While it’s possible to research and identify low-code platform providers independently, connecting with banks that have already started that process is an efficient way to accelerate learning. Community bank consortiums and other community banking organizations are great places to learn about the different providers, compare service offerings and even combine resources to support emerging, low-tech providers.
By: Mike Sekits
Managing Director of the Btech Consortium Fund. Btech Consortium invests in technology companies serving the banking sector.
Advancements in digital banking technology have opened a world of possibilities for community banks. For decades, complicated software integrations resulting in high technology costs made digital innovation accessible only to big banks, but the development of low-code technology has lowered the barrier to entry, enabling small and midsized banks to go toe-to-toe with their larger rivals.
What is low-code/no-code?
Low-code/no-code technology is a software development approach that allows users to create and deploy applications with minimal coding knowledge and expertise. Low-code allows less senior developers the ability to mix and match different modules to connect software applications using a simple drag-and-drop interface with minimal coding. No-code platforms require even less technical knowledge and are aimed at “citizen developers”— business professionals who understand the needs of their business but lack technical coding expertise.
Low-code will be used to describe both types of solutions throughout this article for brevity.
What are the advantages?
Low-code technology allows community banks to build and connect digital solutions quickly and efficiently, reducing dependence on core service providers, optimizing technology resources, and improving internal processes and the bank customer experience. Let’s go into more detail about the effects it can have on speed, resources and customer service.
• The Need For (Digital) Speed
Technical speed and agility are paramount to stay relevant and competitive in today’s market and to keep up with evolving digital trends and customer needs. However, the banking industry’s continued reliance on legacy technology providers for their core services hobbles these efforts, with system updates, one-to-one integrations to third-party providers and new features introduced at a glacial pace. In fact, technology implementation was rated as one of the highest internal risks in the 2022 National Survey of Community Banks.
Low-code software platforms can put more power in the hands of banks by enabling them to build and integrate digital solutions in-house instead of waiting on updates from core service vendors. Their user-friendliness makes it easier for nontechnical employees to develop solutions as they’re needed. It also gives banks the freedom to customize solutions to the unique needs of their business. Legacy upgrades apply a blanket approach to all users, forcing banks to wait on things they may not need. Low-code platforms can address needs soon after identification and, in certain cases, allow smaller banks to leapfrog the technical abilities of larger banks. They can also create flexibility to switch out certain vendors efficiently, from a technical integration standpoint.
• Optimized Technical Resources
It can be hard being an IT employee for community banks. Where large institutions often have teams of developers dedicated to single-purpose technology, small banks typically have far fewer resources to manage all technical requirements. Service backlogs are common, often leaving little time for internal innovation and development. In addition to enabling nontechnical employees to carry out some previously technical tasks, low-code platforms can also help lessen the IT load by allowing developers to automate other tasks using more advanced features of the platform. This frees them to dedicate time to higher-priority and more complex tasks.
• Improved Customer Experience
One thing community banks have always excelled at compared to money center banks is personalized service. But traditionally, customer data has been spread across multiple systems, leaving bank employees to aggregate information manually. Connecting data across product offerings is easier with low-code tech, enabling bankers to build comprehensive customer profiles that allow the banks to tailor product offerings further and enhance customer experiences.
Challenges To Consider
Most low-code technology providers are smaller and less established. This approach to developing applications is relatively new, so more established companies do not commonly offer these types of solutions. Something to keep in mind is that, for banks of any size, it may be difficult to become comfortable with smaller technology providers from a vendor management standpoint.
Check references carefully when choosing a low-code technology provider, and determine if they offer services that cover all your organization’s most pertinent needs. In my experience, there can be great benefits in partnering with technology providers that receive funding either directly from community banks or indirectly through a bank consortium fund. This ensures that other community banks have a vested interest in seeing the technology provider thrive, thus encouraging a better end product.
Another issue with this kind of solution is that this flexibility can sometimes create too many options in product design and workflow. For some, this can be paralyzing and create indecision, often causing delays. The good news is changes can be made far more readily with a low-code technology approach. I recommend starting your low-code experience on smaller, less critical development projects, both to ensure the provider you’ve partnered with is a good fit and to lower the pressure of training your team in its uses and application.
How To Get The Most Out Of Low-Code Platforms
While it’s possible to research and identify low-code platform providers independently, connecting with banks that have already started that process is an efficient way to accelerate learning. Community bank consortiums and other community banking organizations are great places to learn about the different providers, compare service offerings and even combine resources to support emerging, low-tech providers.
When first implementing a low-tech system at your organization, I recommend selecting the types of technology development projects that other banks have already had developed by your chosen provider. For example, if you are looking for online deposit-opening functionality, make sure to choose a provider that has built something similar for other banks. Choose a provider that has experience integrating with your core service provider, as well.
There may be a learning curve, but as low-code technology is developed and put into use by more institutions, its applications should become even easier to replicate for your own community bank. I have noticed that smaller banks appear to be gravitating toward these types of solutions more rapidly, perhaps because larger banks that adopted digital strategies early on tend to be tied to legacy providers with less flexible coding platforms. But one thing today’s world of applications and microservices has demonstrated is that bigger isn’t always better.
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