The traditional banking industry is seeing a change like never seen before. More than 70% of key banking functions such as account opening, credit card applications, and loan processing are moving to digital.
Moreover, customer behavior is changing, more than 73% of customers choose banks based on how they use emerging technologies to ease the way they do business.
To top it all, competition from Digital-first “Neobanking” has mushroomed from naught to 300 in just a decade. In this article, we take a look at how Low code can assist banks with the massive digital transformation that they need today.
1. Modernize Existing Infrastructure
Customers today expect banks to provide a smooth, fast, and cloud-ready user interface in line with their experience in other industries.
Besieged on all sides by fintech upstarts using low code for embedded finance, tech giants entering into payments, cryptocurrency operators, and other threats, banks have little time to adapt and build robust yet modern applications.
Apart from this, banks are also riddled with much tighter regulatory compliances than other industries. After all, you don’t expect Uber or DoorDash to have the same level of security as your bank account!
This leads to a situation where IT teams face technical debt – applications made in haste that need to be re-engineered and refactored.
Low Code platforms help to avoid technical debt because these applications use cloud-native and microservices architectures, coupled with custom integration to legacy applications and a reusable UI.
All this allows for rapid application development with a user-friendly interface while keeping the backend regulatory checks intact, letting banks deliver the UX that customers want.
2. Automate Application Approvals
Apart from better user interactions, there are other areas where low code can help banking and financial institutions. For example, creating new user accounts and loan approvals requires lengthy checks and document verification.
Custom-built banking low code solutions could help ease these processes by moving them to a digital platform and enabling cloud-based document upload and verification.
For example, when Kotak Mahindra bank was looking to automate their customer onboarding and bring it online, they opted for a low-code solution that delivered an award-winning mobile app. With more than 3mn+ happy customers onboarded already, the proof of the pudding is in the eating.
Similarly, when U GRO Capital, a small-business-focused NBFC, wanted to implement a paperless loan processing application, they too turned to low code.
Low code helped build a paperless loan processing application that reduced sourcing to in-principle loan approval from days to minutes.
3. Improve Governance
IT teams at banks are under siege. Nearly half of IT budgets today are being spent on shadow IT projects because IT teams cannot provide the applications needed.
In such a situation, letting citizen developers create abstract prototypes that provide use cases for building applications will help IT teams deliver better governance and more robust software.
4. Preventing Financial Crime
Financial crime is on the rise across the world. According to a PwC survey, 46% of organizations have experienced it in the last two years.
Banks built their fraud and crime prevention infrastructure in legacy systems. As IT teams rush to create new-age financial services applications, frequent updates to existing applications can cause breaks and vulnerabilities.
Low code banking platforms help maintain legacy financial crime protection logic while building modernized applications, solving both problems simultaneously.
5. Single View of Customer Database
Banking is one of the oldest industries in the world. But being old also means that their IT systems are built on a mesh of multiple applications, data repositories, and transactional data warehouses that may or may not speak to one another.
While many industries utilize big data to come out with unique insights and understanding of customers, banks sometimes find themselves left behind, despite their huge wealth of data.
Traditional analysis and reporting in excel sheets are lengthy, may have inaccuracies, and require duplication of effort each time.
Low code-based digital banking platforms use custom integrations to aggregate this wealth of data and build a single source of user data which banks can then feed into big data analytics for insights.
6. Bring About Faster Business Transformation
Traditional software development requires slow, multiple iterations that cannot meet the needs of a banking industry seeking to transform quickly.
Low code enables rapid application development to aid business transformation faster.
For example, when Jana Small Finance Bank wanted to bring their customer onboarding fully on mobile, a low code solution could do it in a mere six weeks, whereas traditional onboarding might have needed a few months.
7. Enhance Personalization
Studies suggest that 80% of customers prefer personalized solutions. However application personalization requires a big IT infrastructure, which all banks may not have.
Low code helps create quick and easy user interfaces through drag-and-drop and visual methods designed for a high-quality user experience. Moreover, reusable components allow IT to focus on personalization efforts rather than basic coding.
8. Lead Management
Lead management is another area where banks can utilize low code. Many large banks are implementing or have already implemented LMS using low code software.
Low code helps create seamless interfaces and makes customizations easier, even for citizen developers within the bank.
Conclusion
Banks are moving to digital. They need IT solutions that can keep pace with their transformational needs, while helping them maintain strict regulatory requirements and improve governance. Low code for financial services fits the bill in many ways.