Global core banking market to hit $10bn in 2017 - Celent

Global core banking market to hit $10bn in 2017 - Celent

Global spending on core banking technology is set for steady, if unspectacular, growth over the next four years, breaking the $10 billion barrier in 2017, according to research from Celent.

This year, around $8.6 billion will be invested by banks around the world on core systems and Celent is anticipating a four per cent rate of growth over the next few years. Breaking down the spending, maintenance is set to rise at 6.1%, compared to just 2.4% for new projects.

A major source of the increase could come from the US, where Celent predicts the long pent-up demand for core replacement is coming to a point where a few large banks will take the plunge, emboldening others to follow. The faster growing, less mature regions of the world will also see a high appetite for core replacement but in Europe there will only be a 'drip'.

Across all geographies, Celent says that banks are increasingly willing to consider core replacements, whether big bang or phased, with cost and customer demands for agility driving factors in firms taking the plunge.

The report also suggests that banks have less trepidation about vendor products than in the past. This is seen in the trend away from on-premise implementations to hosted offerings, as smaller banks embrace running core processes through data centres. However, tier one players are still unmoved by the prospect.

Fiserv remains the dominant vendor in the market among small banks with less than $1 billion in assets, commanding 39% of the market, more than twice as much as nearest rival, Jack Henry & Associates. Among bigger banks, the market is more splintered, with FIS, Temenos and Misys leading the way.

Dan Latimore, SVP, banking group, Celent, says: "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."

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