2021 was the second year we operated within the context of the global pandemic environment. While 2020 was all about a rapid response and adjustment to the dramatic changes in lifestyle and work practices, 2021 was characterized by a new normal and a very gradual return to normality. By the end of the year, certain parts of the world were still under severely restrictive Covid measures while others had achieved a return to near normality.
At Temenos we returned to growth from the first quarter of 2021 and sustained this throughout the year. Growth dynamics across regions were quite uneven, with a very successful year for our US business while our European business lagged the rest of the world. We operated with hybrid models of work from home and office presence, but our banking clients started returning to their offices from Q4 onwards. Overall, Temenos had its fastest ever growth year with bookings, our combined measure of business performance across our SaaS and traditional on-premise business, growing by 36%. We are proud of the Temenos team that achieved this in what were difficult circumstances for a second year in a row. As we exited 2021 we reported that we are now observing pre-Covid demand dynamics in our market and the return to business predictability and normality.
2021 was the first full year of fast and sustained growth in the Softwareas-a-Service model for our market. The cost of running a bank on SaaS is a fraction of the cost of running legacy on-premise software and so we expect SaaS adoption will inevitably grow quickly. With cloud achieving greater adoption more banks and fintech participants made decisions to proceed with cloud deployments achieving faster time to value for their projects and immense scale in significantly less time than traditional models take. We expect to continue to see a rapid growth in our SaaS business. Our technology and functional product superiority serve us perfectly to establish ourselves as the clear leader in this market as well as the traditional on-premise market. I would like to reconfirm that within six years of launching our SaaS business it is achieving an equivalent size that took two decades for our traditional on-premise business to achieve.
Implementation and adoption of on-premise software also recovered during 2021 and we expect it to continue growing based on the low penetration of third party software within banks.
The growth in our total market for our products is accelerating and is now at 10% with growth coming from all aspects of the business, digital as well as core, wealth, the funds and the payments business. The acceleration is clearly driven by the growth in the cloud and SaaS element of the market which is growing in excess of 28% per annum. These growth dynamics are ideal for Temenos to accelerate growth in future years and in fact Temenos is in an excellent position to service both models. We build and support a single product, a single code set that we run for our SaaS clients and which our on-premise clients run for themselves either using traditional technology stacks or cloud deployments. This unparalleled architectural advantage is what propels us to create a sustainable, profitable and growing proposition for the years to come. Our size gives us the opportunity to be able to afford the investments required to be successful in a fast changing and demanding market while our state of the art modern technology, with more than 28 years of business capability built in our model banks, is the cornerstone of our winning market presence and continuing market share gains.
2021 was the first of probably three years that will see Temenos transition its business to a recurring revenue model that public market shareholders appreciate as advantageous. The acceleration of SaaS together with the shift from term to a subscription license model that we have recently announced to be implemented from 2022 for our traditional on-premise business will result in greater value to our customers and a much more predictable and faster growing revenue line for the long term. We believe this far outweighs the short-term impact of lower growth in our profitability for the next year or so. We are aware that while Temenos has delivered superior shareholder returns over the long term, the last two years have been characterized by lower returns than our peers and markets. At Temenos we are committed to the continued delivery of superior shareholder returns and we hope that the new business dynamics will quickly start to reflect value to our shareholders.
Values and a sense of purpose
During 2021 Temenos embarked on a long journey to fundamentally incorporate Environmental, Social and Governance responsibilities in its business value chain. Temenos was recognized by a number of independent third parties as leading the software industry in our ESG credentials with notable recognitions including the Dow Jones Sustainability Index, FTSE4Good, MSCI AA rated and the Bloomberg Gender Equality Index. We remain committed to being active participants in this conversation, have a realistic sense of purpose in this respect and deliver on a robust ESG agenda that is consistent with business value generation. The fundamental trend in our business towards SaaS and cloud adoption results in a significant shift to greener models and for this reason we are passionate to see this trend established and succeed. We are aware as business leaders that collectively ignoring the business value side of the equation at the expense of green credentials will compromise the success of an orderly transition to a better world.
Underpinning all of these efforts are our people. In Temenos we always had a unique set of values that served us well and projected us to be the leader in our market in our 28-year history. This same set of values, which we call Temenosity, is what allowed us to navigate a very complex 2020 pandemic year and brought us back to growth and success in 2021. Temenosity will ensure we continue to gain market share and deliver successful projects to our clients. Our sense of values is far more important today than at other times given that technology professionals today have a much broader array of career options than before and their skills are highly sought after. While we always need to strive to be competitive in our compensation and employee welfare practices, Temenosity ensures we have the capacity to retain our key people and grow our skill base successfully.
It took us more than 28 years to build Temenos as we know it today and we have done so with a strong sense of purpose, guided by our Temenos culture and values. We believe that this is our true competitive advantage. Our business is about building trust and strong relationships with all our stakeholders, our clients, our partners, our shareholders and between us Temenosians. Responsibility is in our culture. Our passion for innovation and for seeing things differently will ensure that we continue to develop winning products for our clients. Our determination, drive for excellence, energy, enthusiasm, resolve, integrity, commitment, people focus and winning attitude will ensure we remain the leading banking software company and overcome any challenges that may lie ahead of us, like we have done in the past. This is of paramount importance during years characterized by significant change.
As we write these words, the world is going through yet another dramatic chapter with war and aggression returning to Europe. We have expressed our solidarity with the Ukrainian people who are suffering the consequences of Russia’s military aggression, and are proactively supporting people in need in Ukraine by matching employee donations.