Low-code takes a visual approach to application development, reducing the technical barriers associated with traditional software development. This means that non-programmers too can partake in the creation of innovative applications and workflows. Democratizing application development in this way could especially transform the financial sector, a historically resolute sector now hard-pressed to change under surmounting digital expectations.
Global Knowledge reports that over 76% of IT decision-makers experience critical skills gaps on their teams. And, financial services are not immune to this talent gap. With a widening backlog of IT projects, many financial services are turning to low-code, easy-to-use, drag-and-drop interfaces to automate their operations. Such builders typically offer component-based architectures to automate account creation, financial data aggregation, UI generation, and more. Increased automation could also positively affect wealth management, trading, compliance, and other areas.
Low-code is becoming an important tool to enact overall digitalization across industries. In this article, we assess how low-code/no-code is transforming the financial sector, looking at potential use cases. We will explore low-code adoption in practice within banks and consider the possible side effects of adoption, as well.
7 Ways Low-Code Can Transform Finance
Aside from the new internet-only neobanks, most banks are older, have legacy code, and are slower to transform. Yet, this sluggishness is at odds with the pressure to rapidly build and deliver new features and the move toward digitalization. So, how might low-code help transform finance?
- Enable quicker app development. Compared to traditional software development, low-code helps accelerate new code releases. This could help deploy more features, more rapidly, and address bug fixes. For example, say a new accountant is getting started with financial data—low-code components could help promptly generate reports for internal reviews.
- Automate estimates and approvals. There are many other areas in finance where low-code could increase efficiency. From an end-user standpoint, this approach could help build systems that automate account setup and loan approvals. For internal operations, workflows that automate Request For Quotation (RFQ) processes could aid vendor price submissions and quotes.
- Deliver improved user experiences for online banking. Nowadays, customers expect banking to occur online, and this digital trend will only continue. Consultancy firm Kearney predicts that 70% of account openings, deposits, consumer loans, and credit card applications will happen remotely over the next three years. Studies also show digital consumers have an unparalleled high expectation for feature support and service availability. One obvious way low-code could transform banking is by offering a quick means to provide a retail-like experience for customers. Low-code excels at generating appealing user interfaces, replacing older views with a more intuitive and modern feel. This could be as simple as offering better navigation of personal financial account data.
- Easily support new platforms. Low-code can reduce the boilerplate code necessary for supporting emerging platforms, increasing agile adoption for native iOS, Android, or web apps. Some low-code platforms even provide voice-driven technologies to enable hands-free assistants and empower those with disabilities. Multi-platform support helps democratize financial access for underrepresented populations, such as African countries that rely heavily on mobile banking.
- Aggregate financial data. Low-code components are commonly used to aggregate data from disparate sources. This is great for financial services, as combining financial databases from multiple accounts and third-party sources could help paint a more accurate picture of holdings—beneficial for end-users and investment firms alike. It’s easy to imagine the personalization potential and investment guidance that smarter portfolios could offer. Some low-code platforms even provide machine learning models to expose trends in finance to direct investment decisions.
- Assist ongoing operations. Low-code tools often provide windows into application performance and usage patterns. Platforms with modern observability features typically help pinpoint usage spikes, which could help spot cybercrime and improve an organization’s response time to incidents.
- Support a component-based banking architecture. Banks are turning into software companies. And, the Banking-as-a-Service trend is evidence of this transformation—banks are beginning to expose core infrastructure through API-based components. Offering a low-code ability to consume these ready-to-use components could enhance third-party adoption.
How Finance Is Using Low-code
So, what are some practical examples of how financial services have utilized low-code to date?
According to Forbes, RBC Wealth Management uses Salesforce Flow to cut time opening a new bank account. Salesforce Flow also helps RBC connect data between disparate systems more seamlessly.
Another bank, Academy Bank, also used low-code to build a PPP loan application tracking app. Or, we can look to ING Bank, which uses the Genesis low-code suite to manage credit and political risk insurance.
Other low-code providers also specialize in building blocks for financial markets. Take Mendix, who offers an Insurance Quote & Buy component that can produce accurate ratings, reducing manual work and the headache of quote preparation.
Another solution provider, WaveMaker, describes how an old credit scoring and financial data analysis company used its low-code/no-code platform to personalize the lending experience. In a bylined article, Shobhit Mathur, head of banking financial services at WaveMaker, explains how composability is a crucial benefit of utilizing low-code in the financial spectrum:
“Low-code can help banks take a composable approach to create a library of ready-to-use components built around internal and external APIs; set up processes to roll out new consumer journeys and enhance existing ones in release cycles within weeks; and extend platform capabilities along with the component library to external players and customers.”
Best Practices for Low-code in Finance
No longer are people visiting physical banks to open a checking account. Financial tools have gone digital. And what’s more, financial data is becoming embedded into many consumer apps. Low-code development is emerging as a rapid way to connect data and enact automatons for financial services to deliver new customer experiences.
Adopting API-based designs in conjunction with new financial digitalization fits the open banking agenda quite well. Taking a component approach to decouple systems by function means financial microservices are specialized and reusable, following the UNIX philosophy of doing one thing really well. In essence, financial services are becoming software companies, composed of building blocks.
Yet, it helps to take a balanced perspective. For financial services, “low code software development will hasten some builds but hamstring others,” writes Amber Sutherland for Corporate Compliance Insights. Most enterprises are already under surmounting technical debt. And financial tech managers may rightly worry that low-code platforms may introduce additional shadow IT. The red tape in large organizations could also delay new tooling adoption and halt overall digitalization.
Governance and Security
Low-code shouldn’t be viewed as a replacement for all digitally native software. It will likely require the support of IT, for as we’ve seen, a citizen developer pure play can have negative repercussions.
Low-code solutions in a financial context must also meet rigorous governance requirements to safely deal with Personally Identifiable Information (PII). Securing low-code will necessitate fine-grained authorization for citizens developers, who may lack cybersecurity training.
With all this in mind, low-code/no-code still has much potential to accelerate the financial services sector. Talent-pressed teams will likely especially benefit from outsourcing development labor to construct abstractions and workflows that hit financial data. And that will enable accountants, data scientists, and financial analysts to deliver new digital innovations while freeing up professional programs to concentrate on core infrastructure.
