While new age financial startups have been at the forefront of digital transformation, many long established banking institutions still grapple with age-old technologies and processes, hampering their ability to compete in the ever-evolving digital age. However, there is hope on the horizon in the form of low-code development—a powerful and promising technology that is considerably transforming the way BFSI institutions operate.
Why is there still a lag in digital adoption?
Challenges such as manual data management and reliance on legacy systems persist in the banking industry, leading to issues like insufficient governance and lack of transparency. Low-code solutions offer a way forward by streamlining processes and reducing dependency on outdated tools.
Many critical processes, ranging from regulatory reporting to customer data management, are still running on end-user computing tools such as excel sheets. To reflect up-to-date data across various internal touch-points, manually cut-pasting data is still in play. And the high reliance on manual workflows for these day-to-day operations has been fostering risks like – insufficient governance and control, lack of transparency, challenges in auditability.
The reason for said challenges include:
- Legacy Systems: Outdated technology infrastructure impedes integration with modern digital solutions.
- Resistance to Change: Fear, lack of understanding, and privacy concerns inhibit employees’ acceptance of new technologies.
- Cost Considerations: Upfront investment and perceived expenses deter organizations from embracing digital transformation.
- Skills Gap: Shortage of employees with digital expertise hampers implementation and innovation efforts.
- Regulatory Compliance: Stringent laws and regulations necessitate careful adherence, slowing down digital initiatives.
- Digital Divide: Disparities in access to technology and education create barriers to digital participation.
- Organizational Culture: Resistance to change and hierarchical structures hinder innovation and agility.
With the above few challenges being laid out, the banking industry continues to remain at the center of innovation. Most recently, with the adoption of low-code based solutions, many banks are able to adapt and transform the way they operate, cut down legacy silos, and adopt innovative digital solutions that allow them to optimize operations and offer greater value to their customers – all while keeping at pace with fast changing regulations and customer norms.
What low-code capabilities appeal to the banking CIOs?
Low-code platforms equip teams with a visual approach to build applications, integrate data sources, and execute workflow automations. A low-code platform helps build products in a visually declarative manner, by abstracting commonly used functionalities as UI components, API connectors, logic blocks. UI components can be dragged and dropped onto a canvas that represents the web or mobile screen and then connect securely to data sources and queries and visually configured business logic and customized per application. This approach to build digital solutions is 10X times faster than traditional approaches.
A forecast by the International Data Corporation (IDC) predicts that global low-code revenue will reach $21.0 billion by 2026, with a compound annual growth rate (CAGR) of 17.8% from 2021 to 2026.
While visual UI designing and ease of integration are the (now) obvious benefits of a low-code platform, conversations with the recent adopters of the technology reveal these capabilities (the real deal-makers, so to speak) that truly delight the banking CIOs:
Self-hosting
Financial institutions are subject to strict regulatory compliance requirements, and compliance failures can have serious consequences for the organization.
The ability of a low-code platform to be self-hosted is instrumental in ensuring compliance and security. Self-hosting grants organizations control over data storage and processing, facilitating adherence to data sovereignty regulations. It also enables implementation of tailored security measures such as encryption, access controls, and network security protocols, essential for safeguarding sensitive information. Through self-hosting, organizations can conduct comprehensive compliance audits, ensuring alignment with regulatory standards.
A leading financial services provider, sought to streamline its operations and improve productivity across various departments. “Incorporating self-hosted low-code platform DronaHQ into our operations has been a game-changer for us. This solution enables our team to focus on our core competencies without the hassle of managing IT infrastructure or worrying about data compliance. It’s empowering our employees to deliver exceptional services while ensuring regulatory compliance and at such great speed,” shares the CTO.
Customizability
Although the market is saturated with ready-made solutions for everyday business operations, each business process is as unique as a snowflake
Low-code solutions enable the creation of highly personalized solutions tailored precisely to the team’s needs. With its modular approach, adapting to change and integrating new features becomes effortless.
“By introducing a low-code solution to build apps, we have experienced rapid transformation in our operations. The ability to customize apps so it fits us to the T, without compromising security have proven the platform’s caliber.” shares IDFC First Bank. Using low-code, IDFC Bank overhauled its HR service delivery like appraisal process from a complex, spreadsheet-based system to a streamlined, mobile-enabled tool within just 2 weeks. Previously, peer evaluations were manually uploaded to SAP systems, but now, employees can assess peers via the app, with instant report generation.
Multiple SSO
Banks typically have distinct user groups with varying access requirements and security considerations. Employees may require access to internal systems and sensitive financial data, while customers may access online banking services, and partners may need access to collaborative platforms or APIs. Low-code players offering support to configure multiple SSO options tailored to each user group address their specific needs and security concerns effectively.
Identity verification and KYC automation platform Equal serves a multitude of clients helping them streamline user verification processes. In a latest story, Equal created a custom admin dashboards for its clients to easily track and manage their respective user KYC verifications. With each client having its own SSO provider, Equal seamlessly integrated multiple single sign-on (SSO) options tailored to our diverse user groups.
Ease of integration with emerging technologies
Low-code platforms enable seamless integration with emerging technologies such as IoT (Internet of Things), AI (Artificial Intelligence), and ML (Machine Learning). Banks can leverage these technologies to enhance customer experiences, optimize operations, and gain valuable insights for informed decision-making, staying ahead in the rapidly evolving financial landscape.
Analyst firm Forrester predicts that citizen development and AI-Infused low-code platforms could drive the low-code market to $50 billion by 2028 (33% annual growth).
Think real-time IoT enabled asset tracking for ATM and POS devices to proactively resolve issues and reduce downtime. Traditional approach to such integration, while achievable, can only wish to deliver the speed that low-code platforms are able to support.
Ease of update
Low-code platforms empower BFSI institutions to quickly implement regulatory updates into their applications without extensive coding efforts. Imagine launching innovative new products or personalized services within weeks, not months, giving your bank a significant edge. This could also entail incorporating new steps into an onboarding process, such as KYC verifications.
Top Categories of Apps Built with Low-Code for BFSI
Category 1: Internal Tools and Operational Apps:
These are essential for streamlining internal operations and improving efficiency. Internal tools could include comprehensive CRUD (Create, Read, Update, Delete) apps, customer support tools, HR management systems, and project management tools tailored to the specific needs of banking and financial institutions.
Category 2: Data Collection Forms:
Capturing and managing customer, employee, and stakeholder information efficiently is crucial for BFSI institutions. Low-code platforms enable the development of data collection forms for customer onboarding, account opening, loan applications, feedback collection, and compliance reporting, facilitating seamless data capture and automation of subsequent processes.
Category 3: Automation Solutions:
Automation is key to optimizing processes and reducing manual intervention in BFSI operations. Low-code platforms empower banks and financial institutions to automate routine tasks, workflows, and business processes such as account reconciliation, loan processing, fraud detection, compliance monitoring, and regulatory reporting, enhancing operational efficiency and compliance.
Category 4: Customer Portals:
Providing clients with a unified and personalized experience is essential for BFSI institutions to build trust and loyalty. Low-code platforms enable the development of customer portals that offer a single interface for accessing account information, managing transactions, tracking investments, and accessing support services, enhancing customer engagement and satisfaction.
Category 5: Embedded Apps:
Integrating low-code apps seamlessly into existing websites, online portals, and applications can enhance their functionality and user experience. Embedded apps could include features such as online forms for account opening, loan applications, customer feedback, and support requests, as well as interactive tools for financial planning, budgeting, and investment analysis, enriching the digital experience for users while ensuring security and compliance.
ROI with low-code, and when it makes sense
One significant advantage of low-code development is its ability to optimize costs while delivering efficient solutions. By accelerating the development process and reducing the time to market, low-code platforms enable BFSI institutions to achieve a faster return on their investment.
GPJ Gupta, Head of Business Solution at Kotak Bank, highlights the importance of carefully selecting the applications best suited for low-code development. In their experience, branch-level applications and operational workflows were ideal candidates for low-code solutions, resulting in significant reductions in development time and costs.
Low-code tools have consistently proven how it can remarkably decrease App development, from three years to just twelve months. This accelerated development cycle aligns with the rapidly changing landscape of the BFSI industry, allowing institutions to adapt quickly to evolving market demands and regulatory requirements. With a faster time to market (GTM), BFSI companies can capitalize on emerging opportunities and stay ahead of the competition.
In summary, the strategic adoption of low-code development not only optimizes costs and accelerates application development but also enables BFSI institutions to deliver innovative solutions efficiently. By identifying the right applications for low-code development and leveraging its benefits effectively, organizations can unlock substantial ROI and maintain a competitive edge in today’s dynamic financial landscape.
Why is FinancesOnline free?
Leave a comment!