Fast-paced advancements across the financial services and technology sectors help facilitate smooth and prompt transactions of money worldwide, but this has also exposed financial institutions to the risk of money laundering — an increasingly crucial and urgent issue.
A rise in the growth of terrorism financing has heightened the demand for anti-money laundering regulations in the financial services industry; thus, driving organizations to restructure their compliance processes to act in accordance with regulations and avoid the possibility of fines and sanctions.
According to a market intelligence study published by BIS Research, the global anti money laundering (AML) software market accounted for $1.86 billion in 2019. The market is expected to grow at a CAGR of 14.12% during the forecast period 2020-2025.
The growth in the global AML software market can be significantly attributed to regulatory compliance requirements with international regulatory bodies and an increased number of wired transactions.
Key Factors Influencing the Market
The global anti-money laundering software market study includes drivers, restraints, and key opportunities present along with the analysis of several factors that positively and negatively impact the overall market growth.
The market drivers include a rise in the volume of wired transactions, increased need for automated transaction monitoring systems, high adoption of cloud services by the financial sector, implementation of network analytics to streamline fraud detection operations, and compliance requirements with international regulatory bodies.
Among the aforementioned drivers, increasing volume of transactions, high adoption of cloud services, and implementation of network analytics for fraud detection are expected to have a high impact during the forecast period.
In the past decade, the number of non-cash payments has increased significantly. The increase in the number of transactions has led financial institutions to incorporate such software to simplify complex tasks and automate repetitive tasks. This has further catered to the growth of AML software solutions in financial institutions.
Also, monitoring transactions manually is a highly tedious task. Using automated transaction monitoring systems in AML software provides a convenient method and a much more efficient process than manual monitoring due to the risk of errors and other inefficiencies related to manual monitoring. In addition, automated transaction monitoring systems are much more effective, as they provide better consistency and faster results.
Further, the growth and development in cloud technology and services over the years has broadened capabilities along with the industry reach of cloud technology. The banking sector is also adopting cloud services to include more flexibility in its agile business model to meet changing customer needs. Cloud technology helps the banking sector to automatically assemble or integrate the resources to meet business demands.
Moreover, the growing demand for big data analytics, along with the various new source of data for analytics, has surged the demand for financial institutions to use it for numerous applications. The introduction of artificial intelligence and network analytics techniques has proved to help various sectors, including telecommunications, financial institutions, and public organizations to investigate and detect fraud.
The significant increase in the transaction number and advancement in technology has amplified the incidents of fraud and cyber-attacks, especially in the telecommunication industry. The heavy dependence of communication service providers (CSPs) on automation, IP networks, and wireless networks has made them vulnerable to such fraudulent activities. Thus, fraud detection algorithms help the service providers to analyze usage data, location-specific data, and customer account data in real-time.
Furthermore, there are several challenges that are hindering the growth of the market. These include high cost of AML software, challenge in the integration of AML software in existing systems, and risk of security breaches and cybersecurity threats.
However, there are certain opportunities that are expected to augment the demand for the AML software market. These opportunities include the adoption of artificial intelligence and machine learning in AML, AML software in the cryptocurrency market, emerging economies adopting AML solutions, robotic process automation in AML, and KYC processes.
The global anti-money laundering software market is segmented broadly on the basis of deployment mode, software type, end user, and region.
The further categorization of the deployment mode segment is based on on-premises and cloud-based services. On-premises deployment mode contributed the largest share to the global AML software market in 2019. This is due to the high level of consumer data security provided by on-premises deployment mode as compared to cloud deployment. However, cloud deployment is expected to witness the highest growth rate during the forecast period.
The software type segment of the market is further categorized into transaction monitoring software, currency transaction reporting software, customer identity management software (CIM), compliance management software, sanction screening software, and case management software. The transaction monitoring software had the highest revenue in the global AML software market in 2019 and was followed by customer identity management software, compliance management software, currency transaction reporting software, sanction screening software, and case management software.
The end users of the anti-money laundering software consist of industries such as information technology and telecommunications, healthcare, transportation and logistics, BFSI, defense and government, retail, and energy and utilities. The Banking, Financial Services and Insurance (BFSI) end user had the highest market penetration in the overall AML software market in 2019, followed by IT and telecommunications and retail end users. The BFSI segment is expected to maintain its dominance in 2025 as well due to the development of next-generation fraud management platforms and AML systems for the BFSI industry by key players.
Lastly, the regional segmentation of the market includes major regions that have the maximum concentration of the technology. These regions include North America, Europe, Asia-Pacific, Middle East and Africa, and Latin America. In 2019, the region of North America dominated in terms of market share percentage. However, the region of Asia-Pacific is expected to grow at the highest CAGR during the forecast period from 2020 to 2025. The increased volume of transactions, regulatory compliances, and stringent regulations in the AML industry are among the key factors driving the growth of the AML software market in Asia-Pacific.
Major Players Operating in the Market
ALM software companies include the following:
|Key Players||Other Players|
|Accuity Inc.||ACI Worldwide, Inc.||Fidelity National Information Services|
|AML Partners||BAE Systems||Kount|
|CaseWare RCM Inc.||Experian PLC||Feedzai|
|Global Radar||Infrasoft Technologies Ltd.||Accertify|
|Lexis Nexis||NICE Actimize||Cybersource|
|Oracle Corporation||SAS Institute Inc.||Token of Trust LLC.|
|Targens GmbH||Temenos||4xLabs Pte Ltd.|