Software

How Low-Code Development Could Help Banks Embrace Digital Transformation

With the banking industry tied to more legacy technology, low-code solutions could bring some much-needed agility to banks’ business processes.

Ernie Smith

Ernie Smith is a former contributor to BizTech, an old-school blogger who specializes in side projects, and a tech history nut who researches vintage operating systems for fun.

The banking sector, like many industries, ultimately has a goal of serving its customers more efficiently and with strong service. But financial institutions have to manage the challenges that naturally face many legacy sectors that have to work around strident regulatory requirements and in-depth security concerns.

Still, some agility and less development complexity would likely go a long way to help the banking industry make the most of potential business opportunities. The broader technology movement toward low-code development offers a lot for banks to embrace, in terms of both behind-the-scenes infrastructure management and front-facing digital initiatives that might have once been prohibited by time and budget constraints.

With that in mind, here’s a breakdown of low-code development’s potential in the banking sector.

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What Is Low-Code Development?

Low-code development is a form of software development that offers an easy-to-use front-end interface that makes it possible to plot a series of commands, often using underlying application programming interfaces (APIs) to connect data among multiple tools, as well as tying into existing infrastructure, whether in the cloud or onsite.

The concept of low-code development, a term coined by Forrester in a 2014 report, is beneficial in many ways. First, it opens the capabilities to larger categories of people, including those without a traditional background in programming. Second, it allows for a faster development process, making it possible to do more in less time.

“The ability to easily build applications won’t make companies devote fewer resources toward the initiative,” says Seth Robinson, CompTIA’s senior director for technology analysis. “They will actually want to devote more resources so that they can leverage all the potential.”

Low-code development can take a lot of forms; for instance, it can be used as a method of application development, but also as a way to manage servers and other pieces of digital infrastructure, extending concepts such as infrastructure as code.

What Are the Best Low-Code Solutions for Banking?

A number of low-code applications and platforms exist for different use cases, offering benefits for several industries, including banking. Some of the most common tools for low-code include:

Power Apps by Microsoft: Because it’s plugged in to Microsoft’s ecosystem of apps, including the Power BI analytics platform, Power Apps has become popular as a tool that supports quick development of back-end business applications. Its ability to integrate with Microsoft Azure is also seen as a benefit.
App Engine by ServiceNow: Originally rooted in IT services but evolving into a more all-purpose low-code tool, App Engine has sparked interest among some highly regulated government agencies.

How Can Low-Code Development Improve Banks’ Digital Offerings?

For the financial industry, low-code could allow a fresh influx of agility in areas that haven’t been quite so easy to serve.

With many banks and their underpinning financial systems still reliant on legacy technology, such as COBOL, a 1950s-era programming language, banks may find themselves unable to move as quickly as they’d like when other industries are well positioned to respond swiftly to changes in the consumer climate.

In a recent blog post, Lucy Brown, business applications industry lead for financial services with Microsoft, notes that financial institutions could find significant opportunity in leaning away from legacy technology where possible.

“On average, financial institutions can spend up to 70 percent of their IT budgets on maintaining and servicing core systems and legacy applications,” Brown writes. “But by allocating resources this way, organizations reduce their time and ability to consider new innovations. At the same time, they risk delivering a poor customer experience with outdated systems.”

She recommends embracing modern interfaces, including on mobile devices, that “seamlessly integrate with any existing business applications, workflows and processes,” which can help legacy infrastructure feel newer.

How Can Low-Code Development Minimize IT Backlogs?

The true benefit of low-code development for banks lies in how much it can do and how quickly it can do it. Given the complexity of most financial institutions, traditional programmers might need years to optimize platforms for modern operations. With 88 percent of IT departments saying workloads have increased, according to a Salesforce study, low-code’s arrival is not a moment too soon.

By expanding its reach to more staff, low-code development allows for faster turnaround, which could allow IT departments to make short work of initiatives that otherwise might not be a priority.

A recent Forbes article noted that banks are applying technology from companies such as Salesforce to transform manual processes that typically take weeks to complete into operations that can be done in just minutes; for example, researching a client before a meeting, which might require data from dozens of legacy systems.

Low-code is also good for managing the occasional curveball, such as the need to change business processes to handle a singular event like the Paycheck Protection Program. According to SiliconANGLE, the critical need for the program, and the speed at which it was launched, required banks to complete in weeks what they might have taken months or years to do normally.

“The only way a company could build such an app so quickly was by leveraging low-code functions — which enable people to create applications through graphical user interfaces instead of traditional hand-coded programming — in the underlying platform,” writer Jason Bloomberg explains.

Businesses should make sure they have security processes in place as they enable broader creation at the productivity level.”

Seth Robinson Vice President of Industry Research, CompTIA

Even in a nonemergency, there is room for added agility. Microsoft’s Brown recommends bringing in both IT and business teams to decide which processes would make the most sense to automate, with emphasis on those that are traditionally manual or paper-based.

“This ensures you understand what pain points and inefficiencies exist within your organization,” she writes. “It will also help ensure any new technology you bring in will work alongside the people who use it day-to-day.”

How Can Low-Code Development Mitigate Risk?

Low-code solutions, while offering many advantages to financial institutions, also bring inherent security risks due to the large number of applications being created.

CompTIA’s Robinson compares the rise of low-code and no-code apps with the use of rogue or shadow IT, in which users bring unvetted outside technology into the system. He notes that this will create new challenges in security and integration.

“While low-code/no-code allows workers with less technical savvy to build new functionality, it does not necessarily address security flaws or how that functionality might be integrated into the broader architecture,” he says. “Businesses should make sure they have security processes in place as they enable broader creation at the productivity level.”

He notes that this would require additional infrastructure and support, in the form of expanded server administration, more robust computer networks and stronger help desks: “The physical IT architecture is the foundation for all technology solutions, and it needs constant maintenance and improvement as companies transform their operations.”

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