ML Solutions Gain Prominence in Anti-money Laundering Software Market
Proliferation of machine learning (ML) in various are benefitting both consumers as well as companies in the anti-money laundering software market. Stakeholders in the value chain are increasing their profits with the help of ML, since the novel technique helps to recognize undetected patterns. Hence, companies in the market for anti-money laundering software are developing solutions that are integrated with MI and cloud computing. For instance, ACTICO- an end-to-end automation solutions company has developed an ML module which is built on the expertise of compliance managers and the knowledge gained from data.
Companies in the anti-money laundering software market are increasing research to develop software with ML to integrate with other functional modules. They are increasing efforts to develop solutions that comply with government norms. Such advanced software systems are gaining visibility in banks and insurance companies, as there is a growing need for software systems that are capable of detecting clients and transactions that are a potential compliance risk.
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Need to Eliminate False Alerts in Transactional Monitoring Solutions Drives Demand for Software
The anti-money laundering software market is anticipated to grow at a CAGR of ~13% during the forecast period. Since end users have high expectations from software systems, companies are developing solutions with robust detection of true suspicious cases. However, rapid growth of the wire industry is challenging for companies in the market for anti-money laundering software who find it difficult to efficiently monitor and detect suspicious transactions. Hence, companies are increasing R&D to develop software that eliminate the issue of false alerts across monitoring and screening programs.
Transaction monitoring is one of the key drivers contributing toward the robust growth of the anti-money laundering software market. As such, transaction monitoring system product type segment is estimated to lead the anti-money laundering software market and the global market is estimated to reach a value of ~US$ 4.9 Bn by 2027. Hence, companies are fine-tuning their efficacy in secondary scoring of the transaction monitoring process.
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Cloud-based Deployment Model Helps in Immediate Analysis of Data Sources
Cloud-based services are projected to engulf the anti-money laundering software market whilst acquiring prominence in the banking world. This is evident since the cloud-based deployment model is estimated to take a huge leap in the market landscape. Thus, compliance officers are increasingly using cloud based services to improve functionality of anti-money laundering software. Moreover, cloud services are helping end users to analyze data in a variety of formats and from a variety of applications. Since most of the data comes from outside of the enterprise, cloud-based services help to harmonize the data and allow the compliance team to make judgments about suspicious activity.
On the other hand, AI is another trend that is witnessing growth in the anti-money laundering software market. Due to the advantages of AI, end users are embracing cloud-based and other advanced services that are fast-changing business landscape. As such, companies are increasing efforts to introduce ‘skim’ relevant data to analyze information from internal and outside the enterprise.
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Streamlined Workflows Set Pace for Innovations in Software
End users are aiming toward a streamlined approach toward innovations in the anti-money laundering software. They are demanding for small-scale pilot programs, since AML compliance has several moving parts. Thus, compliance managers are identifying areas where technological innovations could help design a pilot to test various theories. In order to achieve success in pilot projects, companies in the anti-money laundering software market are increasing awareness about weighing the results in the pilot against previous control strategies in the history of the enterprise.
Banks, being one of the key end users of anti-money laundering software are fighting financial crimes using cost-effective and ML-based software solutions. This is evident since retail banking is projected for exponential growth in the market for anti-money laundering software. There is a growing demand for software systems that prevent financial crimes. Increased R&D have led to innovations in ML-based analytical solutions and robotic process automation (RPA) workflows.
Analysts’ Viewpoint
Graphic analytics for visualization of networks is one of the key trends contributing to the growth of the anti-money laundering software market. Such innovative offerings are leading to formulation of new industry standards. Likewise, companies are increasingly focusing on the development of regulation-complaint software to prevent financial crimes, especially in the banking sector.
AI and ML are transforming the market landscape. However, introduction of norms catering to enforcement against AML failures can result in hefty fines, which pose as a restraint for companies. Hence, companies should increase awareness about small-scale pilot projects to test the efficiency of software modules in specific areas of the overall AML framework.
Anti-money Laundering Software Market: Overview
- The global anti-money laundering software market is expected to expand at a CAGR of ~13% during the forecast period, primarily driven by the increasing demand for online money transactions and growing demand from financial institutes and banks to control unauthorized fund transactions
- The anti-money laundering software market is expected to reach value of US$ 1.9 Bn by the end of 2019 and expand to reach ~US$ 4.9 Bn by 2027. Solution providers are offering anti-money laundering software with advanced technology to improve the performance of the AML software.
- The on-premise deployment model segment is anticipated to account for a notable share as compared to cloud-based segment of the anti-money laundering software market
- North America remains a prominent market for anti-money laundering software globally, and the market in the region is estimated to be valued at US$ 634.7 Mn by the end of 2019. Increasing initiatives by governments of North American countries and presence of major players is a major factor responsible for the dominance of the region.
- In terms of end user, retail banking is expected to dominate the market during the forecast period. Increasing usage of anti-money laundering software by financial institutes and banks to analyze the financial transactions of the commercial sector has resulted in this dominance.
Anti-money Laundering Software Market: Definition
- The anti-money laundering software market report provides analysis of the global anti-money laundering software market for the period 2017 – 2027, wherein 2018 is the base year and 2019 to 2027 is the forecast period. Data for 2017 has been included as historical information.
- In this report, we analyze the growth drivers that enhance the value of the anti-money laundering software market and various opportunities prevailing in the market
- Anti-money laundering software providers are focused on developing innovative and differentiated software solutions to serve specific requirements of end users, which is expected to drive the demand in the upcoming years
North America Anti-money Laundering Software Market Snapshot
- North America is a rapidly expanding market due to increasing mobile banking platforms and e-banking solutions for fund transactions, leading to increasing demand for anti-money laundering software in the region. Banking, financial services and insurance (BFSI) industry in North America is estimated to witness a significantly high rate of adoption of anti-money laundering software during the forecast period. The region is also witnessing a huge shift toward digitization in financial services and transaction processes, which is projected to boost the adoption of anti-money laundering software. These factors are expected to fuel the demand for anti-money laundering software considerably in the near future.
Key Drivers of Anti-money Laundering Software Market
- Rise in online payments increases risk of money laundering activities: Increasing demand for online payment modes in bank transactions, e-Commerce transactions, and individual money transactions creates different illegal routes for money laundering activities. Financial frauds usually occur through authentic payment ecosystems where unknown money transactions are diverted to unrelated merchant or individual accounts through the e-Commerce money transaction platform. Here, merchant service providers unknowingly become the cause of money laundering that expose them to legal penalties. Increasing use of e-Commerce services and easy authorization of online registrations of merchants have made money laundering through online transaction easy for criminals or organizations. This in turn is expected to drive the market.
- Growing demand for financial data mining tools to manage huge financial data: Increasing adoption of online platforms for money or fund transactions from the residential and commercial sector creates a huge financial transaction database. Financial institutes face issues related to data analysis due to continuous growth in financial data. Data mining tools help financial analysts monitor and review legal financial transactions over the e-Commerce or online financial platform. The data mining process assists anti-money laundering software in generating rules and models for financial institutes by analyzing huge datasets, which in turn can generate new initiatives, segmentation, and risk analysis for customer policy revision.
Key Restraints of Anti-money Laundering Software Market
- Increasing complexity and changes in regulations and policies impact performance of AML software: Increasing money laundering activities in international banks, especially in virtual money transactions creates a big threat for all banks and financial institutes. The performance of anti-money laundering software decreases with changing regulations in international financial systems which create issues for existing AML technology protocols. AML software complies with government regulations to control the illegal transactions of virtual e-money. Thus, increasing complexity of regulations remains a huge issue to be dealt with by anti-money laundering software technologies. This factor is expected to hinder the market during the forecast period.
Anti-money Laundering Software Market: Company Profile Snapshot
- ACI Worldwide, Inc.: ACI Worldwide, Inc. is a payment system company that mainly operates across a wide range of industry verticals such as government, healthcare, and retail. The company provides solutions enabled with electronic payment to more than 5,100 companies. The services provided by the company are mostly personalized and focused on the requirements of customers.
- SAS Institute Inc.: SAS Institute Inc. offers business intelligence, analytics, and data management software & services. The company offers solutions such as analytics, customer intelligence, cloud analytics, decision management, data management, supply chain intelligence, in-memory analytics, performance management, fraud and security intelligence, risk management, etc.
- Exiger LLC: Exiger LLC is a software provider offering anti-money laundering (AML) software, intellectual property theft investigations, and solutions for money laundering, corruption, anti-bribery, financial crime, risk and compliance, and forensic accounting to its clients worldwide. It also provides investigation services and litigation support services across the world.
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