United States Core Banking Software Market

Market Overview

The United States Core Banking Software market share witnessed significant growth in the past and is expected to expand at a CAGR of 5.2% during the forecast period (2022 to 2030).

Core banking software refers to the financial technology (fintech) market segment that provides software solutions specifically designed for the banking industry. Core Banking Software is pivotal in overseeing essential functions such as account management, transaction processing, and client relationship management within a banking institution.

The rising use of digital banking and the requirement to update legacy systems are two factors that have contributed to the expansion of the U.S. Core Banking Software industry. The demand for online banking services has increased due to the COVID-19 pandemic, which has also accelerated the transition to digital banking and boosted the market for core banking software.

The demand for modernizing legacy systems and the rising adoption of digital banking are the two main factors driving the growth of the U.S. Core Banking Software market, a subsegment of the fintech sector. In the upcoming years, the market is anticipated to expand even more, offering chances for current players and up-and-coming competitors.

Market Dynamics

United States Core Banking Software Market Drivers

Rise in Popularity of Single Server Customer Account Management

The demand for an efficient, all-in-one platform to manage client banking accounts drives the market's growth. Core banking solutions offer comprehensive features, including 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, these solutions eliminate the need for manual operations and separate software.

Furthermore, banks worldwide actively embrace AI-integrated core banking systems to access real-time and actionable consumer data. These systems enhance operational efficiency, analyze transactions, detect fraud, mitigate risks, and provide insights into consumer behavior. Analyzing complex datasets more effectively enables banks to make informed decisions about their banking services, products, and overall operations.

Surging Adoption of Solutions Based on Cloud Technology

The core banking software market is experiencing growth due to the rising adoption of cloud-based or software-as-a-service (SaaS) banking platforms provided by companies like Temenos AG, FIS, and Finastra. These platforms enable banking institutions to monitor payments, transactions, and other banking activities effectively. As businesses prioritize efficiency and innovation, the market is expected to expand. Additionally, the increasing acceptance of cloud-based banking platforms by different banks is anticipated to drive the growth of the core banking software market. The market will also benefit from the growing adoption of remote banking, cybersecurity measures, Payment as a Service (PaaS), and Big Data technologies over the forecast period.

United States Core Banking Software Market Restraints

Safeguarding Personal Information and Ensuring Data Security

Concerns about data security have intensified due to the growing complexity of core banking software. Issues like data loss, mobile viruses, software bugs, and unencrypted data have raised alarms and can impact the revenue of credit unions, corporate banks, and financial institutions. Additionally, certain core banking software solutions lack the necessary operational flexibility at scale, raising concerns about data security and leading to legal complications. For example, there have been recent incidents where hackers gained unauthorized access to company systems through their data transfer file programs. As technology advances, the importance of data security continues to increase.

United States Core Banking Software Market Opportunities

Shift Towards the Enhancement of Banking Systems with Advanced Features

The workplace culture has been significantly influenced by the COVID-19 pandemic, resulting in the widespread implementation of work-from-home policies in banks and financial institutions. These institutions have faced difficulties dealing with fluctuating interest rates and delayed lease payments, requiring significant adaptations in the financial market. Managing loans and credit has become especially challenging during the pandemic. In response, major industry players are prioritizing the development of advanced software solutions to accelerate their digital transformation and overcome these obstacles. These proactive measures will drive the demand for core banking software and contribute to the market's growth.

Regional Analysis

The U.S. core banking software market's regional analysis emphasizes the significance of comprehending each region's distinctive requirements and opportunities. There is a significant need for essential banking software in the Northeast, home to many sizable banks. To satisfy the provisions of these critical financial organizations, providers in this area should concentrate on providing cutting-edge features and integration capabilities.

On the other hand, the Southeast area offers a chance for smaller, more adaptable Core Banking Software providers. Community banks in this region have distinct requirements and spending limits than larger banks, which has led to a demand for customized services at a lower price. 

The Midwest's vital industrial and agriculture sectors fuel demand for specialized core banking software. Manufacturers may need solutions for supply chain financing and invoice factoring, while agricultural institutions may need technical loan processing and risk management features.

With a significant concentration of tech industry hubs, the West region is a growing market for cutting-edge fintech solutions. Success in this market can be found in Core Banking Software companies that can provide advanced technology and integration with other fintech solutions.

When creating and marketing Core Banking Software solutions in the U.S. market, regional factors like industry specialization, financial restrictions, and the desire for innovation are essential to consider.

Segmental Analysis

The U.S. core banking software market is segmented into 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 4.2% 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 5.7% 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 4.4% 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 5.7% over the forecast period.

Recent Developments

• September 2021 – SAP SE announced the establishment of “Fioneer,” a financial services industry joint venture between Dediq GmbH and SAP SE. SAP Fioneer is a financial services software add-on from SAP. It offers new solutions to help its customers in the ever-changing banking and insurance industries.
• August 2021 – As part of the Oracle Banking Suite, W1TTY integrates Oracle FLEXCUBE, Oracle Banking APIs, and Banking Payments. Real-time payments, digital experience, and retail and business banking applications are all part of the package.