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Why banks considering coding their own applications should think again

Any bank that wants to create applications, for everything from sending customers a newsletter to onboarding a new client, may think hard coding is the best thing to do or the only option they have. 

Let me give you three reasons they should think again.

Coding is expensive and time-consuming

Hard coding applications can take months of programmers’ time – it can be really fiddly and inefficient. And, because skilled coders are so hard to come by, their time is not cheap, and the costs can add up fast. 

It is far more cost-effective to invest in a low code platform that makes it quick and easy to build applications, as that doesn’t require the skills of a professional coder and instead can be done by anyone with basic training. Applications can be up and running within a matter of days or weeks, so banks can improve the way they run operations and serve customers faster. 

What’s more, with a low code platform, it is easier for everyone involved or overseeing a project to collaborate on it and weigh in with feedback at each stage effectively. Think about it – for all the non-coders reading this, how many times have you looked at lines of code and understood what it means to give useful feedback on it? There are low code platforms on the market that make work accessible to everyone in real-time, and which use drag and drop features and simple terminology to make not just how the application works clear, but also the process behind it comprehensible too.

Coding and adapting to change don’t work hand in hand 

As well as hard coding being laborious and costly, applications built in this way can also be tough to change, which is far from ideal for modern-day financial organisations that need to adapt with changing customer preferences. In 2022 and beyond, the growth of your organisation is far from guaranteed, and evolving is the only solution, so banks need to have a system they can adapt as times change. 

This is easier said than done, as the UK’s oldest banks tend to have layers upon layers of hard-coded systems already in place and are afraid that ‘turning off systems’ overnight could cause massive problems. Indeed, we have seen some of Britain’s biggest high street names splashed across the news because their systems crashed during digital transformation projects, causing millions of people to be unable to make payments for hours on end.

However, there are smart solutions. For example, there is software that exists that can ‘wrap and renew’ legacy technology so it won’t cause problems for staff or clients, and this means the bank can modernise and set up a better way of doing things for the future. 

Consider how a bank offers credit cards. With a wrap and renew software architecture, the organisation can be safe in the knowledge that their customer databases and how they interact with front and back offices are protected, while also harnessing AI-driven technology that gives customer service agents all the information they need to suggest the best one for them at a time they need it most.

Old school coders are running out

The phrase, ‘necessity is the mother of invention’ rings so true with my last point. Nothing will make banks realise they can’t continue as they have done for decades like the absence of people who can update the code they need to keep those systems running.

The people who built banks’ applications in programming languages like Java and COBOL in the 1980s and 90s are likely soon to retire, or already retired. That programming language knowledge is disappearing, so it doesn’t make logical sense to maintain those systems over time. 

As mentioned earlier, taking a wrap and renew approach, and doing so now while there is still time to transition away from creaking hard-coded applications bit by bit, is the best way forward for banks and customers alike, as it means no one has to make sudden changes and add unnecessary risk to their growth strategy.

So, what’s next?

The days of banks building their own code are numbered. Modern agile software platforms that allow banks to create the applications they need quickly and easily are the way forward – they are cheaper, less time-intensive, more adaptable and built for the long term. The question isn’t if, but when banks will say goodbye to pure hard-coding of applications, and the sooner banks realise it, the better off they’ll be.

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Steve Morgan

Steve Morgan

Banking Industry Market Lead

Pegasystems

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04 Sep 2019

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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