- Infosource develops the regional forecasts for the Capture & IDP market based on actual and historic end customer investments into traditional Capture Solutions as well as Capture-related offers from RPA vendors and native AI solutions.
- Globally the Finance Segment (including Banking and Financial Services as well as Insurance) is by far the largest sector. While this sector started earlier to invest in Capture & Imaging solutions than other sectors, we expect it to further expand its digital transformation efforts.
- The Public Sector, which consists of Federal, State and Local Government agencies (incl. Grade Schools) combined, is the second largest vertical in the global Capture and IDP market. Investments will continue to grow in investments in the Public sector as e-Government efforts resume and governments close gaps in digitalisation in particular in the State and Local Government Sector.
- The Healthcare Segment is the third largest vertical. Investments in primary data use cases that provide direct benefits for the patient experience will gradually increase in the next few years.
- The Manufacturing Industry is the fourth largest sector based on global end customer investments. Demand will continue to increase in parallel with increasing automation in operations of the sector.
- The demand for Outsourced Capture & IDP Services will over time be driven by the continued decline of analogue inputs, which make it difficult for organisations to maintain in-house scanning operations.
- Telecoms & Utilities/Energy will present a key growth opportunity; however, the Utilities and Energy sector is also characterised by the largest volatility in the near future.
- Logistics & Transportation will grow over- proportionately in the next five years.
VERTICAL MARKET FRAMEWORK
Capture and Intelligent Document Processing (IDP) Software includes solutions and services used to process business inputs which involve unstructured and semi-structured documents and other input types. These Software Solutions understand and extract meaningful, accurate, and usable information. They acquire, classify, and convert unstructured and semi-structured information into enhanced usable data for use in business transactions, analytics, records management, discovery, and compliance applications.
All business inputs are interpreted to understand the content, and where and why it is needed. Data is extracted, validated, and augmented to create the required information for a business process related to an Accounting Workflow or Case Management type application, to comply with Records Management requirements or fulfill analytics or discovery needs.
Our vertical market sizing and analysis covers horizontal use cases e.g., accounting, HR management as well as vertical specific use cases, e.g., bank account opening, mortgage processing and insurance claims processing.
CURRENT VERTICAL MARKET BREAKDOWN
Globally the Finance Segment (including BFSI and Insurance) is by far the largest sector with over a third of the market. The larger part of the demand in the Finance Segment originates from Banks and Financial Service Providers. The Public Sector, which consists of Federal, State and Local Government (incl. Grade Schools), is the second most important vertical. Investments in the Healthcare Segment were just slightly smaller compared to the public sector. The Manufacturing Segment took the #4 position related to demand in 2021.
Further verticals that present relevant opportunities for Capture & IDP Solutions are included in the visual below.
In the next five years the Finance Sector (Banking and Insurance) and the Public Sector will continue to represent the largest potential in the Capture & IDP Software market, followed by the Healthcare and Manufacturing Sector. Infosource predicts that almost half of the market demand in 2026 will come from these verticals.
We expect demand in the Logistics & Transportation industry and the Energy Sector to grow over-proportionately in the next five years.
Opportunities in the Finance Sector
The Banking and Financial Services sector continues to be the largest vertical in the Global Capture & IDP market. It has a long-standing history, as this vertical was the early adopter of Document Imaging technologies. It has also driven the early deployment of RPA solutions and has been a core target market of Capture-related RPA solutions.
Traditional Capture use cases are often related to business applications related to “Onboarding”. The demand for Capture Solutions in the Banking Industry has also been driven by regulatory requirements.
Demand for Capture & IDP Solutions in the Banking and Financial Services sector has been fairly resilient during the pandemic. In 2022, banks saw a strong revenue growth globally, coupled with their highest profitability in over a decade. This allows them to invest in capabilities that position them for future growth and competitive strength. We expect continued strong demand for Capture and IDP solutions from the broader Banking Sector.
The Insurance segment includes Capture & IDP investments by Property and Casualty, Life and Health Insurance Carriers. Major traditional Capture use cases in the Insurance sector are underwriting and claims processing
While the insurance sector has been one of the strong investors in digitisation and automation solutions, it is still in an earlier stage of maturity related to the ideal end-to-end automation of transactions.
The investment in Capture Solutions in the Insurance Sector continued to be strong throughout the pandemic. Infosource forecasts a continued strong demand for Capture & IDP Solutions in the Insurance Sector through 2026 driven by the need to increase efficiency and improve CX, supported by a stronger use of analytics to customise and personalise offers, as well as mitigate risks.
The Public Sector includes sales to the Central (aka Federal) Government and sales to State and Local Government agencies, including Grade Schools. The Government also takes a dual role in the digital transformation of a nation. It is a user of Capture & IDP Solutions for the digitalisation and automation of their own services. But it also often acts as a benchmark for the private sector or invests into broader digitalisation efforts.
Key Capture use cases include citizen services, often related to applications (e.g., for ID, permits, grants, support services etc.). Capture use cases also include backfile conversion projects for existing archives and records centers.
Overall, the Public Sector lags the Private Sector with regard to digitalisation. The pandemic brought many government offices to their limits and surfaced the fact that they were neither prepared to have their staff work from home and serve citizens remotely nor were they in a position to administer pandemic related relief efforts at short notice.
We expect a growing demand for digitalisation and automation in the Public Sector in the forecast period and beyond. Demand in the Federal / Central Governments around the world is shifting to growth again in 2022. In the State and Local Government, we expect strong investments in Capture & IDP solutions in the next five years.
Infosource concentrates its analysis of the Healthcare Sector on Healthcare providers; Healthcare payers are included in the Insurance vertical.
The Healthcare Segment is the third largest Capture & IDP market based on global end customer investments. It has been slower than other verticals to embrace digitisation and automation, partly because of concerns related to the sensitive patient data involved.
Capture and IDP use cases include patient onboarding and capturing patient data for Electronic Records.
The COVID-19 pandemic had a significant impact on the health sector, which forced healthcare providers to focus investments on immediate priorities and caused a delay in Capture & IDP investments. The pandemic also accelerated the adoption of Telehealth, improving adoption rates of Telemedicine and increasing the offers for remote healthcare.
It will take time to overcome these respective hurdles. We expect accelerating demand in use cases related to the use of patient data and the automation of administrative tasks – further accelerated by staff shortage.
Organisations in the Manufacturing Sector are focused on improving efficiencies as part of the manufacturing process related to order management and fulfillment.
Traditional Capture as well as RPA use cases are largely related to the automation of accounting functions with Invoice Processing playing a key role.
The recovery of industrial production was driven by pent-up demand but tempered by supply chain issues. We expect continued challenges in the Manufacturing Sector caused by supply chain issues, inflation and in particular cost pressure driven by increasing energy prices. The demand for Capture & IDP solutions follows the trend of increased industrial productivity but is intensified by the increasing demand for automation in the sector.
Managed Service Providers and Outsourcers
The scope of this segment is the outsourcing of business processes or their elements that involve the Capture of unstructured inputs.
Capture use cases include backfile conversion for existing records as organisations transition to digital processes. The growing portion of use cases involve Advanced Capture Solutions used in Case Management and Accounting processes.
The pandemic accelerated the shift from traditional scan bureaus to outsourcers who offer more complete end-to-end process outsourcing. There has been a growing number of mergers and acquisitions in the sector where traditional scan bureaus have been absorbed by outsourcers with broader service portfolios. We expect this to accelerate over the next few years.
We expect the demand for IDP outsourcing to increase as businesses continue to streamline their organisations by outsourcing their non-core processes, paper volumes decline, and analogue and digital processes have not been sufficiently integrated.
Telecommunication & Utilities
For this analysis we group Telecommunication, Utilities and the Energy sectors together; Telecommunications is the largest vertical of the three.
The major Capture use case is customer onboarding, management and offboarding.
The Telecommunication vertical is facing challenges related to increasing costs and investments in emerging technologies like 5G and growing regulatory requirements. The vertical is considered to be below average in its Digital Transformation effort.
For the combined sector we forecast increasing demand for services and growing competition in the three verticals.
Logistics & Transportation
Infosource follows the development of both industries closely in light of the different market dynamics that drive the demand in the respective markets.
Classic Capture applications in both sectors are purchase order initiation, order handling and supplier onboarding and management as well as invoice processing.
The pandemic severely impacted the Logistics & Transportation industry and is expected to drive structural changes going forward. The increasing demand and competition in the Logistics sector will drive increased pressure on productivity and efficiency.
The Transportation industry on the other hand experienced a material negative impact during the pandemic. We expect the demand for Capture & IDP solutions to recover as budgets for automation get re-established.
Infosource Capture Software Division
Infosource is the leading analyst firm for Intelligent Capture and IDP Software market analysis and consulting with more than 20 years of experience in this field.
This blog post is an extract of the 2021–22 Global Capture & IDP Software Vertical Market Report, one of the elements of the Infosource Capture Software analyst services. It provides an in-depth assessment of the Vertical Market size, forecast, use cases and industry dynamics by vertical.
Please contact Petra Beck at [email protected] or +49-1704567908 to discuss how the Infosource Capture & IDP Services can help you grow your business.