Part
01
of one
Part
01
What is the market size and growth rate for credit underwriting software
Hello! Thanks for your question about the market size and growth rate for credit underwriting software. The short version is that the 2017 global market size for credit underwriting software is an estimated $1.56 billion. A compounded annual growth rate (CAGR) of more than 14% is projected to add $.77 billion to the industry over the next three years, for a total global market size of $2.33 billion by 2021. The Americas are leading the industry, and American growth is expected to surpass the global market size to top $2.42 billion in the same time frame.
The costs associated with acquiring and utilizing credit underwriting software are difficult to discern, given the lack of publicly available information on pricing from the top players in the industry. Some trends affecting costs were observed. For example, while the financial sector may anticipate an 11% decrease in the number of credit underwriters from 2014 to 2024, the industry trend towards utilizing higher-paid data scientists and software engineers in place of underwriters is expected to increase the overall cost of underwriting. Furthermore, emerging trends in developing more nuanced software, smarter algorithms, and more secure platforms will invariably increase the cost of developing underwriting software.
The top 10 players in the credit underwriting software market by market size include: FIS Global, Fiserv, Microsoft, SAP, Oracle, SS&C Technologies, Digital Insight, Salesforce, Temenos Group AG, and ACI Worldwide, Inc.
Unfortunately, a discussion of credit underwriting software in each segment of the consumer credit market is beyond the scope of this request. However, some information about trends in market size by segment is included, as well as some points of interest for further research.
MARKET SIZE
In 2015, the total global market size of the banking and financial sectors applications market was estimated at $23.8 billion, with a CAGR of 0.6%. The market size is estimated to top $24.5 billion in 2021.
In 2017, the market size of the global credit underwriting software sector is $1.56 billion, with a CAGR of 14% in this sector of the industry. Working backwards from the projected market size of $24.5 billion in 2021, we can estimate the total market value of the banking and financial sectors applications market to be $24.16 billion in 2017. Thus, the $1.56 billion global credit underwriting software represents roughly 6.46% of the overall banking and financial sectors application market.
A total market size of $2.33 billion is projected by 2021, an increase of $.77 billion over a four-year period. It is noted that the Americas lead the industry in market growth, with projected revenues of $.87 billion from 2017 to 2021. The differences between the American and global markets may be interesting topics for further exploration.
COST OF UNDERWRITING
While the tremendous market size of the credit underwriting software industry gives an idea of the overall value of this field, companies typically do not publicly disclose the costs associated with purchasing and utilizing their platforms. I reviewed the websites of the top 10 players in the field, but I was unable to estimate the cost of using any specific platform. However, I did uncover two issues pertaining to the costs of credit underwriting software that may be of interest.
The underwriting industry faces unique employment trends that will impact costs. Underwriting has been identified as a field in danger of elimination through automation by credit underwriting software. The banking and financial sector can expect an 11% decrease in the number of underwriters from 2014 to 2024. While reducing the number of employees might initially suggest a reduction in costs for the industry, these underwriters are likely to be replaced with data scientists and software engineers, in order for companies to develop and maintain in-house underwriting software. According to the U.S. Bureau of Labor Statistics, a typical underwriter earned a salary of $63,650 in 2016. In comparison, a software engineer earned $102,280, while a data scientist was paid $111,840. This trend suggests companies may expect the employment costs associated with underwriting to nearly double.
Additionally, to remain relevant in a rapidly evolving industry, companies will be required to refine, expand, and fine-tune underwriting software. Technological advancements may include improving financial and regulatory compliance, identifying and reducing credit risk, incorporating machine learning, improving fraud detection, and developing smarter algorithms to to identify new revenue opportunities. Although machine learning and artificial intelligence (AI) in credit underwriting software is expected to generate $34 billion to $43 billion in savings and new revenue sources, re-investment into perpetually improving software will be necessary for a company to remain relevant.
UNDERWRITING SEGMENTS
After searching exhaustively, statistics concerning the use of credit underwriting software by segment could not be located. As previously discussed, software companies do not publicly disclose the specifics of their platforms, nor the costs. Additionally, as a myriad of software platforms catering to a variety of underwriting needs are available, evaluating the use of individual platforms would be beyond the scope of this request.
However, I was able to gather ample research concerning the most popular types of credit underwriting, such as credit card, personal loans, mortgage, and auto loan lending. If you are interested in the performance of a particular high-performing consumer credit market, the use of credit underwriting software in that segment could be explored.
For example, as personal loan balances topped $100 billion in the fourth quarter of 2016, with 15.82 million consumers having a loan balance, it is likely that interesting trends have been documented in this segment pertaining to credit underwriting software. Similarly, the average mortgage balance at the close of 2016 was $194,415, with originations expanding across all risk tiers in the United States. A focus on a more tailored consumer credit market, versus all segments of the industry, would likely yield meaningful information about the use of credit underwriting software in that specific field.
TOP PLAYERS
1. FIS Global (15%)
2. Fiserv (8%)
3. Microsoft (6%)
4. SAP (5%)
5. Oracle (4%)
6. SS&C Technologies (4%)
7. Digital Insight (4%)
8. Salesforce (3%)
9. Temenos Group AG (2%)
10. ACI Worldwide, Inc. (2%)
As the needs of the field are rapidly changing and constantly evolving, this industry is particularly welcoming to companies with any competitive advantage. For example, ZestFinance is mining for non-traditional data outside the credit report that predicts a borrower's credit risk, while SaaS hopes to improve its software's ability to ensure compliance with financial regulations. Data security and fraud prevention have become significant concerns, with many large companies partnering with start-ups specializing in these areas. Smaller but highly-rated companies in the field include Validis, Decision Lender, defi SOLUTIONS, File Invite, Turnkey Lender, HES Lending Platform, creditonline, and CLOUDCREDIT.
CONCLUSION
To wrap it up, in 2015, the total market value of the banking and financial services applications market was estimated at $23.8 billion, and expected to increase by 2021 to $24.6 billion. The 2017 global market size for the credit underwriting software industry is $1.56 billion. By 2021, a CAGR of 14% is expected to propel the market value to $2.33 billion, an increase in revenues of $.77 billion. Industry-leading American companies are expected to see revenue growth of $.87 billion over the next four years.
The top 10 players in the credit underwriting software industry by market size are: FIS Global (15%), Fiserv (8%), Microsoft (6%), SAP (5%), Oracle (4%), SS&C Technologies (4%), Digital Insight (4%), Salesforce (3%), Temenos Group AG (2%), and ACI Worldwide, Inc. (2%). While these players, as well as most other companies servicing the industry, do not publicly disclose the costs of their software platforms, an interesting trend affecting the costs of underwriting include the transition from traditional underwriters to data scientists and software engineers. Furthermore, the rapidly evolving nature of the field requires the reinvestment of cost savings from automating underwriting processes into the development of more effective and desirable software features, such as fraud prevention and machine learning.
As there is a multitude of software platforms available for each segment of the consumer credit industry, further implications of this research may include exploration of credit underwriting software in a specific segment of the industry, such as mortgage lending or auto loans.
Thank you for using Wonder, and please let us know if we can assist with any additional research needs!