Why Low Code Tools Are More Important Than Ever in Banking

Low code tools could hold the key to revolutionising payment processing in banking, according to a new report from Icon Solutions.

Produced in partnership with research and advisory firm Celent, the report reveals the enormous opportunities presented by low code technology for financial institutions, in the wake of increasing pressures, resource demand and shrinking margins.

You’ve probably heard the terms low code and no code being thrown around and they are certainly becoming more prevalent in the tech world. There is a slight difference between the two in that low code tools require some technical knowledge to operate, and as a result open the possibility of creating more complex applications and enhancements.

Nonetheless, this approach enables developers to create applications with minimal hand-coding, often leveraging drag-and-drop functionalities. As businesses strive for agility, efficiency, and rapid innovation, low-code platforms have gained traction as indispensable tools for streamlining development processes, empowering citizen developers, and bridging the gap between IT and business stakeholders.

With its promise of faster time-to-market, reduced development costs, and greater accessibility, low code is only going to get bigger.

The burgeoning market is anticipated to grow to $77.49 Billion by 2030. It’s also likely to work hand in hand with another rapidly developing technology, Artificial Intelligence, to democratise software development and speed up organisational and product enhancements. Naturally, it could also play a role in transforming mission critical areas of banking and payments. The potential for employees of a financial organisation to quickly deploy new systems, and take advantage of new revenue streams is huge.

And payments is one of the areas where the technology could be particularly valuable. In this article, we’ll give you an overview of some of the findings in the report and the market forces that are causing it to become more valuable to financial services.

Tackling resource constraints

The report which is titled ‘Using Low Code To Accelerate Payments Innovation’ surveyed senior executives from Tier 1 banks across Europe and North America, to gain an understanding of the pressures financial institutions are under today. One such issue is a developer shortage and resource constraint that continues to be a frustration to enterprising organisations.

The need for developers isn’t going anywhere and although more positions are being filled with a predicted 28.7 million developers worldwide by the end of 2024, it is still failing to meet demand. With a rapid pace of change in the industry, this constraint is preventing banks from digitally transforming at the rate they would like.

In fact, according to the report, 45% of the industry see a lack of developer resources as a constraint on bringing new enhancements to the market. 66% of those in product facing roles said that developer resource limitations prevented potential enhancements from being added to their technology roadmap. And this is where the report adds further insight into the impact this is having.

A considerable number of the executives surveyed felt that because of this lack, they’ve lost out on revenue. They believe the product enhancements they were unable to deliver would have supported a 5.3% growth in payments revenue. There’s an acknowledgement here that this might be a slight overstatement but if it’s anything close to accurate, it still reflects a considerable amount of revenue lost.

This is against a market backdrop of tightening payments processing margins and greater regulatory pressure forcing banks to adapt their processes. As a result, 39% of banks see payment product innovation as being a top three priority in the coming year.

The appetite for low code

This only serves to heighten the need for technology that can easily and seamlessly be integrated into the banking infrastructure. And low code could provide the answer to organisations in need of support when resources are low.

Whether it’s being able to connect to a foreign payments infrastructure and therefore a new market or enabling customer service and other teams to make tweaks to customer requests or queries, without sending it down a chain, causing delays and potential lost revenue. There are any number of ways that this technology could enable banks to run smarter.

It’s also good news for institutions who don’t see enough credible off-the-shelf options and are keen to keep such enhancements in house, in order to maintain some degree of control over the project.

The report found that 55% of Tier 1 banks would prefer to develop their own payment processing software, with the aim of then delivering competitive differentiation. For larger banks this has only become more important as they compete with agile fintechs for a slice of the pie. The use of low code tools in house is one way to grow at pace, whilst maintaining ownership over those developments.

Read the report to find out more

The report from Icon Solutions and Celent, is an invaluable resource in establishing the market forces and environment in which low code can provide genuine assistance, whilst also exploring how those tools can help banks to innovate in areas such as payments.

The findings above are simply a taster of the in depth research you can find within. It goes on to provide different ways low code could be used in your organisation from a foundational usage by technology teams within the company, to it being available at a product level, to an advanced use case where it’s integrated into the whole payments process.

The report explores how this technology could be integrated into the existing workflow, the training required and the partnerships and providers that will be required to deliver effective change in the organisation.

Download the full report today to get all the details, and glean insights that could change the future of banking. If you want a further taster of what’s inside be sure to watch our interview with Celent analyst Kieran Hines and Icon Solutions Strategy Director, Toine van Beusekom to find out more.