Technology disruptions have affected many industries worldwide, yet Banking solutions had held their ground for a long time, until now. In recent years, banks had no choice but to jump into the bandwagon and upscale themselves in the realm of technology. According to Gartner, Banking & Investment services had an IT expenditure of about US $ 556 Bn in 2020. Bearing this context in mind, let us explore some of the challenges that are thrust upon the Bank by the ever expanding market expectations & adaptability, and their technical implications.

Challenges faced by Banking & Fin-Tech Solutions

• Competition

FinTechs or the new age digital banks are eating away the market share from the traditional legacy banks. In 2021 Global Fintech market reached a value of more than US$ 135 Bn (source: Expert Market Research). Though traditional banks invest hugely in technology, its (so far) not their core focus & strength and thus, historically resulting in badly implemented and rolled out software systems. In 2016 banking outages were faced by some popular banks, resulting in months of disruption due to a blotched software update, & glitches that caused disruption in banking facilities.

• Regulations

Since 2008, several regulatory frameworks in the line of Basel III, consumer protection acts, regulations around credit risk have been evolving globally. Compliance to these standards is a challenge for every single bank in the world. Technology plays a huge role in analyzing bank’s data to come up with an insightful reporting on regulatory compliance.

• Changing business models

Interest charges are the primary source of income for any bank. Globally, for over a decade the interest rates have been at an ultra-low since the 2008 Global Financial Crisis up till the recent pandemic induced economic slowdown. Therefore, decreasing interest rates all around the world have forced the banks to look at alternative, or rather, multiple sources of income (like fee collection for schools, clubs & societies, commission income from sales of insurance, forex operations); thus, helping them achieve operational efficiency to improve profitability; and these are the new focus points.

• Rising expectations

Millennials & Gen Z prefer to interact with their banks leveraging technology – mobile devices, social media for support requests etc. According to 2019 Morgan Stanley Research, up to 80% of smartphone using Gen Z utilise mobile banking facilities. Old age customers on the other hand, rely on the branch due to their insufficient/ inefficient digital literacy. Hence, hybrid banking models are deployed, which integrates digital experience with traditional bank branches.

• Customer retention

If personalized and meaningful services are not offered, the customer moves away to the latest FinTech immediately. Clever Tap states that 73% of new users churn within 7 days. A single bad experience will affect customer retention by 65%, according to a survey conducted by Applause. Retaining customers can be a tedious task not just for small players, but also for global giants. Banks spend time and money on enriching customer relationships & experience, and reward customer loyalty. For any bank, one-on-one human touch won’t be possible to engage the customers given the size and scale of their customer base. Technology plays a key role in this.

• Data Security

Needless to say, high profile security breaches can demolish the reputation of a bank in no-minute. An infamous breach in a credit rating agency in 2017 not only destroyed the organization’s reputation, but it had to pay at least USD 500 Million as fines to various authorities. Today, there are banking solutions that are built with enhanced authentication, end-to-end encryption, multiple types of verification methodologies for every transaction to prevent data breaches.

• Tech led cultural shift

AI and ML based systems to manage credit risk, customer satisfaction, automated bots to respond back to customer queries 24 X 7 etc. are already part of some of the banks. Days are not far off when each and every bank will be forced to invest on such kind of systems.

• Mobile User Interface

For any bank to sustain in the market today, an extremely user friendly, fully featured, secure and responsive mobile application is a must. Majority of the Gen Zs & Millennials are mobile users who do not hesitate to switch to apps that offer better features. Multiple innovative products like the wallets have emerged since the advent of mobile banking.

• Continuous Innovation

“Businesses must benchmark to survive, but innovate to thrive.” Innovation is a key differentiator that separates the wheat from the chaff. Innovation stems from insights, and insights are discovered through customer interactions and continuous organizational analysis. Leveraging technology in the form of big data, data mining, cloud based infrastructure all came up in the past decade due to the continuous innovation by the banks. This trend will continue to make the banks more agile and scalable.

How do these business challenges translate to technology challenges?

Agility

– For banks to address their challenges, one of the most important traits required is agility, i.e. the ability to roll out technology platforms and changes in double quick time, to beat the competition and to comply with regulations. While having a larger workforce addresses this problem, it costs the banks significantly from an IT perspective.

Accuracy

– With multiple platforms like web, mobile (iOS & Android) around, banks have the challenge to roll out their applications in all platforms for every single change. Some of the complex functionalities break when there are changes done on the same codebase week after week.

Availability

– Making a specific functionality available to the customer in a secure and accessible way without compromising on performance is always a big challenge from technology perspective, especially when complex operations are involved from banking perspective.

How do these technology challenges become testing challenges?

– Validating complex banking functionalities is a difficult and monotonous task – there are more chances to miss things than catching them during the testing phase, especially when functionalities are regressed week after week.

– Many a times, depending on user interface to complete testing in a banking product will only delay things. Underlying business logic can be verified in an automated fashion by orchestrating the APIs in an exactly similar manner as that of the application.

– “Quality of test data determines the quality of testing” – While this phrase is applicable to every domain and industry, this applies more to the banking industry, given the diverse types of products and services a bank deals with.

– Given the multiple platforms in which banking solutions work today, it is very important to ensure that the solution and data are absolute secure. Vulnerability analysis and penetration testing is a must for every banking product even if it is used within the bank.

– Last but not the least, the performance of banking applications that are used in the branch and by the customer, need to be top-notch. A non-performing application impacts the bank’s reputation in matter of days.

Why should you approach Ticking Minds for banking products validation?

– Ticking Minds has worked with multiple modern day FinTechs that leverage the latest state of the art architecture. Our founders have extensive experience in retail, commercial and investment banking. We have worked with multiple peer to peer lending and commercial banking areas.

– Ticking Minds focusses a lot on the test data before focussing on anything else from a testing standpoint. For instance, close to 3 weeks were spent on synthetic test data creation for a commercial lending scenario before starting the functional work

– Ticking Minds has a home grown API orchestrator, that does not rely on the UI, and calls APIs in a pre-defined sequence with well-defined test data set. This helps in achieving the business assurance since the business logic is verified day in and day out.

– Ticking Minds has a lot of experience in mobile as well as web based test automation employing open source solutions like Selenium and Appium. Having mentioned that, we do not attempt to automate anything that does not provide a good return on investment.

– Ticking Minds has worked on more than 100 performance testing projects across banking, travel, hospitality, education, retail and many other industries, cutting across various technology stacks and employing both commercial & open source solutions.

– Ticking Minds is a specialist in validating application security especially around validating OWASP top 10 vulnerabilities. Several global corporations have utilized the services of Ticking Minds to detect the application vulnerabilities before rolling out the application to production