The rapidly increasing pace of change and need for code in many industries, including banking, has driven major growth in two alternatives to traditional software development: “low-code” and “no-code,” according to Steve Cocheo, executive editor at The Financial Brand.
Low-code and no-code software provides users with the basic code elements, enabling financial services firms to do much or all customization in-house, so changes can be made more quickly and economically than if a tech vendor was involved in any tweaks.
While information technology still has oversight of the technology, the availability of low-code and no-code frees the technicians for more complex tasks because marketing or other departments can do most or all of the development of an app or program.
The use of low-code and no-code is still in its early days in financial services. Below are three of the areas where they are commonly used today:
1. Reducing Risk
IT budgets and capacity have not grown at the same rate as the application needs of operations, but low-code platforms provide the ability to address immediate business needs without requiring significant IT support, said Jason Noran, managing principal at Capco.
However, most financial services organizations have built end-user computing applications, such as Excel spreadsheets, that enable flexibility for the business, but might lack proper governance, data lineage or security, potentially causing risk for customers, who could be penalized for the errors caused by the applications.
Building these applications on a centralized, low-code platform reduces those risks in a quick, cost-effective manner, according to Noran. “As with any new technology, however, organizations must be careful not to see low-code platforms as a hammer and every problem as a nail.”
However, requirements driven by regulatory concerns have less variance across organizations, and there is already an abundance of software solutions leveraging machine learning and artificial intelligence that solve these problems effectively, he said.
Low-code and no-code are also helpful in fraud and risk management due to evolving risk patterns, added Samson Aligba, founder and chief solutions architect of Deposits Inc.
“With low-code/no-code, anti-fraud policies can be modified quickly with recent learnings and regulatory compliance. A hybrid of rules bases and ML inference engines behind a no-code interface that allows compliance teams to predefine and manually adjudicate risky transactions will significantly increase customer confidence in financial services and improve customer experience,” he added.
Low-code platforms offer a wide field of new opportunities for financial services organizations to unlock innovation and empower non-IT personnel to meet their own IT needs. Still, these tools should be used selectively and within a governance framework that prevents the creation of new shadow IT and unnecessary software spending, Noran advised.
Related Article: How Low-Code/No-Code Are Changing CX Design
2. Opening Accounts
“There’s no question banks are increasingly seeing the value in working with, and even investing in, low-code/no-code development platforms,” said Fred Lee, chief technology officer at Amount. “Bank of America, BNY Mellon and Citi over the summer invested $20 million in Genesis Global, a company with a low-code platform that financial markets organizations use to develop applications. Such an investment underscores the value of these platforms.”
Many financial services firms are using low-code and no-code for account openings, whether it be for demand deposit accounts, credit cards or personal loans, Lee added. “Identity and income verifications for these accounts can be moved to a low-code decisioning engine, allowing for easier and quicker changes and enhancements to a bank’s rule set for approving applications,” he said.
This enables banks to more easily adjust their policies to optimize desired business outcomes, Lee added. Overall, using a low-code approach helps banks reduce costs, implement changes faster and gives them better control of the process.
3. Completing Multidepartmental Processes
The best place for low-code/no-code in a financial services company is largely dependent on the platform being used, according to Jay Cherrie, global industry lead of financial services at Appian Corp.
"For an enterprise-grade capability (with workflow, case management, system integration) the best places to get value are in complex business processes that span multiple people, departments and systems,” Cherrie said. “These are often activities like customer onboarding that look like a single process to the end client but behind the scenes involve a number of hands touching the activity.”
For example, a mortgage applicant sees only whether the application was approved or declined, Cherrie explained. "In the bank, though, a relationship manager, underwriters, compliance, legal and operations teams are often involved. Low-code offers a fast way to develop an orchestration without the ongoing maintenance costs of traditional programming.”
Related Article: Low Code Unleashed: 3 Winning Strategies to Make It Work for You
The Takeaway: Firms Will Expand Low-Code, No-Code
Financial services firms will look to expand their use of low-code and no-code software as they see what they can and cannot do with it without the help of outside vendors and as they see their competitors have success using these programs.