Third-Party Banking Software Market Size, Share & Trends Analysis Report By Product Type (Core Banking Software, Omnichannel Banking Software, Business Intelligence Software, Wealth Management Software, Others), By Deployment Size (On-premise, Cloud), By Application (Risk Management, Information Security, Business Intelligence), By End-use (Commercial Banks, Retail Banks) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2025-2033

Third-Party Banking Software Market Size

The global third-party banking software market size was valued at USD 6.77 billion in 2024 and is projected to grow from USD 7.28 billion in 2025 to USD 12.98 billion by 2033, exhibiting a CAGR of 7.5% during the forecast period (2025-2033). 

The global market encompasses external software solutions developed by independent vendors to help banks and financial institutions streamline operations, enhance customer experience, and meet regulatory compliance. These solutions include core banking systems, risk management platforms, payment gateways, and mobile banking tools. Banks prefer third-party software for faster deployment, scalability, and cost-efficiency compared to in-house development. The rise of digital banking, fintech integration, and cloud-based infrastructures fuels market expansion.

The global third-party banking software industry is driven by the growth of the banking, financial services, and insurance (BFSI) industry. Integrating the latest technologies like databases, networking, and analytics via cloud computing services is a priority because financial institutions have grown increasingly demanding customer experiences and streamlining operations. This kind of demand for safe, reliable, and feature-rich third-party banking software will increase further as consumers will keep demanding more convenient and faster services in support of the strong market growth. North America and Europe are mature markets with strong adoption, while Asia-Pacific is rapidly evolving due to financial inclusion initiatives and growing demand for digital financial services.

Current Market Trend

Mobile banking and payment solutions

The increasing reliance on smartphones for financial activities significantly drives the demand for mobile banking solutions from third-party software providers. Customers now expect seamless, real-time access to their banking information through intuitive and secure mobile applications. This shift has led banks to partner with third-party developers to build feature-rich, scalable, and user-friendly mobile banking apps that support services such as money transfers, bill payments, account monitoring, and mobile wallet integration.

• For instance, in July 2024, the European Payments Initiative launched Wero, a unified mobile payment platform aiming to replace national systems like iDEAL (Netherlands) and Paylib (France). By November 2024, Wero had 14 million users across Germany, France, and Belgium, offering real-time peer-to-peer payments via QR codes and phone numbers. The platform plans to expand into e-commerce and NFC payments in 2025.

Additionally, the growing adoption of contactless payments via Apple Pay, Google Wallet, and Samsung Pay has further reinforced the need for compatible third-party banking software to process and secure digital transactions in real time.

Third-Party Banking Software Market Growth Factor

Increased focus on security and fraud prevention

Cybersecurity has become a top priority for the banking sector due to the rise in digital transactions and the growing sophistication of cyber threats. As financial institutions seek to protect sensitive data and ensure secure customer interactions, third-party software providers use advanced security features. These include multi-factor authentication (MFA), end-to-end encryption, real-time transaction monitoring, and AI-driven fraud detection systems.

• For example, in March 2025, NatWest partnered with OpenAI to enhance its digital assistants, Cora and AskArchie, to improve customer support and combat financial fraud. By integrating OpenAI's technology, NatWest achieved a 150% improvement in customer satisfaction and reduced reliance on human advisors. This initiative is part of NatWest's strategy to address the £570 million lost to payment fraud in early 2024.

These security innovations are pivotal in building customer trust and ensuring regulatory compliance, making them a significant driver of market expansion.

Market Restraint

High initial setup and deployment costs

Despite the numerous benefits of third-party banking software, high initial setup and deployment costs pose a significant barrier, particularly for smaller financial institutions. These systems often require substantial investment in infrastructure, training, and integration with legacy systems. Furthermore, compliance with stringent global regulations, such as the General Data Protection Regulation (GDPR), the Payment Card Industry Data Security Standard (PCI DSS), and local banking laws, adds another layer of complexity and cost. Banks must ensure that third-party providers adhere to these standards or risk fines, reputational damage, and legal repercussions.

Data privacy concerns also persist, as outsourcing core banking functions to external vendors can raise issues about control, transparency, and cybersecurity risks. The hesitation to fully adopt third-party software stems from uncertainty around long-term support, upgrade costs, and the vendor’s ability to safeguard customer data and meet evolving compliance mandates, limiting market penetration.

Market Opportunity

Cloud-based solutions

Cloud-based solutions have emerged as a transformative trend in the third-party banking software market. These platforms offer unmatched flexibility, scalability, and cost-efficiency, enabling banks to streamline operations, enhance system performance, and reduce dependence on legacy infrastructure. Financial institutions are increasingly migrating to cloud environments to meet growing customer demands, integrate fintech solutions, and achieve operational agility.

• For instance, in April 2025, nCino, a cloud-based banking software provider, expanded its global footprint by acquiring DocFox, FullCircl, and Sandbox Banking between 2024 and early 2025. These acquisitions enhanced nCino’s capabilities in automating customer onboarding and integrating AI-driven insights into banking operations. As of 2025, nCino serves over 2,700 financial institutions worldwide, including major banks like TD Bank and Santander.

Cloud platforms allow faster updates, stronger cybersecurity frameworks, and simplified compliance processes. They also support the integration of APIs, AI, and data analytics for intelligent banking services. This trend reduces capital expenditure and empowers banks to innovate rapidly, helping them remain competitive in a digital-first financial landscape.

Regional Insights

Europe: Dominant region with 40% market share

Europe continues to lead the global third-party banking software market, bolstered by its highly mature financial ecosystem, progressive regulatory environment, and commitment to digital transformation. The European Union's PSD2 (Payment Services Directive 2) has been instrumental in accelerating open banking across the region, prompting banks to integrate third-party platforms to stay compliant and competitive. Countries like Germany, the UK, France, and the Netherlands are at the forefront, with banks actively modernizing legacy infrastructure to support digital-first banking models.

Germany and the UK are particularly prominent due to their vibrant fintech sectors and advanced IT infrastructure. British banks have embraced third-party platforms to power services like real-time payments, mobile banking apps, and AI-driven customer service.

United Kingdom Market Trends

As a global financial hub, the UK is at the forefront of adopting third-party banking software, particularly due to PSD2-driven open banking mandates. London’s thriving fintech ecosystem and strong support for innovation (AI, machine learning, regtech) have made third-party platforms indispensable. Major players like HSBC and Barclaysare modernizing core systems to deliver personalized, digital-first customer experiences.

North America: Region with 32.3% market share

North America remains a powerhouse in the third-party banking software market due to its technologically advanced banking sector, increasing cybersecurity concerns, and regulatory compliance mandates. The U.S., in particular, is a major contributor with widespread use of digital banking platforms and strong investments in IT infrastructure modernization. Financial institutions in the U.S. and Canada are integrating third-party solutions for real-time fraud detection, regulatory compliance (Dodd-Frank, GLBA), AI-driven data analytics, and omnichannel service delivery.

Moreover, major banks are adopting cloud-based and API-driven platforms to improve agility and reduce operational costs. The rise of digital-only banks and the growth of fintech ecosystems in hubs like Silicon Valley, New York, and Toronto further catalyze third-party software integration.

United States Industry Trends

The U.S. leads the global market due to its robust financial infrastructure, stringent compliance requirements (e.g., Dodd-Frank Act, Bank Secrecy Act), and a vibrant fintech landscape. The adoption of cloud-based platforms is surging, enabling banks to improve agility and reduce operational costs. Key vendors likeFinastra, Oracle, and Temenos are expanding their service portfolios to support real-time compliance, fraud detection, and customer experience innovations.

Countrywise Insights

The demand for third-party banking software is growing rapidly worldwide, with countries leveraging their unique regulatory frameworks, digital banking trends, and fintech ecosystems to accelerate adoption.

• India: India’s digital transformation initiatives, including Digital India and financial inclusion efforts,are fueling strong adoption of third-party software. With widespread mobile usage and growing trust in online financial services, banks are integrating cloud-native and mobile-first platforms to streamline operations and serve tech-savvy consumers. Fintech startups are also driving demand for modular banking-as-a-service (BaaS) platforms.
• China: China’s mobile-first financial ecosystem, led by Alipay, WeChat Pay,and a large millennial user base, has forced traditional banks to adopt third-party solutions to stay competitive. The government's emphasis on innovation in AI, blockchain, and data security is driving widespread adoption of cloud-based core banking and payment systems.
• Germany: Germany is a leading adopter in Europe, driven by PSD2 compliance, customer demand for seamless digital services, and the country’s reputation for operational precision. Banks are modernizing legacy systems to offer real-time payments, improved user interfaces, and tighter regulatory integration. The intersection of industrial finance and digitization also contributes to demand for flexible, enterprise-compatible banking solutions.

Segmentation Analysis

By Product Type

Core banking software has emerged as the backbone of digital transformation in the banking industry. As financial institutions modernize their operations to meet evolving consumer expectations for seamless, 24/7 digital banking, core systems are being upgraded to deliver faster, more reliable, personalized services. This segment benefits from leading banks' large-scale modernization efforts. Moreover, core banking software now integrates advanced analytics, real-time processing, and omnichannel support, enabling banks to enhance operational efficiency, customer engagement, and regulatory compliance. This ongoing push toward digital-first strategies will keep the core banking software segment at the forefront of market growth.

By Deployment

The on-premise segment leads this banking software market, especially among large and security-conscious financial institutions. This preference stems from the high degree of customization, control, and integration flexibility that on-premise systems offer. Banks can tailor these systems to align with proprietary workflows and ensure tighter data governance, a key priority in a sector where data security and regulatory compliance are paramount. Additionally, on-premise solutions often appeal to institutions operating in regions with stringent data localization laws or those seeking to retain full ownership of their IT infrastructure.

By Application

Risk management applications are increasingly vital in the context of growing cyber threats, regulatory pressures, and the complexity of modern banking operations. Third-party banking software enables institutions to implement dynamic, real-time monitoring tools that assess and mitigate financial, operational, and compliance-related risks. As regulatory frameworks such as Basel III, GDPR, and anti-money laundering (AML) directives evolve, banks are under pressure to maintain transparency and accountability. Risk management solutions empower institutions to stay ahead of threats through predictive analytics, AI-driven fraud detection, and integrated compliance modules.

By End-use

Retail banks are the primary adopters of third-party banking software due to the scale and complexity of their operations and their direct customer-facing roles. These institutions leverage software solutions to automate tasks, manage customer relationships, and offer tailored services. Third-party platforms provide centralized ecosystems for handling customer data, loan processing, account management, and transaction monitoring, enabling banks to deliver real-time, omnichannel experiences. As customer expectations continue to rise, retail banks are turning to these platforms for data-driven personalization, enhanced customer satisfaction, and greater cost efficiency.

Company Market Share

The third-party banking software market is fragmented, with key players providing multiple global solutions to financial institutions. The players continuously seek innovations and product additions, incorporating the latest technologies like cloud, AI, machine learning, and regulatory compliance to drive the demand from the banking domain. Their strong market presence, international reach, and investment in technology make them a leader in the third-party banking software market.

Microsoft Corporation: An emerging player in the Third-Party Banking Software market

Microsoft's market share in the third-party banking software market is substantial, primarily because of its Azure cloud platform and enterprise solutions like Dynamics 365. It focuses on cloud-based banking solutions, which makes it most in demand among the financial institutions looking for scalability, security, and innovation. Their Azure for Banking is a complete set of services that ranges from advanced analytics, AI, and machine learning to support banks' digital transformation. Strong presence in the financial sector is also supported by partnerships with banks and fintech companies to deliver customized solutions for sustained growth in the banking software market.

Recent developments at Microsoft Corporation include:

• In October 2024, Zafin announced a new phase of its strategic collaboration with Microsoft on bank modernisation efforts. With this expansion, Zafin will strengthen its core banking solutions based on the robust capabilities of Microsoft Azure and Azure AI. It is supposed to help bring about elevations in operational efficiency and customer experience across the global banking spectrum.

Recent Developments

• March 2025- UK-based digital bank Starling is globally promoting its proprietary banking software, 'Engine'. With existing clients in Romania and Australia, Starling aims to secure 40 to 50 clients in the coming years, potentially generating substantial annual revenues and highlighting the demand for advanced banking platforms.

Analyst Opinion

According to our analyst, the global third-party banking software market has experienced robust growth in recent years, driven by the accelerating pace of digital transformation within the financial services sector. As banks face mounting pressure to modernize operations, reduce costs, and meet evolving consumer expectations, third-party software has emerged as a strategic solution offering agility, compliance, and scalability. Regulatory mandates such as PSD2 in Europe and the Dodd-Frank Act in the U.S. have further incentivized the shift toward external platforms.

Additionally, the rise of fintech, open banking, and mobile-first services has fueled demand for cloud-based and API-driven banking systems. Emerging economies like India and China are witnessing explosive adoption as digital inclusion policies and smartphone penetration expand the customer base for modern banking. In both mature and developing markets, third-party banking software is no longer optional—it is an operational necessity driving the next phase of competitive advantage in the global financial landscape.