By Yad Jaura, Product Marketing Manager at Netcall
The end of March marked an important date for financial organisations in the UK. The Financial Conduct Authority (FCA) made it compulsory for firms to focus on their operational resilience and to have identified their most important business services and set impact tolerances.
The overarching aim of this is to protect consumers in the wake of a major event. In recent years a global financial crash, Brexit and a pandemic have all brought unexpected shocks to the financial system. And who could have predicted that as we emerge from under the cloud of Covid, a war in Europe would erupt?
The FCA is requiring that financial organisations, as part of this process, must identify their important business services that, if disrupted, could cause intolerable harm to consumers; a risk to market integrity; instability in the financial system; and threaten the viability of firms. To do this, they must identify the maximum tolerable disruption they can handle to services; map and test these tolerances, identifying resulting issues and vulnerabilities; invest in their ability to respond and recover from disruptions effectively; develop internal and external communications plans for disruption to important business services; and prepare self-assessment documentation.
However, March 2022 was just the first deadline, and by no later than March 2025, organisations will also have to demonstrate that they have performed mapping and testing and can show that their services can remain within identified impact tolerances. They will also be required to operate consistently within their impact tolerances and report any incidences immediately to the FCA.
With just three years to implement potentially sweeping changes to internal systems, there will be no room for legacy manual processes to continue to feature within the organisation – they are simply not fit for purpose under the new FCA regulations. Automation is clearly the way forward and fortunately there are a range of solutions on offer which can make processes run smoothly and reduce operational costs.
This is also where low-code solutions are coming into their own. The main benefits of using low-code include bringing innovation to market at speed and at a lower cost, in a more collaborative way, and being able to react to change without the risk and cost of traditional development. Low-code allows companies to adapt to market changes more quickly, increasing the distribution of new products and digitised offerings.
Indeed, Gartner has predicted that by 2025, a staggering 70% of new applications developed by enterprises will use low-code or no-code technologies. This technology appeals to organisations in many ways because it allows solutions to be developed quickly and easily, and modules can be used in multiple applications. It is also far less reliant on developers so the people who are actually using the system can be actively involved in producing the solution.
The strengths of low-code are helping to break down some of the obstacles that are being thrown in the way of its adoption, for example some organisations are wary of putting major IT projects in the hands of smaller companies, and there can also be a view that all IT projects are massive multi-million pound affairs. However, once companies begin to understand just how fast and cost-effective a low-code solution can be, particularly as they have been focused by the FCA requirements, it is rapidly gaining traction.
From an operational resilience perspective, a huge advantage with low-code is that apps built this way benefit from a tried-and-trusted platform where the vendor is typically responsible for actively managing its resilience. From security patches through to automatic data backups to cloud scalability and performance, a trusted provider can actively manage the platform using independently audited processes, e.g. ISO9001 and ISO27001 compliance, to ensure it operates in the most secure and risk-free way.
In addition, what makes low-code extremely attractive to financial organisations, and insurance companies in particular, is that customer experience can be improved and changed, to respond to feedback. The insurance industry is transitional, with customers rapidly moving on to another company if they don’t like an app or a website. Low-code means that companies can quickly adapt to customer feedback without going into a huge redevelopment program.
We’ve seen some interesting examples in recent years of insurance companies who have already used low-code software to improve their efficiency and their Net Promoter Score (a metric for assessing customer loyalty for a company’s brand, products and services).
A leading insurance underwriting firm has used low-code software to make their claims processing more efficient. The company reported a significant increase in claims handling efficiency, with the number of claims processed per hour increasing by 57% since the implementation of the low-code-based application. The application development process took less than three weeks for full deployment – including the training period. Developing software using traditional methods would normally take far longer. Often just gathering requirements would take three weeks, so the difference between traditional IT development and low-code is considerable.
Another UK-based insurance company, Legal & General, replaced a manual claims processing system with a more efficient automated system to substantially speed up the claims process, improve communication and offer greater visibility for customers.
Low-code is therefore an ideal solution for operational resilience and bringing efficiency to the financial sector, and particularly the insurance sector, enabling organisations to cut underwriting costs, automate manual processes, reduce processing time and supporting costs. You can even use low-code to build a new app that tracks and communicates the operational resilience progress of the rest of your IT estate!
By embracing low-code, companies that are obliged to comply with the new FCA regulations should find operational resilience a lot easier to deal with in the future. With the speeds that companies are transforming their IT with low-code and no-code, meeting the forthcoming 2025 deadline suddenly looks a lot less challenging.