United Kingdom Core Banking Software Market Size, Share & Trends Analysis Report By Solution (Deposits, Loans, Enterprise Customer Solutions, Others), By Service (Professional Service, Managed Service), By Deployment (Cloud, On-Premise, SaaS/Hosted, Licensed), By End-User (Financial Institutions, Retail Banking, Treasury, Corporate Banking, Wealth Management, Others), By Bank Type (Large Banks, Midsize Bank, Small Banks, Community Banks, Credit Unions, Others) and Forecasts, 2024-2032

Market Overview

The United Kingdom core banking software market share witnessed significant growth in the past and is expected to expand at a CAGR of 7.7% during the forecast period (2022-2030).

Core banking software is the area of the financial technology (fintech) market that offers software solutions to the banking sector. Core banking software is a centralized platform that manages a bank's most crucial tasks, such as account administration, transaction processing, and customer relationship management.

A few factors influence the U.K. market for core banking software. First, there is a demand for flexible and agile central banking solutions that can support new digital channels due to the growing digitization of the banking sector and the popularity of online and mobile banking. Second, there is a requirement for secure and interoperable core banking systems that can interact with third-party providers due to regulatory compliance standards like PSD2 and Open Banking.

The U.K. Core Banking Software market does, however, also confront several difficulties. It can be challenging to replace the legacy systems many banks use. The high cost and complexity of adopting new Core Banking Software solutions can be a barrier to entry. Additionally, due to the U.K. banking sector's intense competition, central banking software providers must set themselves apart by providing cutting-edge features and integration capabilities.

Market Dynamics

United kingdom core banking software market drivers

Surging demand for integrated customer account administration

The market is set to grow as there is a strong demand for a unified platform that efficiently manages client banking accounts. Core banking solutions provide bank employees with accurate account information through a comprehensive platform. This platform includes features like fast reporting, enterprise content management, deposit accounts, credit analysis, customer onboarding, customer relationship management (CRM), account opening, loan origination, workflow, and deposit accounts. By integrating transactional and core systems, core banking solutions eliminate the need for manual operations and separate solutions.

In addition, banks worldwide are adopting AI-integrated core banking systems to obtain real-time, actionable consumer data. These tools enhance operational efficiency, analyze transactions, detect fraud, minimize risks, and gain insights into consumer behavior. The improved ability to analyze complex data sets empowers banks to make well-informed decisions regarding their banking services, products, and overall operations.

Growing acceptance of cloud-based solutions

The core banking software market is propelled by the increasing usage of cloud-based or software-as-a-service (SaaS) banking platforms provided by companies such as Temenos AG, FIS, and Finastra. These platforms enable banking institutions to monitor payments, transactions, and other banking activities effectively. As businesses increasingly prioritize efficiency and innovation, the market is poised for expansion. Moreover, the growing acceptance of cloud-based banking platforms by different banks is expected to drive the growth of the core banking software market in the coming years. The rising adoption of remote banking, cybersecurity measures, Payment as a Service (PaaS), and Big Data technologies throughout the forecast period will also boost the market.

United kingdom core banking software market restraints

Data security and privacy challenges

The increasing complexity of core banking software has led to heightened concerns regarding data security. Issues such as data loss, mobile viruses, software bugs, and unencrypted data have raised alarms, potentially impacting the revenue of credit unions, corporate banks, and financial institutions. Furthermore, some core banking software solutions lack operational flexibility at scale, leading to data security concerns and legal complications. For instance, a recent incident involved a hacker unauthorizedly accessing a company's system through their data transfer file program. As technology advances, concerns surrounding data security are becoming more pronounced.

United kingdom core banking software market opportunities

Growing emphasis on the development of advanced banking solutions

The COVID-19 pandemic has profoundly impacted workplace culture, leading to the widespread adoption of work-from-home policies in banks and financial institutions. These institutions have encountered challenges related to fluctuating interest rates and delayed lease payments, necessitating significant adjustments in the financial market. Managing loans and credit has become particularly challenging due to the ongoing pandemic. In response, key players in the industry are prioritizing developing advanced software solutions to expedite their digital transformation and overcome these obstacles. These proactive measures are anticipated to fuel the demand for core banking software and drive market growth.

Regional Analysis

England, Scotland, Wales, and Northern Ireland are among the central regions that make up the regional segments of the U.K. Core Banking Software market. Opportunities for growth and advancement differ by region. With London as a significant financial hub, England has a sizable influence in the banking sector. Scotland has a robust financial sector, expanding fintech industry, and an emphasis on blockchain and virtual currencies. While the banking sector in Wales is smaller, it is more concerned with sustainability and social responsibility than it is in Northern Ireland, which is more concerned with innovation and technology, especially cybersecurity. Companies that can offer solutions for digital transformation, open banking, fintech partnerships, regulatory compliance, ethical banking, environmental reporting, and cutting-edge security and risk management tools are in an excellent position to grow.

Segmental Analysis

The U.K. Core Banking Software market is segmented by solution, Service, Deployment, and end-use.

The solution is further segmented into deposits, loans, enterprise customer solutions, and others.

The enterprise customer solutions segment dominated the North American market and is expected to register a CAGR of 6.7% over the forecast period.

The segment can be further bifurcated by Service into professional and managed Services.

The professional service segment dominated the market in 2020 and is anticipated to grow at a CAGR of 8.1% over the forecast period.

Based on Deployment, the market is sub-segmented into on-premise and cloud.

The on-premise segment dominated the market and is expected to grow at a CAGR of 6.8% during the forecast period.

Based on end-use, the market is sub-segmented into banks, financial institutions, and others.

The bank's segment is expected to dominate the market, registering the highest CAGR of 8.2% over the forecast period.

Recent Developments

• March 2023- According to a new study from the world leader in financial technology FIS®, account-to-account (A2A) payments have increased globally, with the development of real-time payment systems contributing to faster, safer, and more convenient payments for customers at the checkout.
• March 2023- Fiserv, Inc. (NASDAQ: FISV), a top provider of payments and financial services technology solutions, and Central Payments L.L.C., a provider of banking as a service (BaaS), give fintech, large companies, and payment facilitators the tools they need to launch financial products and services faster and with more potential for expansion.