Over the last few years, the Banking industry is increasingly shifting its preference toward third-party softwares because of reduced profits, changing customers’ demand and flexible operations.
The Global Third-Party Banking Software Market is estimated to reach US$11.81 billion by 2019, growing at a CAGR of 7 percent.
Why is Third-party Banking Software Gaining Popularity?
Many banks are attempting to replace traditional legacy based systems with modern banking systems.
The Banking industry, having undergone massive changes, has led to the customization of legacy systems. With every additional feature that banks attempt to build, they face challenges in the integration and execution of newer features.
A minor change in one application often causes problems in other parts of the traditional legacy system. Therefore, banks are implementing Third-party Banking Softwares as it eliminates these difficulties while offering operational flexibility.
Also, poor documentation in the legacy systems often poses a significant challenge for new employees. This warrants for dependence on knowledgeable and experienced employees who have spent considerable time working on legacy systems. Hence, in order to avoid such dependency Third-party Banking is becoming furthermore necessary.
Paradigm Shift in Access to Banking Services
The Global Third-party Banking Software market is divided into three broad segments: Core Banking, Multichannel, and BI.
Third-party Banking Software vendors are enabling banks in providing core banking services through multiple channels. Thanks to this, banks are shifting to automated systems by leverage on the features offered by third-party banking.
With shrinking branch networks, banks are increasingly dependent on mobile and the internet channels. Hence, it is becoming imperative for banks to offer their customers, the flexibility of performing banking transactions quickly and in a secured manner through smart devices. Third-party Banking Softwares are playing a key role in this process of modernization.
How is Third-party Banking Software Aiding Customer Retention?
The market is witnessing intense competition as banks are increasingly focusing on technologies that help in retaining customers.
Customers are keen to buy new banking products and to manage their bank accounts through different channels from anywhere and at any time. To this end, banks are looking to retain their customer base by offering them the features they seek, through third-party banking.
TechNavio analysts have observed that while banks study risks involving leakage of confidential information in switching their technical partners, they’d prefer long-term relationships with a limited third-party software vendor base.
