Banking BPS Market - Global Industry Research Analysis

According to Market Research Store, the global banking BPS market size was valued at around USD 23.98 billion in 2023 and is estimated to reach USD 58.68 billion by 2032, to register a CAGR of approximately 9.40% in terms of revenue during the forecast period 2024-2032.

The banking BPS report provides a comprehensive analysis of the market, including its size, share, growth trends, revenue details, and other crucial information regarding the target market. It also covers the drivers, restraints, opportunities, and challenges till 2032.

Global Banking BPS Market: Overview

The Banking Business Process Services (BPS) Market focuses on outsourcing various non-core but essential banking processes to third-party service providers. These services encompass a wide range of activities such as customer service, loan processing, mortgage processing, compliance management, payment processing, and back-office functions like data management and IT support.

By outsourcing these functions, banks aim to improve operational efficiency, reduce costs, and focus on core banking activities such as customer acquisition and financial services innovation. The rising adoption of digital technologies, automation, and cloud services is significantly shaping the growth of the banking BPS market.

Key Highlights

• The banking BPS market is anticipated to grow at a CAGR of 9.40% during the forecast period.
• The global banking BPS market was estimated to be worth approximately USD 23.98 billion in 2023 and is projected to reach a value of USD 58.68 billion by 2032.
• The growth of the banking BPS market is being driven by the firstly, cost efficiency remains a significant driver, as BPS providers offer cost-effective solutions that help banks reduce operational expenses by outsourcing non-core functions such as customer support, data management, and back-office operations.
• Based on the product, the back office segment is growing at a high rate and is projected to dominate the market.
• On the basis of application, the payment services segment is projected to swipe the largest market share.
• By region, North America is expected to dominate the global market during the forecast period.

Banking BPS Market: Dynamics

Key Growth Drivers

• Rising Operational Costs: Banks are facing increasing operational costs due to regulatory compliance, technological advancements, and rising labor costs. Outsourcing back-office functions through Banking Business Process Services (BPS) can help reduce these costs.
• Need for Efficiency and Scalability: Banks need to improve their operational efficiency and scalability to meet the demands of a rapidly changing market. BPS providers can offer specialized expertise and infrastructure to achieve these goals.
• Focus on Core Competencies: By outsourcing non-core functions, banks can focus on their core competencies and enhance their competitive advantage.
• Technological Advancements: Advances in technology, such as cloud computing and automation, have made it easier and more cost-effective for banks to outsource back-office functions.

Restraints

• Data Security Concerns: Banks handle sensitive customer data, and there are concerns about data security and privacy risks associated with outsourcing.
• Vendor Lock-in: Relying heavily on external BPS providers can create vendor lock-in, limiting flexibility and increasing costs.
• Cultural and Language Barriers: Differences in culture and language can pose challenges in communication and collaboration between banks and BPS providers.
• Regulatory Compliance: Banks must ensure that their BPS providers comply with relevant regulations, which can be complex and time-consuming.

Opportunities

• Expansion into New Services: BPS providers can expand their offerings to include new services, such as risk management, compliance, and customer relationship management.
• Leveraging Technology: BPS providers can leverage advanced technologies to improve efficiency, reduce costs, and enhance service quality.
• Targeting Niche Markets: Focusing on specific niches within the banking industry, such as wealth management or retail banking, can provide opportunities for differentiation.
• Global Expansion: BPS providers can expand their operations into new markets to capture growth opportunities and diversify their client base.

Challenges

• Competition: The banking BPS market is highly competitive, with numerous players vying for business.
• Economic Fluctuations: Economic downturns can impact the demand for banking services, which can affect the demand for BPS.
• Talent Acquisition and Retention: Attracting and retaining skilled talent in the BPS industry can be challenging, especially in areas with high competition for talent.
• Changing Regulatory Landscape: The regulatory environment for the banking industry is constantly evolving, which can create challenges for BPS providers.

Banking BPS Market: Segmentation Insights

The global banking BPS market is divided by product, application, and region.

Segmentation Insights by Product

Based on Product, the global banking BPS market is divided into back office, front office, middle office, and others.

The Back Office segment dominates the Banking BPS Market due to the critical nature of transaction processing, settlements, and administrative support that are essential for banking operations. The Back Office handles administrative and support functions such as transaction processing, payment processing, settlements, and record maintenance. This segment is focused on ensuring operational efficiency and accuracy in the execution of financial transactions.

The Front Office segment holds a significant portion of the Banking BPS Market, driven by the increasing need for banks to improve customer experience and enhance service delivery in a competitive market. The Front Office includes customer-facing services such as account management, customer service, and marketing. It also encompasses areas like onboarding, KYC (Know Your Customer) processes, and customer inquiries.

The Middle Office BPS market holds a considerable share, particularly with the growing complexity of regulatory environments and the need for efficient risk management processes in banking. The Middle Office refers to risk management, regulatory compliance, and performance reporting. It supports both the front and back office by ensuring that financial transactions are managed in accordance with regulations, risk protocols, and reporting standards.

Segmentation Insights by Application

On the basis of Application, the global banking BPS market is bifurcated into payment services, core banking, mortgage and loan, securities processing, others

The Payment Services segment dominates the Banking BPS Market due to the global transition towards digital payment methods, mobile banking, and cashless transactions. Payment Services encompass a wide range of financial transactions, including domestic and international transfers, mobile payments, card payments, and other digital payment methods.

The Core Banking segment holds a significant share of the Banking BPS Market, as every banking institution relies on smooth core operations for customer satisfaction and business continuity. Core Banking refers to the primary functions of a bank, such as customer account management, deposits, withdrawals, and general ledger maintenance. It includes activities like account opening, interest calculations, and end-of-day processes, all aimed at delivering uninterrupted banking services to customers.

The Mortgage and Loan segment is one of the larger contributors to the BPS market due to the complexity and volume of loans and mortgages that banks handle. Mortgage and Loan services cover the end-to-end processing of loan applications, from origination to servicing. This includes loan underwriting, credit checks, disbursements, and repayment processing.

Securities Processing accounts for a moderate share of the market, particularly in financial hubs like North America and Europe, where there is a high volume of securities trading. Securities processing involves the back-office functions of processing trades, settling transactions, and maintaining accurate records of securities, bonds, and stocks. This application segment is highly regulated and involves complex processes to ensure the timely and accurate execution of securities transactions.

Banking BPS Market: Report Scope

Banking BPS Market: Regional Insights

• North America currently leads the global banking BPS market

North America holds a significant share of the global banking BPS market, driven by the early adoption of outsourced services, a highly developed banking sector, and an increasing focus on digital transformation. Banks in this region are outsourcing services to optimize operations, enhance customer experience, and improve compliance with evolving regulatory standards.

Europe is another key market for banking BPS services, with significant adoption in countries such as the UK, Germany, and France. The region’s banking sector faces stringent regulatory frameworks, leading banks to outsource business processes related to compliance, risk management, and reporting.

The Asia-Pacific region is expected to experience the highest growth rate in the banking BPS market, driven by rapid digital transformation, increasing competition among banks, and the growing complexity of regulatory requirements. Countries like India, China, and Australia are leading this growth, with outsourcing playing a critical role in enabling banks to scale operations and reduce costs.

The banking BPS market in Latin America is growing steadily, driven by increasing adoption of outsourcing services in the financial sector. Brazil and Mexico are the leading markets, with banks seeking to improve cost efficiencies and focus on core banking activities.

The Middle East and Africa (MEA) region is witnessing gradual growth in the banking BPS market, with increasing investments in banking technology and outsourcing initiatives. Countries like the UAE and South Africa are leading this trend, particularly in the areas of customer service, back-office operations, and compliance management.

Banking BPS Market: Competitive Landscape

The report provides an in-depth analysis of companies operating in the banking BPS market, including their geographic presence, business strategies, product offerings, market share, and recent developments. This analysis helps to understand market competition.

Some of the major players in the global banking BPS market include:

• Atos
• Avaloq
• Capgemini
• Cognizant
• Concentrix
• FirstSource
• FIS
• Genpact
• HCL
• Hexaware Technologies
• Infosys
• NIIT
• SLK
• Tata BSS
• TCS
• Wipro
• WNS

The global banking BPS market is segmented as follows:

By Product

• Back Office
• Front Office
• Middle Office

By Application

• Payment Services
  • Core Banking
• Mortgage and Loan
• Securities Processing
• Others

By Region

• North America
  • U.S.
  • Canada
• Europe
  • U.K.
  • France
  • Germany
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Rest of Latin America
• The Middle East and Africa
  • GCC Countries
  • South Africa
  • Rest of Middle East Africa

Frequently Asked Questions:

What will be the value of the banking BPS market during 2024- 2032?

Based on statistics from the Market Research Store, the global banking BPS market size was projected at approximately US$ 23.98 billion in 2023. Projections indicate that the market is expected to reach around US$ 58.68 billion in revenue by 2032.

What will be the CAGR of the global banking BPS market?

The global banking BPS market is expected to grow at a Compound Annual Growth Rate (CAGR) of around 9.40% during the forecast period from 2024 to 2032.

Which region will drive the global banking BPS market?

North America is expected to dominate the global banking BPS market.

What are the significant factors driving the global banking BPS market?

The increasing regulatory requirements in the banking sector create a demand for BPS providers that specialize in maintaining compliance, reducing risks, and ensuring adherence to regulatory standards across various regions.

Who are the leading players functioning in the global banking BPS market growth?

Some of the prominent players operating in the global banking BPS market are; Atos, Avaloq, Capgemini, Cognizant, Concentrix, FirstSource, FIS, Genpact, HCL, Hexaware Technologies, Infosys, NIIT, SLK, Tata BSS, TCS, Wipro, WNS, and others.

What can be expected from the global banking BPS market report?

The global banking BPS market report provides a comprehensive analysis of market definitions, growth factors, opportunities, challenges, geographic trends, and competitive dynamics.

Frequently Asked Questions