The estimated size of the global core banking market is $8.6 billion in 2013. Celent predicts it will grow at a 4.0% rate over the next four years, reaching $10.1 billion in 2017.
In the report Global Core Banking: Steady But Unspectacular Growth, Celent details a market that remains vibrant, with healthy competition occurring in all geographies, intensified by some recent acquisitions. Based on vendor responses, follow-up conversations, internal calculations, and publicly available data, Celent estimates encompass more than 11,000 core implementations around the world.
Maintenance Vs New expenditure in global core banking spend
In America, long pent-up demand for core replacement is coming to a point where a few large banks will take the plunge, and as successes proliferate, more banks will be emboldened to follow. Small US banks will migrate slowly. Europe will see a continued drip of replacements, while the faster growing, less mature regions of the world will see a higher appetite for core replacement to meet the faster-changing needs of their particular geographies.
Although bank behavior is highly dependent on geography, Celent observes three common trends around the world:
- Banks are increasingly willing to consider core replacements, whether big bang or phased (which depends on size).
- Cost and customer demands for agility are key drivers motivating banks to finally make the switch.
- Vendor products have matured enough that the trepidation banks have typically felt may no longer be warranted.
Despite these trends, bankers are by nature a rightfully cautious lot. Momentum for change is beginning to build, but we’re not yet seeing a headlong rush toward core replacement.
“A growing number of banks are at the point where pressures on the business are sufficient to convince them that it’s time to undertake a core replacement. It is, however, a small and steady stream – not a flood,” says Dan Latimore, SVP of Celent’s Banking Group.
“Geographical differences are particularly striking,” adds Stephen Greer, analyst with Celent’s Banking Group and co-author of the report. “We’re beginning to see many vendors starting to make inroads in new geographies as they build off the strength in their traditional markets.”
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