All banks find launching new products and making changes to their operating systems to be a painful process. As new technology is layered onto the old, the process of testing and launching is only going to get more difficult. Making mistakes is costing the banking industry millions and destroying brand reputation.

On 27th July 2018 TSB published its half-year results, which revealed that the technology meltdown they suffered in April cost them a total of £176.4m and 26,000 customer accounts. The subsequent IBM report into the bank’s disastrous attempt to migrate to a new IT system found that TSB didn’t carry out rigorous enough testing.  It had “not seen evidence of the application of a rigorous set of go-live criteria to prove production readiness”.

At the same time as high profile failures such as this, all banks’ payments businesses have been affected by unprecedented levels of change – new regulations, new competitors and new technologies, and the expectations of a new generation of tech-savvy customers. To meet these demands, banks have embarked upon a period of significant development to the IT infrastructure that supports their payments business. As well as the increasing complexity of their payments systems, the workload on project, business and technology teams has been considerable.

The risk of traditional approaches to testing

However, while banks are busy deploying the latest technology and working with agile new suppliers, the fundamentals of their testing frameworks and methods are not commensurately advancing. Their current approach can be characterised thus:

• the absence of either a permanently available test hub or integrated test environment
• the use of armies of staff often hired from external, specialist test resource suppliers
• a focus on component-level testing with full end-to-end testing only being used when absolutely necessary
• a per-project budgetary approach for both systems development and testing
• use of complex risk management structures and processes to identify and then mitigate the inherent risks in the current testing approach
• a lack of automated testing
• dependency on manual testing facilitated by a complex maze of simulators (‘stubs’), in-house developed tools and ad-hoc code
• frequent squeeze on the final testing stage –  UAT – due to time and budget constraints.

This current approach means that banks are spending huge sums on testing: on people, on one-use test environments and especially on trying to mitigate the significant risks present. All banks are well aware of the damage to customer relationships, reputations and revenues that IT failures can cause, and of the key role of testing in avoiding these.

A new approach is critical and long overdue

Many people believe that automating the test process is the silver bullet, but is automation alone the answer? While more automated testing can decrease costs, increase efficiency and, critically, reduce risk, there is no point in banks simply automating existing bad processes. If you automate a bad testing process, no matter how well, it just becomes an automated bad testing process. Further, it is essential that testing reflects the real world, through a full end-to-end process with all its supporting interfaces and system idiosyncrasies.

The optimum approach is a combination of refinement and then automation. Banks need firstly to fundamentally review and change their approach to testing – simplifying things, investing to deliver improvements to their current practices and then embracing automation, taking advantage of the latest testing tools and techniques. This investment in testing technology must rationalise, simplify and automate their testing, providing a full regression testing capability in an always available manner.

For banks wanting to succeed, testing needs to go beyond automation, which alone is no guarantee of assurance. Only the proposed ground-up review of current approaches to testing, and a strategic investment in appropriate technology, will enable banks to move from the current state of basic payments testing to one of business assurance.