By Iain Ramage, VP channel, Rocket Software.
Household banking names are having to face down a number of challenges at the moment. The first is innovation. Let’s be honest, when thinking about innovation, it is not the UK stalwarts like Lloyds, HSBC or Barclays that immediately spring to mind. Instead, fintech start-ups like TransferWise and Revolut are more likely to be perceived as leading the banking revolution. These new players are starting to pose a very real threat to established brands as they chip away at market share. The second challenge is compliance; juggling vast amounts of data and maintaining compliance with a variety of regulations is causing some worried frowns. The only way that banks are going to be able to tackle either of these challenges is through technology, which is good news for technology suppliers and resellers.
Never too old to innovate
With PSD2 (the Revised Payment Service Directive) coming into force this year, customers are now able to use third-party providers to manage their finances. This means banks are obliged to give third-parties, such as Monzo, access to their customers’ accounts and are therefore no longer just in competition with each other.
To combat this, banks need to look at ways to stay competitive. With so many new kids on the block, having a more agile, ‘start-up’ mentality can help, which some of them already have; “Hands up if you belong to a start–up company that’s 250 years old,” James McLeod, Software Lead at Lloyds, asked the audience at Github Constellation this year, aiming to dispel the notion that traditional banks are too old to innovate.
In order to innovate, banks need to be agile and develop systems that allow them to compete with the fast-moving market. This will mean adopting a DevOps methodology; the closer integration of development and operations staff will enable internal teams to collaborate throughout a project, resulting in shorter development cycles and more dependable software releases. However, changing decades of working practices is a serious challenge that isn’t going to be fixed with an internal memo; it will need something more robust. Banks must equip developers with the right tools for the job, namely, Application Lifecycle Management (ALM) automation.
ALM systems streamline all stages of the application development cycle and have always been essential in keeping track of the development process. However, not all of them have kept up with the complexity of new working practices. Many ALM systems still require levels of manual intervention that are unrealistic in an environment where so many people need to be informed of every stage of the process.
By automating the approvals and version control, these processes are completely removed from the danger of human error, as every change is automatically recorded, allowing developers to “roll back” to a previous version if something goes wrong. This gives banks the ability to adapt their services faster and more safely. Automation presents a great opportunity for technology providers to help banks become more agile, keep up with the competition, as well as protecting against downtime and customer data loss.
Data security is an area where banks should be using their advantage over the smaller newcomers, as their trusted brands and secure systems are often an assurance of security. When developing new applications, banks must ensure they are documenting the software development processes fully in order to satisfy auditors. Any changes to software that handles user IDs, passwords and other personal information must be treated with particular care in order to stay compliant.
ALM automation enables employees to view, manage and report work via an operations portal. The automated programme systematically records and documents all actions taken by developers, including when and why these actions were taken. This makes life much easier for auditors, as all records are automated, kept in one secure location and saved in the same format. ALM automation therefore results in faster – and cheaper – audits. Some banks have even found that once auditors are told that they’ve implemented ALM automation, they can quickly tick things off their list and avoid further investigation of systems, helping banks stay agile and making them a competitive force to reckon with.
Regulatory compliance should not always be considered negatively. According to Daniel Schmand, Global Head of Trade Finance at Deutsche Bank, it should be seen as an opportunity to review policies, processes and controls. Looking at regulatory compliance as a chance to improve banking is certainly a favourable approach, especially when taking on the mammoth task of managing data and staying compliant at any time.
For technology providers and resellers, ALM automation presents an opportunity that is not to be missed. It’s far more than simply applying a new process to an old system – it’s about helping banks to make the most of what they already have in order to stay relevant, and dare we say – show the newcomers how it’s done.