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Banking

LOW-CODE TECHNOLOGY BOOSTS THE GROWTH OF SPECIALIST BANK

That’s where Netcall’s Liberty Create came in. Create is a new breed of low-code software solution, built for both business users and professional developers

Hampshire Trust Bank (HTB) is a digitally-focussed specialist bank staffed by experts that enable UK businesses to realise their ambitions. Primary operations include development finance, specialist mortgages and specialist business finance (including wholesale, block-discounting, structured asset finance and classic cars). HTB also provides award-winning savings accounts to individuals and businesses. With an ambitious growth target in mind, the bank targeted digital as key to its expansion.

 

A fresh approach to change

HTB was frustrated with relying on external resources for technical developments on tasks that they didn’t deem to be particularly challenging. Results were slower than expected, often failed to match business requirements, and the associated price tags were unreasonable. The team knew the job could be done better in house and began searching for a way to utilise the knowledge within the business without hiring an additional army of developers. Low-code clearly stood out as the solution.

That’s where Netcall’s Liberty Create came in. Create is a new breed of low-code software solution, built for both business users and professional developers. By using its drag-and-drop interface to configure, rather than code, it allows users to build a new app fast. And once the app exists, it can be tested, refined and improved on an ongoing basis.

The low-code platform has enabled HTB to form a small team that can now build the systems the bank needs and manage process improvements easily.

 

Modernising the front office to improve customer experiences

“Our journey with low-code development started because we needed to modernise the front-office application suite, across the business and across all of our products. We invested in Liberty Create initially for our specialist mortgage division, to replace manual processes, improve workflow to drive cost efficiencies, and increase consistency in process execution across the team,” explains David Patterson, Head of Solutions & Delivery at HTB.

The initial mortgage division project was successful and Liberty Create is now driving cost efficiencies and business improvements throughout the organisation. The platforms that have been built by using low-code have become core assets, assisting with vital areas such as linking the bank’s API infrastructure to data services, fraud prevention, credit risk, and Companies House data.

The use of Liberty Create has enabled HTB to focus on the time it takes to serve customers (and serve them well) and as a result, it has positioned the bank for exceptional growth.

HTB’s latest platform a property development finance system, has replaced a host of manual and spreadsheet-based processes that handle client customer and credit-rating data. Low-code lends itself to an agile improvement approach, so the system can be continually enhanced and added to.

“This project has come in at less than one-third of the anticipated cost. Plus, it will be delivered four months earlier than planned. These very short timeframes are enabling us to move towards weekly deliveries of capability enhancement, and with confidence in the quality of delivery,” adds Russ Fitzgerald, CIO at HTB.

 

Delivering – and delivering faster

The delivery model of Liberty Create matches HTB’s agile project approach. Without getting bogged down in the process, the development team utilises the elements of agile that work best in digital transformation in banking, especially for a small bank. Liberty Create lends itself perfectly to that capability.

During its low-code journey, HTB invested heavily in testing capabilities, providing value with an improved turnaround time for any defects. Previously, developers would publish a change, finishing in the evening, then the test team would arrive the next morning and start the test pack, which could run for 3-4 hours, ensuring everything worked correctly and highlighting any regressions. The developers wouldn’t get feedback until lunchtime, therefore losing half a day of development time.

Now, the developers publish an update and leave for the evening. Liberty Create takes 30 minutes to package the release and push it to the test environment, waking up the testing platform automatically once complete and running the series of tests. By 9 am, the test team starts the day with the results and the developers work on any fixes needed immediately. As a result, an extra half a day per developer is gained from every push. This acted as the first step for HTB on its journey to seamless integrated testing and DevOps.

 

Changing the relationship with off-the-shelf for good

Today, HTB’s confidence in front-end building capabilities now influences how the bank approaches new potential suppliers with a clear strategy that needs to work with low-code. By tailoring its own front-end capabilities and utilising API services, the bank can pick the best out of the industry suppliers and create USPs for its customers.

Low-code has also changed HTB’s attitude towards buying tech – with no more front-to-back services that are not delivering value, or slow releases and outdated legacy systems. The bank commoditises its back-end systems suppliers based on the ‘best-in-breed approach’ to build or buy. It has become the cornerstone of HBT’s technology strategy, increasing innovation, flexibility, and creativity.

 

Growing with a trusted vendor

With the introduction of low-code, HTB has moved from being a user of a legacy core banking platform into building out its own capabilities. It has honed its ability to develop systems efficiently, change direction when needed, and react to an industry position or an operational challenge quickly.

“We can definitely say we’ve seen time and cost savings by using low-code to solve business challenges,” says Russ Fitzgerald, CIO at HTB.

Today, the bank sees itself as a five-year start-up. With investment, a new leadership team and many specialist hires, it has experienced exceptional growth and developed thriving specialist lending propositions for SMEs.

“Initially, we worked alongside the Netcall team, which started our delivery and then worked extremely well with us to hand over to our small but very talented internal team. We’ve had very strong engagement with Netcall, from the CTO all the way down – we value this support and attention greatly. For us, it is amongst the highest criteria we look for in a supplier – and there are only a handful of suppliers where we genuinely feel we get that top level of support, plus the ability to feedback, request and input on product road mapping,” adds David Patterson, Head of Solutions & Delivery at HTB.

The HTB Development Team is now building a portfolio for the year ahead. Like any innovative business, the team has more ideas than resources. Reflecting their confidence in using low-code as a front-end tool, the team is considering using it for internet-facing services and a number of digital services to improve internal workflow and processes. “This will become the blueprint for how we do it going forward,” comments Mike Beveridge, Business Analyst at HTB. A number of ‘microservices’ are also on the agenda.

“We’re looking forward to growing our technology capabilities using Netcall’s low-code, adding to our current technology estate and allowing the bank to move towards the next generation of banking technology,” adds Faizal Danga, Project Manager at HTB.

The team aims to utilise the workflow insights provided by Liberty Create in a wider element across the bank to improve back-office efficiency, data governance, data quality, and control, while also improving the operational efficiency of the bank.

 

Banking

BRANCHES ARE THE HUMAN FACE OF YOUR BANK?

Sudeepto Mukherjee, Senior Vice President, Financial Services Lead EMEA & APAC Publicis Sapient

 

Branches have always played a pivotal role in a bank’s ability to acquire and service customers. Historical surveys have consistently pointed to the fact that proximity to branches is one of the key reasons that determine who consumers choose to bank with. Even with the increased adoption of mobile banking in the past decade, research from data specialists CACI had found that surprisingly, the decline of branch visitors has been modest, equating to less than 2% per year, with digital channels supplementing the customer experience rather than replacing it.

The COVID pandemic has changed all of that. It has suddenly forced consumers away from branches into call centres and web/mobile channels to meet their banking needs. So the big question is what role should branches play as we recover from this pandemic? Will branch centric business models like that of Metro Bank still thrive or will the digital only banking offerings like those from Starling and similar win out?

Banks will always have 2 different faces to consumers. The first face is one that is human and relationship based. This is the part of the bank that consumers rely on to get advice on how to manage their life savings. The face that they call upon when they are in financial distress and need help overcoming that. The face that helps them make product choices on what credit type would best suit their circumstance. The second face is that of the bank as an efficient machine that uses the best available technology, data and AI to meet transactional needs quickly. This is the face that consumers rely on to make payments in real time and conveniently. The machine that provides the ability to quickly respond to queries around account balances and transaction history. The machine that alerts consumers when certain actions are performed on their accounts. Customers expect both these faces from their bank. However, the financial crisis and the PPI scandals saw banks loose the trust and credibility of customers as they were seen to be driven more by internal profits rather than consumer needs. The human face of the bank was no longer visible to most consumers and the machine failed to live up to the expectations set by the Big Tech giants like Apple and Amazon that seamlessly provided services via their digital platforms.

The Bank Branch can play a pivotal role going forward in re-establishing this human side by helping a bank build trust and become the primary advisor for our financial needs. Instead of just meeting transactional needs like check deposits and account openings, banks can now transition branches into relationship centres where their employees are 100% focussed on financial advice and well-being of their customers. They are teachers and coaches, life-cheerleaders and financial partners – they are many in number.

Historically this model has been difficult to achieve because of the high cost of such personalised service at scale in branches. However, advancements in technology/AI coupled with the propensity of customers to use digital channels for transactional needs now make this imminently within reach .

 

This transition will require a fundamental shift in 3 big areas:

  • Creating a strong digital infrastructure to enable an omni-channel service: Banks will have to double down on their digital transformation efforts and build an infrastructure that can serve most transactional needs seamlessly via digital channels and call centres. The operational burden on both call centre and back office staff will have to be significantly reduced by automating as many processes as possible and providing the right tools and insight to help consumers efficiently.
  • Culture and Capability: This will also require a big shift in both capability and culture. Every function of a bank (like risk, finance, product control) will have to get more comfortable in leveraging technology to do a majority of the tasks currently done by humans while investments will be needed in new capabilities so front line staff can focus on building relationships at scale and provide good advice to consumers.
  • Bringing customers along on this journey: All this will work only if there is also a strong focus on educating customers on how best to interact with a bank and use branches only for the most complex needs while relying on other less expensive channels for day-to day banking services.

 

Making this transition will not be easy. Constrained finances and a higher compliance burden, have resulted in a large technology debt and complex operating models in most banks. Banks have to take a more ambitious approach to “jump” to this new model. Digital leaders like Amazon and Netflix have shown how a shift from physical stores to a more digital centric ecosystem can not only be more efficient but also create value for consumers.

Now is the time for banks to seize this opportunity to redefine the role of branches and re-establish them as essential advice centres for meeting their communities financial needs.

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Banking

STRANGE NEW WORLD: WHAT NEXT FOR BANKS?

SOFTWARE

Simon Wilson, Director, Payment Solutions, Icon Solutions

 

What’s next for banks in this strange new world we find ourselves in? Forget the forecasts and predictions, we are in unchartered territory and the only honest answer is that no one truly knows exactly what is coming down the line.

But what we do know is that accelerating payments transformation initiatives to be more cost effective, resilient, innovative and flexible in the face of uncertainty is key to delivering for customers and establishing a leadership position.

 

Build foundations to reduce costs and deliver for customers

An immediate and critical priority for banks is to offset the impact of squeezed revenue streams, which are under pressure from all sides.

The threat of second waves and local lockdowns means that transaction volumes will remain volatile in the short-term. As recessions start to bite, cross-selling opportunities will be limited as overall demand for banking products and services reduces. Margin pressure is compounded by historically low interest rates, and record rises in delinquency and defaults increasing exposure to non-performing loans. The global transaction business is likely to come under added pressure as trade corridors become much more local and additional disruption from US-China relations starts to bite.

Yet at the same time, banks must also be prepared to respond to rapidly changing customer requirements and provide them with greater control. Customers will need to be able to manage their money in different ways, instant access to credit and liquidity will continue to be essential, and instant data-driven decisioning absolutely critical to supporting the specific needs of individual customers at any given time.

But expensive and outdated legacy infrastructure is a roadblock to these requirements, making it hard to reduce operating costs and support innovation. Prioritising and accelerating strategic payments transformation initiatives will mitigate long-term revenue constraints and, if executed correctly, reduce total cost of ownership (TCO) by factors. It will also enable the creation of differentiated, personalised, value-added products and services for customers and protecting profitability and positioning for market share capture as growth returns.

 

Simon Wilson

The time is now to overhaul legacy infrastructure

There is little resource, and indeed appetite, for high-risk, expensive long-term migration projects in such uncertain times. This is understandable, though it is uncertainty that should make payments transformation initiatives a priority.

Consider that many banks have struggled to cope with the increased load on digital banking services, which have pushed the resilience and stability of legacy architectures to breaking point. This has crystallised the importance of an ‘antifragile’ approach to risk, with systemic contingencies and buff­ers to meet demand surges. Ensuring operational resilience will be particularly important given that we can expect renewed regulatory focus on the potentially catastrophic impact of outages during crises.

Banks must also contend with the challenges of enabling secure, efficient remote interactions at a previously unimaginable scale. This includes the huge redistribution of workforces, keeping customers safe from fraud, and enabling effective digital service provision through artificial intelligence and machine learning.

Given the sheer scale and immediacy of the challenges, over-engineered and monolithic solutions cannot deliver the flexibility required. The good news, however, is that banks don’t have to look far for a low-risk, low-cost alternative.

Cloud-native, agnostic challenger banks have been able to move quickly and flexibly through these uncertain times in a way that incumbent banks have not. This should provide a best-practice model and roadmap for the industry. Investing in open-source, Cloud-native infrastructure is how banks secure their place in the digital era, enabling them to operate and deliver in more agile, scalable and innovative ways.

 

Embrace purpose in new look economies

Banks must also prepare for radically altered economies and a new position within them. Governments across the world, regardless of political persuasion, have necessarily embraced socialist policies, with banks facilitating the distribution of massive government stimulus, relief and requisition packages directly to corporates and consumers.

With the risks of relying on global trade for essentials exposed, economies will likely become more autarkical. After many years of industrial decline in some countries, we can expect a significant uptick in investment and output to shore up supply chains. Banks, along with governments, will have a critical role in financing and supporting this domestic growth.

Conversely, there are stark questions about commercial viability. ‘Non-essential’ businesses across the hospitality, travel and beauty industries are being hit the hardest, precisely because they are considered ‘non-essential’. Yet, it is a haircut, a stiff drink and a holiday (not necessarily in that order) that many of us most looked forward to while locked down. Relaxed liquidity buffers and capitalisation requirements provide flexibility for banks to deliver economic stimulus until good times return.

In addition, to a large extent some of the lowest-paid and least-appreciated sections of society are now rightly recognised and valued as key workers. And it is often these same workers who can’t afford a mortgage deposit, for who credit is expensive and whose savings are limited. Calls for fairer, more sustainable economies may push banks to promote financial inclusion and provide access to financial products and services on better terms.

It is clear that banks cannot expect to carry on with business-as-usual approaches. Indeed, there is a generational opportunity for banks to re-shape public opinion towards the industry.

 

Leading in a strange new world

The recession we are entering, and the longer-term ‘new world’, will have nuances not seen before. While defaults on loans will unfortunately rise, unusually banks will enter the situation with rising deposits as customer struggle to spend or are simply unwilling to risk normal levels of spending. This provides opportunity for investment and change in approach. We do not know what will come next. But there are clear steps that banks can take to enhance their ability to effectively respond to the unknown. In the face of significant uncertainty, financial institutions accelerating transformation to reduce costs, deliver innovative new customer experiences, and increased agility and resilience can establish leadership positions in a strange new world.

Icon Solutions’ payments experts have compiled insights from their network to deliver key recommendations and considerations. Download the infographic to find out more.

 

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