Market Overview
The global core banking solution market size was valued at USD 14 billion in 2021. It is projected to reach USD 50 billion by 2030, growing at a CAGR of 14.8% during the forecast period (2022–2030).
The execution of routine activities such as withdrawals, passbooks, cash deposits, statements of accounts, and demand draughts is possible via the networking of branches known as core banking solutions (CBS). Additionally, users can use a single platform supplied by the CBS network to access banking services and manage their accounts from any bank branch. Additionally, fundamental banking solutions depend on computer and internet technologies to provide customers with a streamlined banking service experience. Additionally, fundamental banking solutions support the dynamically shifting needs of the market and the consumer by streamlining and upgrading banking procedures, accelerating financial transactions, and increasing presence in outlying and rural areas.
Rapid changes in customer attitudes and behavior regarding banking products & services have prompted banks to improve their current product lines by implementing core banking solutions to offer the market cost-effective and efficient banking services. Banks also use applications programming interfaces (APIs), data analytics, artificial intelligence, cloud computing, and robotic process automation (RPA) to update banking functioning and offer real-time banking services. As a result, these variables fuel the expansion of the core banking solutions industry.
Market Dynamics
Global core banking solutions market drivers
Need to provide better customer services
Due to massive changes in consumer behavior and preferences toward availing of banking products and services, banks are enhancing their existing product lines in the market. Moreover, to provide cost-effective and efficient banking services, growth in the need to connect traditional banking systems with a centralized server is expected to rise in the market. In addition, banks are increasingly adopting and implementing core banking solutions to provide convenient services and maintain transparency in business operations. Banks have increased focus on expanding existing product lines, improving strategies to manage operation costs, and providing better customer services in the market. These factors, therefore, drive the growth of the core banking solutions market.
Booming adoption of core banking technology
The banking industry has become the fastest adopter of cloud computing, application programming interfaces (APIs), data analytics, artificial intelligence, robotic process automation (RPA), chatbots, machine learning, and blockchain. In addition, by implementing core banking solutions, banks can perform practical customer analysis while enabling customers to carry out their everyday banking transactions effectively. Therefore, several banks are implementing core banking solutions to modernize banking functionality to provide more integrated and value-added services. Hence, the adoption and implementation of core banking solutions among banks drive market growth.
Global core banking solutions market restraint
Lack of awareness regarding core banking solutions
Banks are less likely to invest in these solutions due to a lack of awareness of advanced solutions provided by core banking software. Moreover, banks are subject to higher cost pressures characterized by shrinking margins, which results in lower investments in advanced technologies in the industry. In addition, inadequate familiarity with the implementation of core banking solutions helps optimize existing IT architecture, a significant factor that hampers the market growth.
Global core banking solutions market opportunities
Untapped potential of emerging economies
Developing economies offer significant opportunities for core banking solution providers to expand their offerings. Several banks and financial institutions are implementing advanced technologies in their business processes. High investments in developing and transforming current product lines, improving operations, which address customer demands, and increasing productivity of business operations are significant factors expected to boost the market growth. Furthermore, countries such as Australia, China, India, Singapore, and South Korea are substantial adopters of core banking solutions. They are expected to create the potential for the market in the coming years.
Regional Analysis
Region-wise, the global core banking solutions market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
North american predominance in the global market
North America is the highest revenue contributor and is estimated to grow at a CAGR of 12.7% during the forecast period. Advancements in information technology and an increase in the development of interactive & consumer-friendly user interfaces of websites & applications for banking operations are the major factors that boost the growth of the core banking solutions market in the region. Moreover, North America defines significant global trends and directions for the core banking solutions industry. In addition, consumers in this region are the most advanced core banking solution consumer base, fueled by the presence of major global players and tremendous government support toward investment and adoption of advanced banking solutions in the region.
Asia-Pacific is the fastest-growing region. Rapid deployment of new architectures to encourage digital banking to maintain brand loyalty, accelerate better user experience, and expand operations of banking channels are some of the significant trends in the market. Moreover, the rise in internet adoption and huge government budget for information technology (IT) spending for banks are expected to boost the market growth in the region. Furthermore, massive adoption of their ''shelf' core banking system is significantly higher in the banking industry. In addition, the rise in the adoption of multiple core banking solutions platforms and the shift of trends among individuals toward convenient payment methods are some of the major factors expected to provide lucrative opportunities to the market in the coming years.
Europe is the second-largest region and is projected to reach USD 15 billion by 2030, growing at a CAGR of 14.4% during the forecast period. Growth in the adoption of core banking solutions among banks for tracking and managing significant financial transactions, technological advancements, and expanding existing banking services are some of the critical trends in the region. The surge in internet adoption, awareness regarding real-time banking solutions among consumers, and increase in banking payment services are major factors expected to fuel the growth of the core banking solutions market in Europe.
Segmental Analysis
The global core banking solutions market is segmented on component, deployment model, enterprise size, type, end-user, and region.
Based on components, the global core banking solutions market is bifurcated into Solutions and Services.
The Solution segment is the highest contributor to the market and is estimated to grow at a CAGR of 13.5% during the forecast period. An increase in investments in software for faster loan processing, a rise in focus on customer acquisition among bankers, and management of established communication between bank professionals and customers are significant factors that drive the market. Furthermore, several banks and financial institutions are shifting their focus toward enhancing banking operations such as transaction management, servicing loans, opening new accounts, withdrawals, and processing deposits. In addition, significant factors that boost the solution segment growth include extensive use of emerging technologies such as predictive analysis, artificial intelligence, and others to achieve operational and cost-effective banking operations. As a result, these factors boost the solution segment's growth.
The Service segment is the fastest growing. These services reduce the time and costs associated with optimizing systems in the initial phase of core banking solution deployment. In addition, services play a vital role in the core banking solutions market, owing to the adoption of advanced technologies to minimize infrastructure investment costs and increase scalability via the software-as-a-services model. Moreover, core banking services help deploy and integrate distinct IT solutions in an enterprise ecosystem and provide streamlined and automated banking processes, which fuels the growth of the services segment in the market.
Based on deployment model, the global core banking solutions market is divided into On-premise and Cloud.
The On-premise segment is the highest contributor to the market and is estimated to grow at a CAGR of 13.7% during the forecast period. An increase in demand for security over critical data from cyber-threats to monitor invasion of data within banking systems has led to a rise in the implementation of on-premises-based core banking solutions in the market. Moreover, improved data security compared to cloud-based solutions promotes the adoption of an on-premises deployment model, a significant trend in the market. Furthermore, it enables banks, financial institutions, and other end users to own accountability for expensive software upgrades, enhance better maintenance of servers, and continuous system security checks, which drive the growth of the on-premise segment in the market.
The Cloud segment is the fastest growing. Cloud-based security solutions enable superior control over access to the application and sensitive information from distant locations among banks and credit unions & community banks, which is a significant factor that drives the growth of this segment. Moreover, cloud deployment ensures the real-time availability of operational and financial data. This fuels the market growth. Furthermore, the adoption of cloud-based core banking software has vastly increased among large and small & medium enterprises (SMEs), with growth in the need for reducing infrastructure investments.
Based on enterprise size, the global core banking solutions market is segmented into Large Enterprises and Small & Medium Enterprises (SMEs).
The Large Enterprises segment is the highest contributor to the market and is estimated to grow at a CAGR of 14% during the forecast period. To ease the process of tracking banking channels and product offerings, banks and other large enterprises are incorporating real-time extensive data analysis and other core banking solutions, propelling the market's growth. Furthermore, the adoption of core banking solutions is high among large enterprises, owing to affordability and economies of scale, enabling them to gain various benefits from core banking solutions in the market.
The Small & Medium Enterprises segment is the fastest growing. To stay competitive in the market and gain maximum benefits from technological aspects, SMEs are increasingly adopting core banking solutions, which have become a significant trend in the market. Moreover, the need for cost-effective monitoring of financial data and banking operations is a critical driving factor for the growth of core banking solutions in the market. Furthermore, SMEs are implementing advanced banking software as it helps reduce cost, improve performance & security, add flexibility, and reduce the time required for banking operations.
Based on type, the global core banking solutions market is segmented into Enterprise Customer Solutions, Loans, Deposits, and Others.
The Enterprise Customer Solutions segment is the highest contributor to the market and is estimated to grow at a CAGR of 14.1% during the forecast period. The rise in internet usage penetration and technological advancements globally contribute to the growth of this segment. In addition, a core banking solution helps streamline current business processes with supporting technology and provides easy & convenient access to banking services. This, as a result, is the primary factor that propels the enterprise customer solutions segment growth. Moreover, organizations that can drive rapid customer acquisition and launch new products to attract new customers are expected to generate higher revenue and profit from this new environment of core banking solutions in the upcoming years.
The Loans segment is the fastest growing. With supporting multiple facets of loan portfolios, from prospecting to closure and monitoring, the demand for core banking is rising in the market. In addition, a comprehensive loan management solution facilitates banks and financial institutions to automate procedures for achieving cost savings and providing a better customer experience, which fuels the market growth.
Based on end-user, the global core banking solutions market is segmented into Banks, Credit Unions & Community Banks, and Others.
The Banks segment is the highest contributor to the market and is estimated to grow at a CAGR of 13.8% during the forecast period. Core banking solution allows inter-connectivity between branches of the same bank and facilitates management of deposits, credit processing, and loan. Therefore, owing to these numerous benefits, demand for core banking solutions among banks has increased tremendously, propelling the market growth. Moreover, as the core banking system is the software, which relies on computer and internet technology, banks are mainly investing in technologies such as data analytics, robotic process automation (RPA), artificial intelligence, cloud computing, application programming interfaces (APIs), among others to deliver the kind of banking experience their customers require. These factors boost the growth of the core banking solutions in the banking sector.
The Credit Unions & Community Banks segment is the fastest growing. Credit unions & community banks broadly implement core banking solutions as it enables speedier payment processes and helps track finances, which has become a significant trend in the market. Moreover, core banking solutions unify processes, products & services, and transactions, which is one of the primary growth factors in the market.
