Product Code: 70784
The Digital Banking Platform Market is expected to grow at a CAGR of 11.2% during the forecast period (2021 - 2026). The rapidly evolving digital transformation in the banking industry, as well as the demand for smart mobile devices and digital banking services among consumers, are some of the major factors driving the growth of the market.
- The majority of the banks prefer digital banking platforms, due to the various benefits offered, such as reduced IT cost, fast time to market, open banking, out of the box yet configurable capabilities, omnichannel customer experience, and microservice architecture to name a few. For example, In April 2020, Brattleboro Savings & Loan (BS&L) chose NCR to provide customers and businesses with superior digital banking experience. With the NCR DI platform, the bank is expected to consolidate three vendors that previously supported digital banking into one, simplifying operations and increasing efficiency in the back office.
- Though Neo-banks are still a niche market, they are witnessing a higher growth rate in terms of market share and serving customers at around one-third of the cost of traditional banks. Fintechs are targeting lucrative niches in the value chain. Big tech players, with their large customer bases, pose a real threat and a few incumbents are investing heavily in innovation, putting laggards in the shade.
- However, Issues such as integrating digital banking platforms with legacy systems, network outages, security concerns can cause banks severe losses and thus such factors might hamper the growth of the market. For instance, In October 2019 alone, Commonwealth Bank, Chime, St George mobile bank, Lloyds Bank website, Halifax, Royal Bank of Scotland, and some major credit card providers faced severe network outages resulting in losses. The network outages in banking services are considered to be more catastrophic when compared to other industries due to which the need for network automation has a lager scope in this industry.
- As a result of the COVID-19 crisis, there is rise in online banking activity such as increased digital transactionsand a decline in trips to brick-and-mortar branches. The current pandemic has forced individual consumers as well as corporates who once resisted online banking to adopt digital banking apps as their new default. The pandemic might result in increased convenience among consumers which might grow the demand in the long run. On the vendors part, majority of the vendors have been concentrating on customer acquisition by providing services demanded by the challenging times.
Key Market Trends
Increasing Adoption of Cloud-Based Platforms to Boost the Market Growth
- Cloud technology has significantly changed the way businesses work across various end-user industries, driven by cost efficiencies and economies of scale. The rising adoption of cloud services across the world is fueling the growth in cloud traffic growth. According to Cisco Systems, the global cloud traffic is expected to grow to approximately 14,078 exabytes per year by 2021, as compared to 3,850 exabytes per year in 2016. In 2019, cloud traffic in North America amounted to about 4,860 exabytes per year, which accounted for the largest share.
- Many banks prefer cutting the IT infrastructure cost needed for on-Premise setup by leveraging cloud-based services, which enable them to deploy new products and scale infrastructure quickly, cater to the broader customer base with varied needs at a faster speed, manage rapidly increasing real-time payments while ensuring compliance and security standards.
- As a subscription fee is made to a SaaS provider, system maintenance costs and legacy technology issues are reduced. Rather than spending a small fortune on IT, SaaS provides banks with the ability to reallocate budgets so they can focus on innovation, customer satisfaction, and business growth.
- The use of cloud has also helped mobile banking platforms offer a responsive User Interface (UI) and support the bank customers' entire banking journey, right from onboarding to transactional banking requests, on their mobile devices. Banks are rapidly adopting mobile banking platforms, owing to their changing preference toward mobile banking.
- Moreover, increased adoption of third party applications for real-time payments such as Whatsapp Pay, PhonePay, has led to increased demand for reliable infrastructure by the banks to carry out UPI transactions smoothly. For instance, Visa recently completed a $5.3 Billion acquisition of Plaid, a fintech startup that allows applications to connect with customers' bank accounts easily and instantly. Technological shifts such as these have led to increased demand for cloud infrastructure in the digital banking industry.
North America is Expected to Hold Major Share
- North America has many of the largest banks, which proves to be a major factor driving the market for digital banking platforms. Digital banking vendors in the region are offering software as a service in order to make the transformation from legacy systems to digital. For instance, Temenos helps new U.S. digital banks go live in 90 days with the most functionally rich and technologically advanced, front-to-back SaaS digital banking offering
- With the increasing adoption of blockchain technology is enhancing security, especially in the BSFI sector, many organizations are adopting digital banking platforms. This factor is fueling the market's growth in the country. Many companies are developing blockchain-based cloud digital banking platforms.
- Besides, North America is among the leading innovators and pioneers, in terms of cloud adoption. The region boasts of a strong foothold of cloud infrastructure vendors, which further contributes to the growth of the market.
- The steady growth in the use of digital banking platforms has come after a similar surge in the use of Fintech apps, which is notably among the fastest-growing app categories in the United States. United States residents have begun to rely even more on their mobile devices while being stuck at home due to the global Coronavirus (COVID-19) pandemic resulting in increased digital banking across the region.
The digital banking platforms market is moving toward a fragmented market. This is because of the entry of companies and solutions in the market that creates a very fragmented landscape within the digital banking ecosystem. However, with technological advancements and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and partnerships.
- In March 2020, Apex Group Ltd., an established financial services provider, announced the launch of its digital bank and onboarding platform via subsidiary European Depositary Bank ("EDB"). As stated by the company, the platform will be able to process and open bank accounts in Luxembourg in just five days, subject to the client's completion of all KYC checks.
- In July 2019, Appway announced the launch of Client Update, a solution to support financial institutions in delivering personalized, holistic, and smart management of client updates and account maintenance. This solution complements Appway's existing offering, which includes Onboarding for Wealth, Regulatory Reviews for Wealth, Digital Mortgage, and Digital Banking Platform.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
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TABLE OF CONTENTS
- 1.1 Study Assumptions and Market Definition
- 1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
- 4.1 Market Overview
- 4.2 Industry Value Chain Analysis
- 4.3 Industry Attractiveness - Porter's Five Forces Analysis
- 4.3.1 Bargaining Power of Suppliers
- 4.3.2 Bargaining Power of Consumers
- 4.3.3 Threat of New Entrants
- 4.3.4 Threat of Substitutes
- 4.3.5 Intensity of Competitive Rivalry
- 4.4 Market Drivers
- 4.4.1 Increasing Adoption of Cloud-Based Platforms to Obtain Higher Scalability
- 4.4.2 Rising demand for smart mobile devices and digital banking services among consumers
- 4.5 Market Restraints
- 4.5.1 Increasing Security Concerns
- 4.6 Assessment of Impact of Covid-19 on the Industry
5 MARKET SEGMENTATION
- 5.1 By Deployment
- 5.1.1 Cloud
- 5.1.2 On-Premises
- 5.2 By Type
- 5.2.1 Corporate Banking
- 5.2.2 Retail Banking
- 5.3 Geography
- 5.3.1 North America
- 5.3.2 Asia Pacific
- 5.3.3 Europe
- 5.3.4 Middle East and Africa
6 COMPETITIVE LANDSCAPE
- 6.1 Company Profiles*
- 6.1.1 Appway AG
- 6.1.2 CREALOGIX Holding AG
- 6.1.3 EdgeVerve Systems Limited
- 6.1.4 Fiserv, Inc.
- 6.1.5 Oracle Corporation
- 6.1.6 SAP SE
- 6.1.7 Sopra Steria
- 6.1.8 Tata Consultancy Services Limited
- 6.1.9 Temenos Headquarters SA
- 6.1.10 Worldline SA
7 INVESTMENT ANALYSIS
8 MARKET OPPORTUNITIES AND FUTURE TRENDS