Banks are at our doorsteps. Quite literally. The innovations in the FinTech industry have ensured that “Bankers’ hours” are transformed into a “round-the-clock” experience. With new players such as Neo Banks, Challenger Banks, Mobile Wallets, and even Grocery Stores entering the market, customers are lining up at the virtual counter and traditional banks are striving to keep pace. Volatility in the banking sector is not new. However, emerging markets, new FinTech products, changing customer needs, dynamic regulations, and most recently the pandemic has brought unprecedented changes in the banking industry. Customer expectations border towards instant gratification. Getting a loan for many has become as easy as ordering a pizza. While this might be true for the progressive banks, some in the brick and mortar mode are struggling to survive. Mid-sized banks are reinventing themselves with new products while the big guns are rolling out customer experiences to the swipe friendly generation X and Y. Nonbanks with great Fintech solutions are not making it any easier.
With banks rolling out products and services at an accelerated pace, can ISVs afford to stick to the traditional methods of software development in such a dynamic environment?
In a recent study done by Ernst and Young in collaboration with Wharton Business School, researchers predicted four scenarios for banks post 2020: – Business as Usual, Financial Issues, New Markets or Dynamic Change of unprecedented proportions. In all cases, one constant stayed as a solution – Investment in Technology.
In such a do or die situation, technical collaborators act as strategic enablers for banks to revive and rejuvenate their Core Banking Systems. Modernization of Core Banking Systems is not without its challenges. Banks are increasingly looking towards cloud-based SaaS products to create or supplement their CBSs, while others are trying to build applications on top of existing legacy systems. Banks meanwhile are mainly concerned with four priorities with respect to their Core Banking Systems modernization:
Banks are now faced with the scenario where If a product is not rolled out in a few day’s time, the moment is gone and so is the customer. Financial institutions are now faced with the challenge of creating impactful customer experiences across channels in a matter of weeks. Low-code’s intuitive drag and drop visual modeling and workflow functionalities assist developers to create visually stunning applications while spending less time on coding. Professional developers also have the choice to inspect the code to make any further customizations or to build additional business logic into them. Low-code platforms help developers create applications for multiple channels with single source code providing a continuous experience to the customer across channels. ISVs focusing on business logic can speeden up the process by letting low-code bear the weight of visual modelling. Moreover, the agility of the entire process allows business users to collaborate and give real-time feedback eventually churning out Minimum Viable Products in tandem with the market requirements.
Evolving customer needs and a diminishing legacy workforce have forced banks to think in terms of either rebuilding or re-architecting legacy systems into a cloud-based SaaS architecture. Encapsulating the existing systems using Open APIs is another option. Technical Collaborators can use low-code to iron out these challenges involved in the process.
Data models can be either reused or remodeled. Certain low-code platforms have capabilities of reverse engineering from existing data models into newer database models. While this gives programmers control over the application interfaces, it helps in redesigning the database model for new-age applications. Existing business logic can then be integrated with the backend using low-code.
In this case, low-code platforms can be used to build responsive UIs on top of legacy using a REST service. Without touching the core logic, low-code can be leveraged to create integrated and optimal applications with a lower turnaround time and better interfaces whilst still using the resilience of legacy core.
Although expensive, this could be the last resort where refactoring and re-architecting do not work. The alternative would be to go for cloud-native microservices-based applications. A low-code platform capable of creating such applications would provide the benefit of portability, scalability, and addition of new features with low downtime. Alternatively, low-code platforms can be used to tie up these microservices to work in a seamless manner.
The current economic situation has imposed a disparate landscape of regulations across banks globally. Technical innovation and regulatory boards have a symbiotic relationship. A change in regulation demands a change in applications. This would require nimble applications to be created/updated without affecting the customer experience. Posed with this challenge, ISVs can dive into the code and customize existing business logic and keep compliance issues at bay. Also, timely releases of the MVPs with respect to changes in regulations keep both business users and customers satisfied.
This is where the role of professional developers is of prominence vis-a-vis the citizen developer. Good low-code platforms have inbuilt security features that get implemented without programmer intervention. However, professional developers through a scrutiny of the code have the ability to make sure that API endpoint permissions are secure and that security vulnerabilities have not been breached. In addition to this ISVs can offer Banks, legal agreements like security and compliance certifications and service level agreements to fortify their products.
In a study conducted by the Everest Group, it has come to light that over 50% of mid-sized banks are mulling switching over to a cloud-based architecture to power their Core Banking Services. Digital transformation, quicker go-to-market, enhanced customer experience, resilience, compliance, and security remain catalysts fuelling this change. low-code platforms cater to all these and more. A case in point is that of XYZ, a European bank that migrated from an On-Premise CBS to a cloud-based one using Azure DevOps. Using a low-code platform available in the Azure marketplace, the technological collaborators managed around 600 applications in a matter of weeks. The takeaway? Reduced costs by 50%, fast deployment of products , adherence to compliance and regulations, and effortless partnership with business users.
It would be only prudent of ISVs to utilize the ability of low-code platforms to cater to these factors thereby creating “bankable” solutions. To do or not to do should not remain a question!