Established financial institutions face rising competition from digital-only alternatives, making clear the case for using low code to enable rapid innovation.
The steps involved in almost any type of financial transaction are largely the same across the board. This makes the routine ways we interact with financial institutions prime candidates for app-based account management and automated workflows. It’s also why neobanks and other digital-only financial services have become enormously popular in recent years.
Despite this, the actual user experience that clients have when working with financial services varies dramatically. Sometimes, these experiences are unnecessarily lengthy or complicated, particularly when it comes to the application and enforcement of security controls. More often than not, this is down to the fact that established financial institutions often heavily reliant on legacy architecture, which is harder to integrate with today’s software solutions. Financial startups, on the other hand, face different challenges, such as limited resources for developing modern app-based services.
Developing a bespoke financial services application from scratch using the traditional method is time-consuming, expensive, and subject to numerous testing and refinement cycles. Low-code solutions can help reduce that technical debt by facilitating fast and agile development, applying visualized and fully automated workflows, and continuous testing and feedback.
Given that financial workflows, such as transferring funds and opening accounts, are so similar within their respective domains, low code is particularly suitable for driving innovation in the sector. By providing the underlying framework, including business logic represented as drag-and-drop visual components, low code makes it easy to develop branded financial services applications in minimal time.
This is also why the banking, financial services, and insurance (BFSI) sector now accounts for almost a third of the entire low-code market. However, given the highly regulated nature of the sector, and the fact that regulatory regimes vary significantly between jurisdictions, there are still significant barriers to its adoption.
Digital sovereignty, which is especially important in the financial services space is, after all, far harder to achieve when relying entirely on closed-source ecosystems – which most low-code platforms are. However, there are exceptions, like Corteza, which gives businesses complete freedom over how and where they host and manage their data. This makes the combination of open source licensing and low-code development a natural fit for driving innovation in the finance sector.
How are financial institutions using low code?
Financial institutions, especially startups and other small businesses with limited resources, are increasingly turning to low code to close the gap between professional developers and business users. Low code is the ideal solution for combining skills and experience from across a wide range of business and technology domains. Indeed, the financial services environment is one where easy access to information, along with the abilities to automate routine workflows and analyze data at scale, is essential.
Here are some of the ways the financial services sector is using low code:
Traditionally, financial auditors relied on spreadsheets to store, analyze, and perform tests on data. However, spreadsheets become highly impractical at scale, leading to massively increased workloads and a higher risk of human error. Low code is well-suited to automating financial audits, along with a wide range of other routine processes, such as loan approvals and know-your-customer (KYC) checks.
All financial institutions, regardless of their size, need the same degrees of security and compliance as Fortune 500 companies. This includes bank-grade identity verification services, which must be applied across all systems handling sensitive data. Low-code eliminates much of the legwork involved with integrating vital services like these, thus helping reduce the chances of fraud and malpractice, all while ensuring compliance in one of the most regulated industries of all.
Innovations such as AI-powered chatbots and other automated customer service solutions are increasingly essential for helping financial institutions improve the quality of their services and scale with demand. By facilitating quick and easy development of both customer-facing apps and internal solutions like customer relationship management (CRM), low code helps streamline the delivery of customer-driven processes, enhance relationships, and increase profitability.
Traditionally, financial institutions have relied on monolithic applications existing in a static network. The problem with these solutions is that are notoriously difficult to adapt to constantly changing customer needs. A microservices architecture, by contrast, makes it easier to add new pieces of functionality. A low-code solution facilitates the rapid development of loosely coupled, modular services, such as login and identity verification, account balance reporting, and the transfer of funds.
Every modern financial services company needs web-based client portals that allow customers to carry out routine banking operations and manage their accounts on any mobile or desktop device. A robust client portal provides a branded and customized user experience. Low-code solutions make it possible for customer experience teams to collaborate closely with professional developers to create modern and frictionless customer experiences that can be easily adapted to evolving demands.
Empowering better governance and security
Security and governance are important in every industry, but financial firms operate in one of the most regulated spaces. This also means that reliance on closed-source ecosystems is far from ideal in the financial sector, where firms can end up becoming beholden to a particular vendor. Financial services are built on trust, which means customers must have full control over their data. Building and preserving that trust requires interoperability of the sort that an open-source, low-code software stack can provide.
While low code shouldn’t be considered a complete replacement for all software development, it can play a central role in reducing operational risk across many business operations, such as fraud prevention and compliance auditing. By reducing technical debt and limiting sprawl, low code makes it easier to configure and enforce security and governance policies, while an open-source development environment eliminates the single points of failure that come with relying on a specific third-party vendor. Thanks to open-source and low-code, you can connect any data source, standardize business processes and deliver adaptable and customizable customer experiences driven by continuous improvement.
Planet Crust is the principle creator behind the Corteza open-source low-code development platform. We provide training, support, hosting, and consulting services to financial institutions seeking to accelerate digital transformation and keep up with the rapidly evolving market. Try Corteza on-premises or in the cloud today.