Is ‘Low Code’ the Secret to Payments Transformation?

It’s a transformative time for the payments industry. The development of innovative payments methods and technology has changed marketplace dynamics, pushing new players into the spotlight and shifting the focus of payments services. With agile, nimble and future-focused fintechs leading the charge, payments processing is no longer simply about transferring funds. Today, payments processing is about providing effective, seamless customer experiences that also present banks with compelling, and new, value opportunities.

While this transformation is exciting – and inevitable – it does pose challenges for more traditional financial institutions. Global Tier 1 banks have the resources and expertise to service large multinational corporations (MNCs). For functional, compliance, and geographic reasons, MNCs have extremely specific needs for their payments services as well the means by which these services can be digitally accessed. APIs, mobile app and application-to-application (A2A) integration must conform to very stringent requirements. As a result, payments processing for these banks is not a commodity service that can easily be farmed out to a partner with a standard application. It requires a solution that offers the flexibility to be customised and extended to meet the unique needs of the MNCs, serviced by the bank.

Like everyone else, Tier 1 banks are under pressure to innovate. As competition and customer expectations increase and margins shrink, this is lighting a fire under banks to implement new services and features quickly that differentiate themselves in the market, and lower costs.

The innovation challenge

However, while this creates compelling, value-adding opportunities for banks, those financial institutions that are tied to vendors armed with traditional payments solutions may soon find themselves left behind. While having a strong dependency on a vendor can be advantageous because they can offer a vast amount of functionality with a large set of parameters, in return, such dependency can result in a very complex and hard-to-maintain partnership. And when a bank wants cloud-native features swiftly that aren’t provided by a solution they’ve invested in, it takes time – often years – before new functionality is made available. The result? Banks are left operating with a cumbersome payments system that can’t evolve, is unfit for purpose, costly to maintain and which struggles to keep up with the competition.

When the pressure is on, banks can’t afford to waste time – a reason why many modern-day financial institutions are looking for alternatives.

Is low code the answer?

One option that several banks continue to explore is building a payments solution from scratch. While this plays into the need to innovate and brings something fresh and dynamic that the market might not have seen before, it could be three to five years before a mature platform has been created and can be rolled out within the bank. And let’s not forget about the multi-million investment that’ll be required upfront, alongside the high-pressure demand on existing resources that are already stretched and scarce.

So, what’s the alternative? Perhaps the answer is right in front of us.

In 2014, Forrester suggested that a new type of software development known as ‘low-code platforms’ might just have the ability to transform business. According to Forrester, these platforms would “enable the rapid delivery of business applications with a minimum of hand-coding and minimal upfront investment in setup, training, and deployment.”

Providing a rich opportunity to help banks move their payments structure seamlessly from a cost centre to a revenue stream, low code payments offer Tier 1 banks a direct and low-risk path to transformation. Not only does this technology provide a stable, proven and transparent framework-based payments solution – offering a huge amount of functionality right out-of-the-box – but it also delivers the openness and flexibility of a home-built system that is able to meet, and exceed, customer expectations.

Elastic by design, cloud-native and flexible, low code technology makes it possible for banks and third-party integrators to customise and extend the solution with implementation-specific functionality – all without depending on a vendor. In turn, banks are empowered with a greater level of independence and control because their sustainable and agile payments system equips them with the infrastructure to turn strategic options into business opportunities.