The global Anti-Money Laundering (AML) software market witnessed a sizeable growth, reaching USD 1.63 billion in 2021. Anticipated to experience a substantial and rapid increase in revenue during the forecast period, the market is currently under the spotlight, as indicated by the latest analysis conducted by Emergen Research. One of the primary drivers of this growth is the escalating need for monitoring and reporting of suspicious activities to financial regulatory authorities.
Stricter regulations have become a necessity, as compliance plays a pivotal role in reducing the risks associated with financial crimes such as terrorism financing, money laundering, and corruption. Various regulatory bodies, including The Financial Industry Regulatory Authority (FINRA), China’s Banking and Insurance Regulatory Commission (CBIRC), and the Australian Transaction Reports and Analysis Centre (AUSTRAC), have introduced compliance measures in response to the rising instances of financial fraud. Non-compliance with these regulations often results in significant fines for the parties involved. The increased focus on adherence to government directives, coupled with instructions for financial institutions to implement AML solutions, such as Know Your Customer/ Customer Due Diligence (KYC/CDD), aimed at preventing money-related crimes, is poised to propel market growth in the coming years.
Despite the promising prospects, a notable challenge in the path of revenue growth is the considerable initial cost associated with the deployment of AML solutions. These solutions are designed to detect suspicious financial activities and enforce regulations against unlawful transactions, which includes transaction monitoring, Know Your Customer (KYC), and currency transaction reporting. Even with the implementation of AML solutions, certain fraud cases may remain undetected. In such instances, financial institutions opt for various methods and technologies to consolidate KYC data for improved data quality. This approach, combined with external consulting firms’ involvement for a more comprehensive examination of customer data, often incurs higher costs than regulatory fines.
According to projections, the global anti-money laundering software market is expected to record a Compound Annual Growth Rate (CAGR) of 15.1% over the forecast period. This substantial growth is set to elevate market revenue from USD 1.63 billion in 2021 to an estimated USD 7.64 billion in 2032. The increased demand for AML software is attributed to the evolving and more stringent government regulations.
The COVID-19 pandemic had a noteworthy impact on the global anti-money laundering software market. The pandemic led to a surge in online sales and the adoption of online payment methods. This shift resulted in an increased risk of fraudulent money transactions, underlining the significance of AML software for financial institutions. Additionally, the pandemic saw a rise in online scams, including the illegal sale of medical supplies, personal protective equipment, essential items, and fraudulent COVID-19 donations, further boosting the adoption of AML software.
Money laundering is a predominant threat within the banking sector. To combat this threat, AML software equipped with Internet of Things (IoT) and Artificial Intelligence (AI) has emerged as an effective solution. AML software’s primary objective is to identify fraudulent transactions and relay real-time data to financial authorities. This allows for the continuous monitoring and tracking of financial activities, contributing to the reduction of money laundering risks.
Key Market Players and Strategic Developments
The global anti-money laundering software market is characterized by a fragmented landscape, with numerous large and medium-sized players commanding the majority of market revenue. To maintain their competitive edge, major players are pursuing various strategies, such as mergers, acquisitions, strategic agreements, and contracts. Furthermore, they are actively involved in the development, testing, and introduction of more efficient AML solutions.
Some key players in the global anti-money laundering software market include:
- Oracle Corporation
- BAE Systems PLC
- Tata Consultancy Services Limited (Tata Sons Private Limited)
- Fiserv, Inc.
- Fidelity National Information Services, Inc.
- Experian PLC
- SAS Institute, Inc.
- ACI Worldwide, Inc.
- CaseWare International, Inc.
- AML Partners LLC
In the realm of strategic developments:
- In November 2021, ACI Worldwide, Inc. introduced network intelligence technology to counter real-time payments fraud. This technology facilitates the sharing of industry-wide fraud signals with machine learning models, strengthening fraud protection measures for banks, processors, acquirers, and networks.
- In the same month, BAE Systems PLC announced a five-year deal with Nova KBM, a universal bank in Slovenia, to provide its NetReveal compliance suite. This suite focuses on improving operational efficiency, reducing false positives, and ensuring compliance for the bank.
- In September 2021, Tata Consultancy Services Limited partnered with NICE Actimize to implement anti-money laundering, compliance, and fraud risk management solutions.
- In June 2021, Fidelity National Information Services Inc. introduced a new series of AI-enabled risk solutions in partnership with C3.ai, Inc., aiming to enhance regulatory compliance and risk management for capital markets firms.
Key Highlights from the Report
- The software segment is projected to record a substantial revenue growth due to the increased adoption of software solutions by financial institutions for tracking and reporting suspicious activities.
- Among the deployment types, the on-premise segment is expected to exhibit robust revenue growth, as it offers complete control over data, a crucial factor in the context of data security.
- North America is anticipated to dominate the market in terms of revenue share, owing to the presence of major market players like Oracle Corporation, Fiserv, Inc., Fidelity National Information Services, Inc., and SAS Institute, Inc., among others.
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