Banks have been dabbling in digital transformation for years now. Today, many banks can run powerful headlines, such as elimination of X number of documents from the customer onboarding process, uptake of digital channel for Y percentage of transactions, or migration to cloud and adoption of agile methodologies.
The question remains: Is this scalable?
To create real impact at an enterprise level, banks can benefit from a platform-centric approach to deliver sustained innovation. Low-code platforms offer technology that comes prepackaged with microservices-based architecture and cloud-native functionalities to help collaborate with fintech players to deliver advanced consumer value propositions.
Just as platformification revolutionized open banking, a platform-based approach is becoming critical for banking software development. The traditional approach of vendor solution deployment and hand-coding for integration and gaps will not scale. This can be attributed to a lack of quality talent pool at manageable price points, the rapid pace of new development and the magnitude of ongoing change.
The early, albeit small-scale, success of no-code/low-code platforms within the financial industry proves the value that banks can derive from these platforms. Today, there are modern low-code platforms mature enough to become the backbone of complex IT needs within a bank. They bring enterprise-grade functionalities to rapidly roll out secure, scalable apps and pixel-perfect experiences for the end user.
A strategic approach built around low-code can not only help in faster app development, but can also build an optimized IT landscape that can evolve with minimal technical debt. Two paradigm shifts can accelerate the modern banking journey:
Components-based approach: The current IT landscape is mired with duplicate features and functionalities across hundreds of applications. This results in significant overhead in maintenance and a speed breaker when trying to make even simple enhancements applicable across the portfolio. Adopting a composable application approach around a rationalized set of APIs can help minimize redundancies, reduce development and maintenance costs, and increase the speed of change.
Embedded banking: Consumer expectations from banks continue to soar, and personalized banking is the need of the hour. That’s what the new-age, banking-as-a-service providers get right. Banks may be laggards in the retail segment, but they are certainly well-positioned to deliver retail-like experiences to business and corporate banking customers.
Low-code can help banks take a composable approach to create a library of ready-to-use components built around internal and external APIs; set up processes to roll out new consumer journeys and enhance existing ones in release cycles within weeks; and extend platform capabilities along with the component library to external players and customers.
A low-code approach will work if the organization takes a strategic route modeled around the platform, rather than trying to retrofit a low-code tool to their current way of working.
Over the last few years, most banks have adopted modern tools for different aspects of software development and delivery: requirement management, test automation, CI/CD, cloud hosting, etc. These tools, coupled with the existing technology platforms, form an integrated backbone of the IT landscape. Any new engineering tool has to “gel” with these existing toolsets, even if its capabilities are on par with them. After all, the appetite to rip and replace – both risk-wise and ROI-wise – is always low. Hence the need for an “open” low-code platform that integrates easily with existing tool sets with no disruption to the business.
Financial institutions are quickly realizing that low-code can be leveraged for a lot more than citizen developers building good-looking apps at speed. There is a definite shift in the way low-code is being consumed in banking, as we see more banks lean toward developer-centric platforms that enable serious and complex banking applications and platforms. This is driven by internal needs to accelerate innovation, as well as external stimuli – i.e., componentization of vendor applications and the need for collaboration with new fintech players.
The way I see it, that is the next play for low-code in banking.
Jeannette Kescenovitz, who leads development of banking-as-a-service at Finastra, joins us on the BAI Banking Strategies podcast to share her views on how BaaS might grow its presence at U.S. banks and credit unions this year.
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