Importance of test code quality in continuous testing of financial applications

The global pandemic (2020-2021) had led to unanticipated issues such as economic crisis and credit risk. The upcoming years looked uncertain while facing a critical time. To protect from the economic fallout, the leading business entrepreneurs focused on finding out possible solutions that they thought would help them in stabilizing business continuity and serving their customers better.

One of the Gartner’s Business Continuity Survey reveals that as less as 12 per cent of organizations were prepared to combat the effect of a deadly catastrophe like coronavirus. Amidst the threat of spreading COVID-19, the leading financial institutions considered evaluating their business continuity plans and pandemic planning initiatives to ensure they put safety and efficiency first.

Banking and financial institutions considered agile methodology to adapt to the changing global scenario. The unforeseen event urged the BFSI sectors to reflect on their fundamental practices and how prepared were they for the future. The impact of the pandemic was so widespread that banks faced a weak investment return leading to future credit risks and economic uncertainties. Reportedly, the European banks collectively have experienced an estimated credit loss of an average of €700m in Q1 2020. Meanwhile, in the US three popular banks informed that they noticed a significant credit loss of $25b in Q2 2020.

Current Trend and Opportunities

To prevent the pitfall and evolve from this economic crisis, banks seized available opportunities and prepared their next business module. This catastrophe has urged banks to re-evaluate and analyze their core and non-core assets. Under this scenario, 60% of the banks considered the divestment option, a plan to divest in the next 12 months.

The possibility is likely to play a massive role in understanding the type of organizations banks would like to connect with in the future and how conveniently they can transform their existing process. A growing interest in digitalization is driving banks to adopt digital banking products and solutions to cater to customer requirements. They are taking steps to boost their digital transformation plans.

With a growing threat during a pandemic and different phases of the lockdown being imposed everywhere, financial institutions had adopted remote working policies. It provided an opportunity for the business leaders to reconsider working remotely, operating in the long-term, and consider the monetary impact this approach could have.

This situation enabled many banks to understand their resilience and capabilities. They also reconsidered their cost transformation programs to move in tune with the new challenges of this crisis. The future from here on looks promising and inspiring.

From the online purchase of grocery items to electronic goods, banking and financial institutions, companies introduced promotions, special services, and reward points to re-establish their position in the market. The customers’ purchase behavior was requirement-based, as a product was bought and sold based on bare necessity.

Customers were driven more by emotion during the crisis. Hence, for organizations, brand messaging, tone and purpose became extremely important while connecting with their customers at an emotional level. It helped in establishing customer brand loyalty. Customer purchase behavior depends on four principles, as stated below:

  • As customers remain indecisive, empathy and commitment become two ways to win their trust. During the pandemic, consumers reacted positively to inspiring content that highlighted social, financial, and other real-life aspects.
  • Brands should keep informing their customers about the crisis, how to protect themselves and change in the situation. Customers are likely to trust brands that provide reliable and accurate information about the current situation.
  • Engaging and connecting your customers by facilitating and extending social support are assured ways of improving brand loyalty. Social engagement with customer support and responding instantly during this pandemic have helped build brand loyalty.
  • Offering new schemes, promotions, and offers helps your brands to evolve through endorsement. These efforts have an impact on your customers.

Digital Transformation

Digital banking solutions, which have been brewing for a long time, have accelerated during this unprecedented time. This pandemic situation profoundly changed the behavior of retail and corporate banking clients and facilitated the use of digital banking.

A recent survey done by Ernst and Young, reveals that 62% of consumers said they would use less cash in the future, while 59% will opt for contactless payments. The use of digital services and products propelled more expansion when some of the bank branches were closed, and in response, banks accelerated digital and technology transformation programs.

The small and mid-size companies started adopting digital solutions faster than anticipated. There was an increase of new digital accounts by 2.4 times in the first quarter of 2020 as compared to the first quarter of 2019, and a 49% rise in SME digital loan applications in 2020 as compared to 30% in 2019, in one of the Singapore-based banks.

The concurrent situation has led to massive economic uncertainty, and there is a requirement for the bank to endure this sudden disruption. With a low margin, banks opted for digital tools and focused on sustainable digital enablement that helped them save cost and time. Their motto was, “Grow your business with digital innovations to live up to your customer’s expectations”.

When assessing customers’ requirements, it was observed that a combination of UI and UX of a digital platform contributed to customer satisfaction and experience. Since banking and financial institutions were turning their services online, they needed a platform that could improve the appeal and undisrupted performance.

The following instance supports the claim of how banking is relying on digital and online platforms. In April 2020, Lloyds Banking Group decided to provide a tablet to their 2,000 customers over the age of 70. The objective was to provide training and support to help them access online banking. As banks are now adopting the best digital practices and customer-centric solutions, they form a well-connected digital ecosystem and unique value propositions for their clients. The whole objective shifts to serving their customers better through an outstanding and uninterrupted online banking experience.

Banking has been evolving even before the pandemic swept the entire world. Based on customer requirements and expectations, banks are compelled to leverage digital channels, accounts payments or transfers and online wallets. To avoid the risk of spreading the infection, consumers opted for cashless payments during this pandemic situation. Consumers who did not consider online payment and transactions as options were encouraged to migrate to a digital platform. Since many consumers were not fully familiar with the digital platform, banks have taken it upon them to educate their customers for an outstanding experience.

As the cashless transaction became the new reality of the ongoing situation, banking and financial sectors had to speed up their digital innovation process in response to customer needs by leveraging cross-channel, customer-centric metrics and tracking the success of digital banking. To re-align sales, reduce operational costs, and offer excellent customer experience, data and analytics, AI and automation played a significant role.

A Cost-effective Managed Services

A well-panned managed service can offer operational flexibility and ensure uninterrupted business-continuity plans against unanticipated challenges during the global crisis. With the pace at which the market situation changed, the banks and financial institutions could not afford to hold back the digital revolution for long. Organizations realized that if they suspend their online operational transformation, they will suffer business loss. They understood the competitive edge the change would bring and hence started managing the costs more carefully.

A well-managed service allowed the banks to reduce operating expenses for the long term, and the sudden outburst gave a reason to the bank to adopt managed services. Managed services helped banks to formulate a strong business continuity plan. It is during the time of crisis that managed services helped the banks to maintain the system stability.

The financial instability during this challenging time urged banks to develop strategies to encourage their customer to move online and prove their operational flexibility. With this rapid digital growth, banks were compelled to invest in security, virtual collaboration and cloud infrastructure, analytics, artificial intelligence, and automation. The banks and financial institutions were quick to adopt digital transformation. And the one who did could recover from the economic setback and establish a strong foothold.

Since banking operations largely depend on customer behavior and satisfaction, the banks must face and overcome the challenges of maintaining their standard of customer services, while mitigating operational hurdles.

Current Contact Centers

Digital and mobile banking witnessed a sharp rise during this critical situation, along with the voice channel to serve consumers well. Despite the fully functional digital operation, a few of the banks were operating from branches in different locations. It proved that even if we were relying on a digital platform, we still needed human interventions. We realized the importance of both during a crisis like the current one. AI-driven technology replaced this to achieve the objective. AI could smartly detect the call intention and provide real-time data to the users. This technology helped in reducing call time, and improved efficiency, and customer satisfaction.

Rise of Open Banking Solutions

The situation gave rise to open banking solutions as there has been an 832% increase in open banking during the global lockdown. Banks took more interest in the open banking payment initiative to gain more understanding of their financial situation. Consequently, more and more banks used the opportunity and invested in open banking solutions. The European financial institutions witnessed a steady increase, and globally the organizations were eager to have a different perspective. They did not mind sharing the information on an open platform. A recent report revealed that there was a rise of 20-29% of investments in open banking services for two-thirds of the respondents.

Partnering with FinTech

Banks were simultaneously looking to speed up the digital innovations during the prevailing global situation when the economies across the globe were slowing down. Also, during this pandemic situation, many venture capitalists were restricted from investing in FinTechs. Hence, partnering with FinTech in this situation proved to be economically and mutually beneficial.

Many governments slowly eased rules and regulations in FinTech companies to encourage the growth of innovations and balance out economic disruption. It came as a relief against the long-standing rules, which were once imposed on them.

The current situation provided opportunities for FinTechs to strike a balance between digital transformation while creating a secure financial backbone. As banks and FinTechs together collaborated, it helped them to bridge the funding gap.

As banks were in the earlier stages of digital transformation, partnering with FinTech companies proved to be helpful in terms of improving technological expertise. Banks in collaboration with FinTechs could develop platforms for financial inclusion, analyze transactions and other data for deep insights, capability development and deploy automation for compliance.

Mortgage Refinancing & Payment Deferral

The crisis raised lots of dependability on banks as to how they are addressing their customer’s issues. Due to low-interest rates, there was a steady rise in mortgage refinancing in April and May 2020, resulting in high loan volumes for lenders. As the whole world was suffering because of layoffs, and pay cuts, the homeowners found it to be challenging to pay their instalments on time. This catastrophe has left many customers asking for mortgage deferrals.

Many banks waived fees, increased credit card limits, and granted mortgage payment holidays in response to customers’ inability to keep up the monthly mortgage payments. They made a few adjustments with the short-term and long-term financial changes. Banks provided tailored solutions based on the customer’s requirements by leveraging machine learning, AI and analytics and driving improved engagement.

Managing System Performance and Unexpected Risks through QA

The customers looked for additional support during this crisis in terms of credit facilities from the banks globally. Banks had to be prepared for the upcoming risks and take measures to keep their business and customers protected from the financial debacle, as default and bad loan cases were expected to rise in numbers.

Banks had to build a powerful fraud and risk management and strengthen their portfolio using their analytical capabilities. It helped them to generate useful insights, improve the operational process, and decide quickly on process-related matters. The impact of the global setback urged the banks to focus, assess and review their stress testing models. Since banks actively took steps towards digital transformation, they had to ensure that their systems had seamless performance, system integration and customer acceptance of their digital platform.

Efficient software and algorithm were needed to detect fraud and reevaluate the risk modelling. It allowed banks to calculate pricing, and evaluate and measure the credit risk of borrowers. Banks needed real-time data and an advanced risk calculator, as the economic impact during this time turned a large amount of data unreliable. Banks had to develop advanced analytical capabilities to filter data accurately and spot anomalies quickly.

Since the outbreak of the global pandemic, there has been a significant rise in criminal activities, increasing the threat of money laundering. Banks will also have to strengthen their KYC and Anti-money Laundering (AML) programs. It helped the banks and financial sectors to manage risks and keep pace with changing regulatory scenarios.  

Journey Ahead from Here

The rising concern and uncertainty of this pandemic situation have made the global banks sort out multiple ways to address their customer requirements. The customers require extensive support and flexible services, and interaction. As the situation demanded high technical upliftment, banks were likely to adopt the followings that allowed and helped them to meet their customer expectations. 

  • Accelerated digitalization efforts
  • Cloud migration
  • Intelligent workflow management
  • Partnerships with the BFS sector and FinTechs
  • Embedding security and governance across operations
  • Advanced risk modelling

The current condition posed multiple challenges and compelled banks and financial institutions to invest more in the digital future. They are now improving their operations by leveraging innovative technologies and continuing to inspire other industries that have not reached digital excellence. The financial sector is on the right track to reap the benefits and enjoy the success of its cost transformation programs for the future.

Ensure Credit Quality in Digital Lending Applications

The digital lending market is exploding with growing apps and fintechs. As per a report IIFL FinTech, the digital lending market is expected to grow to a whopping USD 515 billion by 2030. Lending services are no longer about hard-copy documentation. The lending process has moved far beyond becoming completely digital. From recording queries and customer financial details to credit underwriting and loan disbursal, the process is increasingly becoming online.

The online lending process saves time and effort for customers from physically visiting the bank branches to either sign the documents or verify their identity. Digital lending platforms have reduced foot traffic in branch offices, increasing the dependencies on digital applications, which leads to frequent updates and changes in digital applications. These regular updates require continuous monitoring to create a secure, scalable, and efficient digital lending application.

Why gradually industry shifted towards digital lending from traditional processes?

The traditional lending process was inefficient, filled with errors, and time-consuming. It involved managing hard copies of required documentation, frequent bank visits, and prolonged verification of borrowers’ loan profile, credibility and repayment history. The issues were further amplified if the borrower did not meet the eligibility criteria and underwriting based on their past credit history. Securing loans from the banks remained a matter of speculation for the borrowers. This is where digital lending came into the picture and steadily captured the market.

The current scenario of digital lending

Factors like unlimited access to the internet at an affordable price, smartphones penetrating the market, and applications and software available for loan applications facilitate digital lending. Digital lending in India is expected to touch $350 billion by the end of 2023.  

A report states 36 RBI Approved Loan Apps. These names are independent of banks that already offer lending services at a reasonable interest rate. The lending app comes with instant approval and disbursal within 24 hours, which is extremely convenient for borrowers seeking small and medium-sized loan amounts in case of emergency.

But how the lengthy traditional lending processes become so convenient?

The bank lending apps can access the customer data stored in their in-house server and system. However, the fintech organizations procure this information from various sources like banks and third parties through the Application Programming Interface or APIs.

The fintech applications have to obtain the data from diverse sources. To maintain the turn-around-time and live up to their service reputation, they must send the request data access from multiple sources like credit bureaus for borrower past credit history, link to the bank server for bank account verification and auto debit facility, and more to access borrowers’ details.

The lending process through these applications can be extremely critical if the essential quality checks are not done. There can be rising security concerns, performance & functionality errors, delayed access to customer credit history and a cluttered user interface. Let’s look at the complications or bottlenecks in digital lending applications and what problem it may lead to if remains unresolved.

  1. Security and privacy – Customer data is the most sensitive. Digital lending applications procure customer data directly from the bank server and from a third-party vendor. These transactions can be highly sensitive, and if attacked by malicious malware, they can lead to terrible issues if unresolved. It is crucial to ensure robust security measures and compliance with data privacy regulations.

  2. Data protection from risk and fraud – Understanding the current trend of digital lending platforms protecting customer data from risk and fraud is essential but challenging too. Protecting the sensitive credit details of customers are a complex process if the fintechs do not have adequate mechanism to analyze user behaviour and identify the potential risk.

  3. Scalability – As the number of users and loan applications grows, the application needs to scale efficiently to handle increased traffic and processing demands. Inadequate scalability can lead to slow response times and system crashes during peak usage times.

  4. Migration from Legacy systems – As per a report, over two-thirds of organizations are still using and relying on legacy systems. Legacy systems are non-adaptable and inflexible. They are not compatible with digital lending platforms. Integrating the digital lending platform with the legacy platform can be challenging and may require extensive effort and expert resources. And yet enterprises cannot abandon the legacy platform as they have been running for more than 30 years with an estimated over £2 trillion transactions every day.

  5. Integration with the main banking server – This brings us to the next bottleneck. It is a significant effort to integrate the digital lending platform with banks’ legacy platform. Moreover, the legacy systems are not equipped to manage the integration with the digital platform. They also cannot offer innovative offerings like banking-as-a-service (BaaS) as it does not support application programming interfaces (API) integration with third-party services. However, since the upgradation of these legacy systems is time-consuming, banks resist the changes leading it as a bottleneck in the digital transformation process.

  6. Regulatory compliance – Digital lending applications must be compliant with financial regulations. Frequent regulatory changes also demand financial institutions keep up with the changes and update their applications. With frequent changes in features and functionalities, keeping up with regulatory compliance can be complex.

  7. Data transactions – The digital lending platform pulls large amounts of user data from the main banking systems. It requires robust infrastructure and seamless data integration & management systems to eliminate bottlenecks and ensure smooth operations.

  8. Customer satisfaction – Customers require a fast loan approval and disbursement cycle. Hence, to ensure optimum customer satisfaction, lending institutions validate application workflow that expedites the decision-making process, minimizes delay and conforms to user experience. Also, recurring functionality, performance, and security errors can cause potential application issues that damage the brand’s reputation.

  9. Verification of data quality – Digital lending does not pull irrelevant data. They pull only required customer information. Banking systems may store multiple data but not all data are accurate and useful for digital lending platforms. Choosing the relevant data helps fintechs arrive at an informed essential lending decision. However, verifying the data quality can be complex due to the unavailability of relevant and accurate data.  

  10. Mobile responsiveness – The current trend in digital applications demands high mobile responsiveness. The process can be extremely complex in the absence of a mobile responsiveness platform. Hence, the digital lending platform requires extensive validation to ensure that the platform continues to deliver high-quality services and offer optimized user experience.

Digital lending apps became prominent during the pandemic, and customers are embracing it, because of fast approval and disbursal. But the credit quality remains under the scanner.

How reliable is the credit quality in digital lending applications?

A long-standing business lending process is more effective with manual review, cross-verification, and years of root-cause analysis of defaults and assessments compared to digital platforms. The former could be time-consuming, but it helps to achieve the desired risk outcome. It also helps the banks achieve low default rates.

However, the industry cannot avoid the trend of digital adoption. To adapt to the model, financial institutions have found a middle ground to amalgamate the digital model with the accuracy of data-driven model-based decision-making. As digital lending continues to improve, risk managers can take a calculated approach towards automation.

How can we improve the credit quality of digital lending apps?

Banks are testing the automated digital engine based on data-driven assessments and a structured credit framework to assess credit quality based on predictive default risk. As a result, the decision will be more consistent, accurate, fast and cost-effective.

Is quality assurance and testing essential to ensure the credit quality of digital lending apps? Can quality assurance and testing ensure the credit quality of digital lending apps?

Digital lending apps or fintechs pull data from the banks’ main servers. They also coordinate with TSPs like credit bureaus, collections and more. They handle critical transactions 24/7*365 days and customer details, making QA strategy an essential step. QA and testing confirm that the application and platforms are free from defects and errors before production and market launch. It also must offer outstanding client experience with high-quality mobile apps. Quality assurance and testing helps lenders to improve the credit quality of digital lending application.

Some factors are important here to ensure the credit quality of digital lending applications. API functionality and performance, digital application features and timely response of digital apps.

Though digital lending applications require end-to-end test coverage, including functional testing, reliability testing, validation testing, load testing, UI Testing, Security Testing, Penetration Testing and more, there is one more crucial aspect when it comes to validating digital lending applications.

Our understanding from the projects we have handled is that these applications have a few restrictions and limitations. We have also observed a reliability on API functionality and performance if digital lending platforms have to function without any technical glitches.

As high as the dependency on API, the risk with digital lending keeps increasing. API testing is conducted on Encrypted and Unencrypted APIs, multiple encryption levels and data formats, API tunnelling, instability/availability, handling many security protocols, and more.

We offer manual and automated API testing, validating requests and responses at various API layers. We also validate the accessibility of the API level and check the functionality, reliability, performance, and security of the programming interfaces.

Our intuitive robotic test automation solution, Tenjin, is a functional test automation solution. It is a seamless & effective test automation tool for BA and functional testers. Tenjin Test Automation solution is REST and SOAP API ready. Its features like auto-learn, auto-discover and auto-execute help to learn application interface automatically

We support financial institutions with end-to-end testing of their digital lending platforms.

Both banks and fintechs have brought their lending processes to digital platforms for quick approval and disbursal. It allows the borrower to avail loans in case of an emergency. But like all other platforms, digital lending apps require thorough testing to ensure higher customer satisfaction with lower TAT and improved credit quality. This is where Yethi’s domain expertise and industry come into the picture. We have delivered over 500+ projects for over 130 clients across 30+ countries in various LOBs in banks and financial institutions.

10 Critical Steps in Testing the Business and System Upgrade Projects of Banks

Banking businesses thrive on market relevance and ever-evolving customer preferences. It matters a lot for banks to ensure the highest level of customer satisfaction. They can never compromise business quality as it may harm their reputation, incur a monetary loss, and take away their customer reliability. Compromising the quality of their services and systems may lead them to pay a significant penalty. Hence, testing is crucial in the event of new system installation or upgrades in banks.

Banks ensure to reform their services based on current trends and technologies as customer demands and preferences keep evolving. To stay relevant to their customers and stay ahead of their competitors, banks incorporate the latest technologies and improve their services, eventually improving the business metrics.  Hence, banks must validate every business and system upgrade to retain customers and offer them a seamless experience.

Testing is an integral part of the banking systems which demands a more strategic approach than a random one. It involves a great amount of strategy and planning to ensure that the projects go live successfully without any glitches. As so it may look simple on the surface, testing the business and system upgrades are usually a critical process. There are many steps that an enterprise must consider during the testing of the upgrade projects. Here we have discussed 10 critical steps in testing that the enterprise business must not overlook if their end goal is to serve their customers well and succeed.

Steps in testing the banking business and system upgrades:

Before we consider the step for the execution of successful testing of the business and system, it is important to define the goals and objectives of the testing projects. Here are key considerations to make while determining testing projects of banks once you have determined the objectives of your testing project. 

    1. Requirement gathering based on the project scope.

The testing projects of the business and system upgrade begin with an understanding of the project requirements. The scope of testing, the banking modules, menus, submenus and more are the essential components of any project.

Understanding the project requirements is a complex task as banking applications are quite diverse with multiple features and functionalities. The QA team must have a thorough understanding & awareness of banking modules, functionalities, various layers of application integration and more. The process can be complicated and the project scope may remain unidentified if the teams don’t gather adequate project requirements.

Is it an elaborate exercise to gather project requisites?

Requirement gathering is the entry phase of the software testing project. As a part of the project strategy, it is essential to gather the project requirements and understand the scope of the projects.

By gathering project requirements and understanding the project scope, it is easy to strategize, define, and measure the testing project outcome. It also helps in deploying manpower and determining the time and cost of the project. The team understands what is to be tested; they also understand if they are missing out on any important components, or any potential risk involved so that they can discuss with the stakeholders to have a detailed knowledge of requirements. The team also creates the requirement traceability matrix (RTM) to map the test cases.

    • Requirement validation based on available resources (Time, money, and manpower)

Validating requirements helps the team streamline the testing projects and segregate them into categories to individually address the issues in each category and allow to resolve them immediately. Based on the project categories the requirements can vary. After gathering the project requirements, the team takes an overview of the available resources and validates if the available resources match the project requirements and identify the test environment.

Banking applications are usually complicated with multiple requirements. Also, based on new trends and customer requirements, the application features may change frequently. This dynamic nature of the requirements can further add complexity to the validation process, as they are subject to frequent changes based on the changing application features. Additionally, resource availability in terms of time, funds, and manpower may experience small variations, influenced by the specific project requirements and scope.

Can project requirements change frequently? Does frequent changing project requirements affect the testing project outcome?

Frequent changes in project requirements may not affect the project if requirement gathering is done considering all aspects. The diversions are evaluated by the project team to ensure they can accommodate frequent changes without affecting the project or workflow. Changes in applications are part of the project plan, so a pre-defined strategy and a thorough requirement validation can help the team to prepare with the time, money, and manpower for a successful test execution of business and system upgrades. The frequent changes will significantly not impact the project outcome if the requirements are gathered, assessed, and validated adequately before initiating the project.

    • Planning tests under the scope of the AUT

Planning the test is a critical step for the effective execution of the software testing life cycle. Testers define the test plan, application under test, scope of testing and more to yield expected results. Based on requirement gathering and validation, the team also effectively calculates the effort, time and cost required for testing. The project team also develops the test strategies, methods, and techniques during this stage. They also identify the test cases, test deliverables and milestones. The planning stage will only be successful when a detailed plan is presented, reviewed, and approved.

The test planning stage can be complicated because this is the stage when all the essential components are defined. If one or more project components are not added, then there will be a lack of clear understanding of the project, testing objectives, and scopes, leading to issues in deliverables. Since the executable test cases are identified in this phase, if the roles and responsibilities are not assigned, and test plans are not reviewed and approved, it will be tough for the project team to move on to the next step.  

Can the project team accommodate application changes if the request is raised at the later testing phases? Will it harm the project plan?  

Application changes are normal and can be raised at any stage. The changes are purely based on regulatory and technology updates as well as customer demands. Hence, the updates may come frequently, which the team must accommodate accordingly. Since the application changes are flexible there are greater need to incorporate these changes. Feature and functionality changes are integral parts of project plans.

    • Selecting the test cases for the sanity check

This is an interesting phase in the testing project where you identify the new functionalities, feature changes, and any bug fixes. Since the objective is to perform a quick and fast sanity check, there is no requirement to write new tests. This step ensures that the newly implemented changes are working without any errors.

The process can be complicated as only a small portion of test cases are selected for sanity checks. The team will fail to determine the impact ratio if the right test cases are not selected. The project team must thoroughly understand the project requirements and select only those test cases that might have the highest impact on the application’s functionality and performance.  

What is essential to identify the test cases for sanity checks?

Based on the project, application under test, project scope and test environment, the project team can identify the test cases based on their test predictability. The project team usually handles multiple test scenarios to understand the test cases that can have the maximum impact on application features, functionality and performance and choose the most probable test cases. Usually, the requirement gathering and analysis, understanding of AUT, project scope and the test environment are the essential aspects to identify the test cases for sanity checks.

    • Designing and developing the actual test cases

This is the actual phase when the testing team starts designing and developing the test cases. The team prepares the required test data for testing, and the quality assurance team reviews it. The team identifies the test cases that must be designed and developed and writes them to ensure that the written test cases are easy to understand. They also create test data and scenarios for test cases, identify probable results, and review and validate test cases. They update the requirement traceability matrix (RTM) with new changes.

The main objective for the team in this phase is to have a set of accurate and relevant test cases to ensure that they provide complete test coverage of the software and application. It helps the team to have a 360-degree overview of software quality. A comprehensive testing process allows the team to detect potential errors in the software before it is released. The team prepares the test data and keeps it ready for test execution. In the test case development phase, the testing team creates, verifies, and reworks test cases and manual and automated test scripts.

Banks may face two types of complications at this stage. First, if the team lacks the skill and knowledge to identify accurate and relevant test cases, and second, if due to multiple changes, the number of rework test cases increases. It may consume an ample amount of time and money to find skilled people for the job and validate the increasing number of test cases due to frequent changes in applications.

Can there be a possible solution to reduce the effort and time of rework?

It is time-consuming to find skilled developers and testers when your projects are time-bound. Even if you manage to put the entire team together, you might have to meet with one more challenge of accommodating frequent reworks. The project team might have very less time to meet the project deadline and time-to-market. So, banks hire third-party vendors to handle the testing projects to ensure they go live confidently without worrying about software quality. Since the amount of rework increases with application changes, it occupies a significant segment of the software testing lifecycle compared to new changes. Hence, the team selects a robust test automation solution to reduce the rework or regression test time.

    • Understanding the available test environment

Some banks and financial institutions have a conducive test environment with the necessary hardware, software, and network configuration for test execution. While the team designs and develops test cases, they can simultaneously evaluate the existing test environment. If the test environment does not support the massive business and system transformation and upgrade projects. The team must consider setting up the test environment for an effortless test execution project.

The process is complicated if the bank runs long on its legacy system and has a massive amount of data to migrate. Banks find it tough and time-consuming for seamless execution of the testing process without a favourable test environment. Moreover, they must delegate skilled people for the projects or hire a new team.

What is the possible solution if you do not have the required team strength, bandwidth, and allocated budget to set up a test environment?

Banks can consider hiring a third-party vendor to take care of all their test requirements and deliver the project on time by meeting all the quality standards and regulatory compliance. The QA solution providers have the required test environment or can set up one to ensure timely project completion.

    • Setting up the right test environment for seamless test execution

The test environment defines the condition on which the software is validated. Setting up a test environment can be simultaneously conducted with designing and developing test cases. In this stage, the project team determines the software and hardware conditions for testing the product. As the activity is done by the development team, the testing team may or may not be involved in the process. However, they check the readiness of the available environment, and this is known as smoke testing.

The first step in setting up the right environment is to understand the required architecture. The team must be skilled and aware of the available architecture. The test environment needs to be adaptable for seamless test execution. The process can be complicated if the environment is not favourable for test execution and is not ready with the test data set up.

How can the team ensure that the environment is built-ready for seamless test execution?

The team must validate the readiness of the test environment to ensure seamless test execution through smoke testing. They must understand the hardware, software, and network configuration well to ensure that the environment supports the test execution without any disruption.

    • Executing the test cases

In this phase, the test cases and test scripts that were created in the design and development phase are executed to detect defects or issues or errors in banking software. The evaluated results are gathered and assessed by the team. Test execution combines the two phases, planning and developing that verify the software quality. The activity also helps report bugs or technical glitches in the software. If the testers report bugs, the errors are reported to the developers who fix the bugs, and the testers test the software again.

The process can be complicated if there is no adequate test, or if there were any issues in the planning and development of the test cases. Also, if the test environment is not favourable or the test execution did not happen as per the test plan. The team must also put the stages together to finally execute the test cases.

Can multiple test execution degrade the software quality?

The objective of software testing is to validate the accuracy, stability, reliability, usability, efficiency, flexibility, portability and more. Software is tested to ensure that it successfully passes all the criteria. Multiple test execution does not degrade the software quality, instead, it delays the product release. It may not be necessary to test the same feature again and again. Moreover, testing the same feature repeatedly can be time-consuming. It is a good practice to test only applicable changes, performance, and security instead of testing the complete software functionality and menus. It saves time and effort and does not disturb the existing feature of the software.

    • Tracking and reporting defects

Tracking and reporting defects is one of the objectives of testing the software and its quality. The defects or issues are logged in defect tracking systems that are raised during the test execution. The details of the defects include descriptions, defect severity, priority, and more. The test execution results are examined to verify the software functionality and performance and simultaneously detect defects if any.

If the team identifies defects, it is sent to the developers for resolving the errors and retested again to ensure that the defects are fixed. After the defects are fixed team documents and report the test results to the stakeholders. The end objective is to identify and resolve the defects to ensure that the software can be released without any errors. Hence the software must be tested multiple times to ensure all defects are resolved. The process can be complicated if the team does not have an adequate mechanism to identify defects. Finding defects manually is a complicated process.

What solutions can organizations opt for to reduce the rework and multiple retests?

Multiple defect-tracking tools in the market can reduce the manual effort of identifying defects in the software and reduce the rework. For its benefits, organizations use defect-tracking tools that can be easily integrated with testing or test automation solutions. This saves time and effort and reduces rework. The team can confidently fast-track product releases.

    • Planning exit test followed by test closure

This is the final stage of the test execution and a critical one. In this final stage, the quality evaluation of the software is completed and determined if the product is ready for release. In this phase, all testing-related activities and formalities are concluded and documented. The testing team by now must have a clear understanding of the software quality and reliability. Whatever issues have been detected this far must be resolved. The team must document the testing process and improve the testing processes based on their experiences. It helps in removing the bottleneck from future testing projects.

The stage comprises preparing test summary reports, defect tracking and reporting, cleaning up the test environment, preparing test closure reports, transferring knowledge, and providing feedback for process improvement. The main objective of test closure is to validate the software quality and ensure the product market launch. It also confirms that the test execution was organized and completed efficiently. The process will be complicated if there is a lack of relevant information, or the team fails to capture feedback and critical lesson learnt from the project.

How to ensure that the report is whole and comprehensive?

Recording the project reports manually will be liable to errors as there can be a chance of missing out on information. There are a few test automation solutions in the market that comes with easy reporting solution. As reporting is a tedious, elaborate, and time-consuming exercise, these solutions are convenient and useful for the project team.

Conclusion

The steps, scenarios, and situations mentioned above are our understanding of the business and system upgrade projects we delivered. Yethi has supported 125+ banks and financial institutions in 30+ countries in their transformation and upgrade projects. In the 700+ projects we have completed so far, we have achieved quality and punctuality by completing the projects within strict deadlines.

We manage end-to-end test lifecycles efficiently to ensure customers receive quality outcomes within the project deadline. We have conducted end-to-end functional testing and non-functional testing in upgrade testing projects. We have also validated the robustness and responsiveness of systems while ensuring stability and flexibility in data migration and systems performance testing.

We leverage the highest potential of our robotic codeless test automation solution Tenjin during repeated regression cycles in a project. Our intuitive and intelligent solution comes with banking and FI-specific plug-and-play adapters that reduce implementation hassles with banking applications. Tenjin offers data-driven test execution and covers pre- and post-regression cases and effortless system integration testing, user functionality testing, user acceptance, regression testing and more. It comes with easy report generation capabilities and integration with defect management tools to generate test summary reports.

Testing Essentials for the Recent CBS Versions

Oracle has already announced the release note of v14.7, with several patchset releases in FLEXCUBE core banking solutions versions like 14.6, 14.5, 14.4 and more. Finacle CBS, on the other hand, has gone through a massive transformation from v10 to v11E. Infosys Finacle v11.E has many interesting features, including a product factory framework, multi-channel capabilities and more. Let’s take another instance: Temenos’ latest version R23 highlights several features in Core Banking, Digital Banking, Payment Hub, Risk and Compliance platform to increase agility and smart digital experience, accelerate growth and enhance customer engagement. The list of CBS versions goes on, and so do the challenges. Let’s have an in-depth overview of the current challenges and possible remedies to them.

The Current Scenario

In the last few years, the growth strategy for enterprise banks has changed. There are many changes released in the core banking solutions and there are too many regulations to comply with. Moreover, customer demands are changing rapidly, creating a constant tug-of-war for financial service providers to serve their customers on the channels they choose. The emergence of Fintechs, telecom partners & retailers, and other startups are challenging the business and their revenues. In order to keep up with the pace of change, banks must transform. But often complex technologies, regular updates and frequent patchset releases get in the way of the bank’s digital transformation strategies.

Banking software is one of the most critical and complex. Complex modules, submodules and intricate architecture of multiple menus are one of the reasons, but the complexity increases more because of frequent roll out in application versions by OEMs. The changes in the new versions and patch releases become a complicated task to tackle together.

Some banks are still running on legacy platforms simply because the migration of massive volumes of data will overeat their budget and take years to complete. But the transformation should not be so tough. The banks are breaking down their transformation journey into small segments to easily manage the project. It can reduce project complexities and simplify the banking business. The core banking solutions are tailored to fit customer preferences. It accelerates innovations and helps banks to stay ahead of their competition.

Why implementing the recent core banking versions can be complicated?

The core banking solutions support the banks in their transformation journey. But changes in technology, regulatory changes and customer demands make it essential to roll out new versions. However, updating the new versions over the existing ones can still be tedious and critical at the same time.

The reason banks transform is because their ultimate objective is to offer multiple services and ensure customer satisfaction. Since core banking solutions are an essential component of the banking business, it becomes necessary to remain updated with the changes in the CBS platforms. During the CBS transformation journey, banks may face multiple errors, which if remain unaddressed can multiply into severe issues, like security breaches and compliance infringements leading to further loss of money and reputation.

Here we list down some of the common complications that may occur during the core banking transformation.

  • Migrating data from the old legacy system to the new version of the core banking application is challenging, as it may run into the risk of data fraud and manipulation.

  • Integrating the new CBS version with the existing one can be complex, as updated versions have multiple features and functionalities that can disrupt banking operations.

  • Finding the right people for the right job is a complex, time-consuming, and costly affair, as you do not always find skilled people aware of the new system’s updates and changes.

  • Understanding the future needs of the banking business is complex, and so is adapting to the new CBS versions. As banks look for solutions that support the banks’ growth, the CBS versions must be scalable.

  • Managing business as usual can be complex with the implementation of new CBS versions as it may disrupt normal banking operations.

  • Complying with banking regulations that come with new CBS changes during implementation can be challenging.

  • Maintaining service reliability with the vendor offering support and updates can be complex if they are not as per the industry standards.

As the banks embark on the transformation journey, on their way they confront many risk areas. Risk mitigation is necessary to ensure that the banks gain the most out of this endeavour. The data migration process from the legacy platform to the new versions may open the door to many threats. Hackers may manipulate the data and easily steal sensitive customer data and information. It is essential to ensure the security of the enterprise application during the transformation and data migration process and comply with all the necessary security standards.

Banks cannot afford to deny access to their customers during the transformation project. They cannot put their BAU transactions on hold. It adds up to more complications when banks have to grant accessibility to their customers, compromising the quality of applications. In the absence of core banking solutions, some transactions may be done manually making the transactions more vulnerable. Also, if the old version is not updated with the new one, then the organization may lose many opportunities like losing business to their competitors, data security issues, slow performance, device compatibility issues and more. Banks invest time and money in core banking transformation projects and look for adequate returns on investment.

But how to achieve the desired result and mitigate risk in the core banking transformation journey?

Banks require end-to-end validation of core banking platforms. Whether the bank is undertaking a complete digital transformation or small implementations as a part of business-as-usual projects, validating core banking applications becomes necessary for the banking business. The change in customer behaviour and regulatory changes influence the OEM to implement new changes in enterprise applications. Banks must adapt to the changes implemented in the newer versions of core enterprise applications to ensure they offer unparalleled customer services.

Banks are implementing technologies to mitigate risk through risk probability. During the transformation journey, banks must measure the risk contingencies to overcome/mitigate the risk and ensure that they continue high-value services to their customers as well as thrive on their reputation. Maintaining core application security is crucial as it ensures data protection against theft and manipulation.

The above points to the importance and necessity of maintaining the quality of banking software. The banking applications are evaluated based on stability, flexibility, security, functionality, and performance. Quality assurance helps banks achieve the desired outcome. Banks’ digital transformation is incomplete without end-to-end validation. Upgradation and validation are both essential components of banks’ transformation journeys. Software testing is an inseparable and incomparable component that confirms the quality of banking or financial applications.

How do new technologies in recent versions of CBS platforms inspire the testing industry?

The CBS platforms are evolving continuously. Each version released is an enhanced version of its preceding one and supports banks’ digital transformation journey. The new technologies and customer expectations inspire the OEM to release new versions of Core Banking Solutions.

The new changes in the application version must be verified at different levels to ensure that the project implementation does not go wrong. The banking software testing industry also has undergone a massive transformation. Test early and test often is a thing now. Banks require the most robust and scalable solutions to take care of all their QA needs. Application changes occur fast and frequently, so regression occupies a significant area in CBS testing. Undertaking each regression sprint will be expensive and time-consuming. Therefore, banks opt for automation testing, which can reduce the regression burden, also saving time and money.

Also, banks can replicate a testing environment through various API threads to avoid sharing the live environment. It ensures application security. But it is still essential to validate the quality and integration of APIs. Hence API testing has become a popular practice for banking operations. Banks select probable test cases/scenarios that can impact the banking operation.

This is a cost-effective option that highlights the impact areas without running through the entire application flow. It is commonly called sanity testing. Code quality is validated to ensure the application can move on to the step ahead into the other testing areas like functionality, performance, and security. Software testing is more agile now. It follows CI/CD methodology supported by continuous testing in the DevOps pipeline for easy adaptability to the agile environment.

Can testing ensure banks receive the desired outcome and a high return on investment?

Let’s explore what testing does to your banking operation and banking software. Core banking solutions are the backbone of the banking business. And what if we do not validate the quality of the CBS platforms? There were many such incidents in the past of performance and functionality errors. Organizations pay heavy penalties for functionality errors, monetary loss, reviving back the connections, and loss of reputation.

The core banking solutions are the most vulnerable software with multiple data layers. As there are many data layers, the applications may run into errors if remains unvalidated. This is where software testing comes into the picture. Core banking transformation for any enterprise is critical. Both functional and non-functional testing are essential and integral parts of transformation projects. Here are some of the testing essentials for the recent CBS versions to ensure you have the desired result and a high return on investment.

  1. Regulatory compliance – Based on new trends and technologies, the regulatory authority implements new changes. It requires banks to remain compliant while implementing new CBS versions. Banks must check the system’s stability, accessibility, performance, and security while integrating the new changes with the old ones. System downtime, functionality and performance errors must be considered during project implementation.

  2. Project and program objectives – The main element for core banking transformation is the stability of the system and responsiveness. To ensure the desirable outcome of the transformation project it is essential to validate the consistency and measurability of system behaviour, and response time under peak hours of operation.

  3. QA or project scope – It is important to understand the QA scope of the core banking transformation. Based on the intensity and the project requirements like modules upgrade, version upgrades and more, banks undertake end-to-end testing projects, including functional, performance and security testing. For example, if banks are looking for new patchset implementations, they can undertake comprehensive functional testing, or if they are implementing frequent changes, they may automate the regression pack and more.

  4. Budget and time calculation – Core banking transformation projects come with budget and time constraints. Banks cannot put off their transformation journey for long. The projects must go live without delay. The migration from the legacy platform to the new versions is a time-consuming and expensive practice. Hence, it is crucial to consider and calculate the project budget and time to ensure you gain the maximum return on investment.

  5. Resource requirements – It is important to follow a proper strategy and not put all the eggs in the basket. Resources must be thoughtfully planned based on the QA scope or project scope. The deployed manpower can vary based on the above criteria. For example, the number can drastically come down in the case of an automation project and increase if it is non-functional (performance & security) testing under the project scope.

Why Yethi for your core banking transformation project?

Yethi has tested 25+ business areas offering services to commercial banks, central banks, small finance banks, cooperative banks, payment banks, fintech and more. We are focused on process & risk-based testing and tested channels, modules and platforms in more than 31 countries. We have tested 15 Channels & validated their impact analysis on CBS platforms. We have a ready-to-implement and ready-to-use repository of over 1 million test assets specific to banking and finance.

Our core banking transformation projects are based on three testing methodologies like agile, waterfalls, and DevOps. Yethi’s IP solution, Tenjin, is a robotic, intelligent, codeless test automation solution also comes with plug-and-play banking-specific adapters. It is easy to integrate with all major core banking platforms and fast to execute test automation, saving you 80% of testing time & 70% cost for testing, ensuring the organizations can maximize their return on investment. 

How does Stress Testing affect banking risk & return?

The banks form the economic background of any country. Hence, each move banks make towards improving their digital platform determines where they are in their transformation journey. The banks globally are in stiff competition, and no one wants to leave any stone unturned. From implementing new technologies to upgrading and transforming the business flow, enterprises are making multiple efforts to improve their services and ensure customer satisfaction.

Banking applications always face massive loads, like continuous usage for long hours, multiple users using applications at the same time and more. It puts an immense load on banking systems and applications. The usage capacity sometimes exceeds the limited capabilities of the systems. In addition, users demand new features based on new technologies, which may impact the software if the same is not validated. It is essential to understand the upper limits of the system’s capacity by increasing the load beyond the maximum limit and verifying the stability and reliability of the software application and ensuring that the systems do not fail beyond a certain level and even if it fails, it can recover back.

This is where stress testing becomes critical. The primary goal of stress testing is to measure the robustness of software applications even when the system is running at optimum capacity and sometimes beyond the expected load. Stress testing, also known as Endurance testing, ensures systems do not crash under extreme pressure. Systems sometimes run under extreme conditions to evaluate their conditions beyond normal operating points.

The endurance of banking AUT is checked by putting it under the highest form of stress. It is done to understand if the banking applications can withstand the stress. It helps the testers to determine the stress limit at which the software/systems/hardware will crash. Stress testing also validates that the system has effective error management under extreme conditions.

The current scenario of why stress testing becomes essential for a banking company

  • Frequent feature included with the existing one
  • Less time for the product release cycle
  • Frequent changes in government compliance and a need to keep up with the pace
  • Frequent releases on digital applications and people reliability with a digital platform
  • Interconnectivity of digital platform with main bank server applications

Let’s take an incident for an example,

During the salary transaction, the first couple of days in a month, banks may witness a spike in traffic. High value and volume of transactions and multiple users using the applications simultaneously can create a lot of stress on banking applications. Stress testing becomes essential to validate the abnormal spikes in traffic, and prevent the banks against the loss of revenue and reputation.

Types of Stress Testing:

Systemic Stress Testing – It is conducted across multiple systems working on the same server. It helps discover defects in one application when another application data blocks it.

Exploratory Stress Testing – It is conducted to test the systems with unusual parameters running on extreme conditions, which is rare in real scenarios. Exploratory stress testing is used to detect defects related to multiple users at the same time, virus scanning in all machines simultaneously, large volumes of data fed into the database simultaneously, and the database going offline when accessed from a website.

Application Stress Testing – It is conducted to find defects in performance bottlenecks in applications, network issues, data locking and blocking.

Transactional Stress Testing – It is executed to validate one or more transactions between multiple applications. This testing helps in fine-tuning and optimizing the systems. 

Why Stress Testing?

  • To check if systems can function as usual under extreme stress conditions
  • Show the error message when the systems run on extreme stress
  • Highlight the Grey areas like loss of revenue and reputation when the system crashes under extreme condition
  • Stress testing prepares your systems for extreme conditions

Stress testing helps to analyze the behaviour of the systems in case it fails. A system passes stress testing when it displays appropriate error messages under extreme conditions. It also helps in validating if the system can recover from the failure.  

Why Stress Testing is becoming exceedingly complicated?

During stress testing massive data sets can be lost in the process. This data are often security-related and has a risk of getting lost or the data sensitivity could be compromised. The data in the banks and financial institutions are both massive and sensitive, hence the organizations must compromise the data with a calculated risk.

Banks and financial institutions’ constant effort is to innovate their services and adapt to new technology. In their quest to transform digitally, banks and FIs are constantly implementing changes to their digital platform. Even a tiny amount of change can make the systems extremely vulnerable leading to system failure. Hence, adequate stress testing is essential to ensure that the systems do not fail under extreme conditions. It also prevents the loss of massive and sensitive information stored in the banking systems.

Stress testing helps FIs to ensure better customer experience and builds confidence in the institutions’ ability. The overall QA burden is increasing in banks and FIs due to the growing complexity of environments, frequent releases, complex workflows, and changes implemented by Government regulatory institutions. Hence, it is inevitable to conduct stress testing to ensure the recoverability of the banking systems even after the system fails in extreme conditions.

As banks and financial institutions are transforming digitally there is greater dependency on digital platforms. Transactions have increased in mobile devices, which has increased the chances of system failure more than ever. Whenever there is a spike in traffic with an increasing number of application users, the systems require thorough stress testing to ensure that the digital platforms do not fail with subsequent and rigorous usage.

Is your system stable and reliable to handle extreme scenarios and recover back after service failure?

Is your risk equivalent to the return? Can you expect an equal return to the risk you have incurred?

How can Yethi simplify the complicated stress testing process while ensuring that the banks gain a fair return on investment from a calculated risk?

Considering the volume and sensitivity of data stored in bank systems are massive, testing the stress level of the banking systems can be complicated. Banks may lack available resources; hence, they can consider outsourcing it to third parties who have domain expertise and experience. Stress testing determines the stability of the system by testing beyond normal operational capacity. While we were handling one of our performance testing projects of Greenfield implementation of a newly formed Small Finance Bank, we noticed a few instances.

It included multiple applications like Core Banking Solutions, CRM, Mobile apps, Lending and more. We designed Performance Engineering Parameters based on Testing and Observation to validate transaction response times, average transaction response time, memory usage, CPU usage and throughput of the system.

The system under test was across 400 branches for 4 million customers and 4.5 million accounts simulation, and 4 host servers (20+ cores), load balancers and Database. The target matrix set for the project was response time for transactions within 3-5 secs, EOD batch should be less than 2 hours, EOM/EOY should be less than 3 hours, achieve 1 million transactions daily load, and achieve a maximum 5000 users load. The stress testing was conducted for 5000+ until the system broke.

Through stress testing, banks and FIs validate the stability and reliability of multiple applications. They test their applications under extreme scenarios and check if their systems recover after a service failure. Organizations take this calculated risk to ensure that in real-world scenarios when thousands of users are involved, the systems do not fail and harm their revenue and reputation. The risk is equivalent to the return, as the organizations are sure of their systems’ capacity to handle a load of multiple users simultaneously.  

With a decade in the business and a client base of 125+ clients across 30+ global countries, Yethi has handled more than 60 performance testing projects. Our IP, a ready-to-use test case repository of more than 1 million test cases consists of reusable test assets (including PT instances) that can be further built to multiple test scenarios. It saves 40% human effort and 50% time for testing further reducing time-to-market by up to 70%.

Our team of experienced performance testers adopt a structured approach to planning and executing the performance testing phase. They define clear objectives, milestones, and timelines to ensure optimal utilization of the available time and resources. We employ an agile approach to issue analysis and resolution. They promptly identify performance-related issues through comprehensive monitoring and analysis and quickly resolve them through collaborative efforts with the bank’s stakeholders. This iterative process enables timely issue resolution, ensuring stable and reliable applications.

We collaborate and communicate effectively with the bank’s stakeholders to fast-track the go-live process and mitigate potential delays with thorough feedback and discussion. Client satisfaction is vital for us, so we concentrate on testing efforts, accelerated issue resolution, and ensuring that any critical issues are addressed promptly, minimizing the risk of delays. We establish a robust testing environment and infrastructure that accurately simulate the anticipated user load and concurrency levels. We offer comprehensive test coverage to cover various usage scenarios and user loads. By simulating realistic usage patterns, data sets, and user behaviours, we ensure that applications under scope are thoroughly evaluated and optimized.

 Our typical performance testing flow would look like,

  1. Capturing NFR (Gather & Analyse NFR, Perform Feasibility study, Identify performance test tool)
  2. Environment Setup (Setting up server-tier deployment, Populating Target DB, External Systems & Licenses, Performance Test Strategy & Plan)
  3. Use Case Scripting (Develop Load Test Scripts, Design Load Test Scenarios, Create Test Data)
  4. Scenarios Building (Identify & build Volume, Soak, Stress scenarios, Determine Think & Pacing time, Define Injector Profile  for injector deployment, Define time lines)
  5. Execution (Sanity test, Volume test, Isolation tests, Stress test, Soak test, Load Balancing tests)
  6. Reporting & Analysis (Data sample collection, Determine test outcome by comparing expected Performance, Result report & dashboard for all test types)

 If the stress testing is done strategically, following a performance reengineering framework, the return is worth the risk taken.  A proper framework would not just allow you to attend the desired result but will also simplify the process.

End-to-end BAU Testing Methodology and Approach

End to end BAU testing methodology and approach

A banking system or a platform might have minor patches, enhancements, and configurations after they are sent to production. These changes may seem negligible, but even a little change can affect the features and functionalities in the BAU flow.

Think of a usual day, when you have pre-defined tasks to complete. The OEM introduces a new patch deployment that requires you to fix it in the running systems. This addition can disrupt the entire business workflow if not addressed on time. You can put your usual workflow on hold. You would need an adequate strategy supported with process validating tools to ensure that workflows are not disrupted. It is necessary to prioritize and strategize your daily activities accordingly, which will help you complete your task without disrupting your usual business flow. 

The problems will arise when you fail to validate, prioritize, and strategize the critical tasks. The patch fixes, enhancements and configurations may seem minor, but it is strong enough to impact the regression test cases. The continuous back and forth for every change can disrupt the entire business flow. End-to-end BAU testing is necessary when there is a need to validate the BAU flow. The BAU testing team ensures that the minor changes do not disrupt the everyday business operation.

BAU testing challenges

Why is this a challenge now? What has changed? Need for urgency to handle the challenges 

In current times, OEMs frequently release multiple application versions with configurations and enhancements due to regulatory changes, business requirements and others. The banks and FIs must update the same so that their applications remain relevant to their customer requirements, and they can serve their customers without any issues. In an ideal situation, banks and FIs would test the new features or minor patches, presuming that the old features would function as usual. In the practice, most banks and FIs will ignore the existing functionalities. Each time a new addition is done, there is a huge possibility that the existing functionalities may face a few changes, which over a period would be degraded if not tested.

BAU testing is a continuous maintenance work that includes business upgrades, defect fixes, security patches, feature improvements, support tickets raised, and minor changes to existing features based on customer feedback. BAU projects are not flexible to changes. There is a risk of losing employee engagement by focusing more on meeting customer requirements. The repetitive actions in BAU testing lead to more mistakes. As measuring the success of BAU testing projects is based on the team’s progress, the errors occurred can deeply impact the project. All these reasons make the BAU testing project hard to control and monitor.

BAU testing has not been a serious challenge until now because the frequency of version release was 5 times less as per a recent report. As customer demand and digitalization have compounded, banks and financial institutions are upgrading updated versions at close succession that can meet customer requirements. The continuous testing of new feature integration with the older ones becomes a challenge now. It requires an adequate testing methodology and approach. BAU testing methodology is essential to streamline the testing and periodic regression run process so that it can analyse the patch fixes, enhancements, and ad hoc fixes through functional testing and enhance the regression pack for future usability.

Building and enhancing a regression test pack is an integral part of BAU testing methodology. BAU testing requires repeated testing of application features and functionalities. Repeated testing is time-consuming and liable to human errors. It is becoming exceedingly essential for banks and FIs to consider BAU testing methodology as application features are vulnerable. When new features are introduced, they might disrupt the old features. Also, writing codes every time a new feature is introduced can be liable to manual errors. Therefore, by creating a regression test pack, banks and FIs save a substantial amount of time and prevent applications from human errors.

It is also essential for banks and FIs to consider the BAU testing approach for an unhindered and quality release. BAU testing approach tracks the quarter-to-quarter improvement by reducing effort, improving efficiency, and increasing test coverage.

Is the current BAU testing approach adequate? 

BAU testing is essential to ensure that the business process flow remains uninterrupted. Banks and FIs are initiating BAU testing but it is hard to quantify the outcome of the testing process. Users may have several questions,

    1. Is BAU testing measurable with the right methods and approach?

    1. What are the right methods of BAU testing?

    1. What approach should banks and FIs take to ensure quarter-to-quarter improvement in BAU testing practice?

    1. How can we streamline the BAU testing process?

    1. How can we speed up the release cycle and ensure quality and efficiency?

Here are the solutions.

Business-as-usual (BAU) requires banks and FIs to keep up a routine work environment and maintain a smooth efficient workplace. BAU testing is done to ensure that this everyday routine work remains interrupted, and the process flow remains smooth. Since BAU is a continuous process, testing must be executed with due diligence.

To ensure the successful outcome of your BAU testing effort it is crucial to consider reducing the time, cost, and effort invested in testing. Banks and FIs must evaluate the ROI of the testing practice to measure the outcome of BAU testing. Breaking down the criticalities, we must also understand that achieving the 100% desired result for BAU testing is not possible without a proper methodology and testing approach.

Let us evaluate the parameters of measuring the outcome of BAU testing.

    1. Time constraint – Integrating new features in existing BAU models and expecting 100% accurate results on time is hard. Accommodating testing in the continuous workflow is a challenge that most banks and FIs must put up with. Will it harm the workflow, can we expect quality results, these are the common questions that banks and FIs muddle with. Planning a BAU testing project comes with experience and skill. A skilled and experienced team can design a BAU testing project through appropriate methodologies and proper approaches. Executing the BAU project and measuring the outcome quality in less time determines the success of the BAU testing project.

    1. Cost monitoring – BAU testing requires a lot of customization in order not to disrupt the continuous workflow. There is a fair amount of cost for customization that banks and FIs must incur, and it tends to go overboard if not monitored or controlled. Will the expense increase rapidly with multiple customizations, will there be a need for new software to support the new additions, will there be a need to incur an extra cost to accommodate the changes and more are the most common questions that Banks and FIs dwell over. Monitoring the BAU project testing and incurring the price is a work of competency. The most competent team can monitor and control the overboard expenditure with the right methodologies and approach. Executing the BAU project and measuring the quality outcome in a cost-efficient way determines the success of BAU testing projects.

    1. Effort management – BAU testing involves managing the effort towards the quality outcome of the project. BAU testing involves a substantial amount of regression cycles, where the dependency is more on the test automation solution than on manual effort. There must be a logical distribution of manual effort and test automation solutions. This parameter ensures that the project is completed within time and following a strict budget without involving extra resources required towards project completion. Managing effort without depleting more than you can handle is the work of the skilled and experienced testing team. The proper distribution of resources determines the success of the BAU testing project.

Conclusion:

The end-to-end testing methodology and approach are essential to reduce errors in BAU testing projects. At Yethi, we follow an organized end-to-end BAU testing methodology. Our BAU testing methodology consists of,

    • Analyse the regression impact

    • Map the impacted regression test cases

    • Retesting and reporting, defect logging and tracking

    • Enhance and maintain regression pack – Add test cases for the patch fixes and enhancement to the regression pack

Our BAU testing and periodic regression run consist of patch fixes, enhancements, and ad hoc fixes. We conduct BAU functional testing in three areas, integration, acceptance, and UI/UX. 

We follow a 3-stream structure in Patchset Regularization Methodology. We understand Patch Set backlog and impact analysis and build test strategy for backlog validation. We design test cases for backlog validation, backlog patch deployment in the test environment, backlog cases test execution (manual), automated regression testing, and deploy patch set backlog production.

We build and maintain an automated regression pack. We understand the application configuration and customization, design base regression cases, install Tenjin (5th generation codeless test automation solution), configure Tenjin application BOT, automate regression cases, validate automated regression pack, and update automated regression pack with patch set regression cases.

Either the banks and FIs or Yethi can handle the final stream, BAU-regularized patch set to test and deployment based on preference. It is divided into two quarters, each quarter consisting of patch set analysis, design and execution of manual patch set cases, and automated regression of impact area.

The approach Yethi takes for BAU testing is allocating the Core and Flexi team for projects. The core team is a team consisting of fixed resources, while resources are flexible and can be easily moved to other projects from the Flexi team based on the requirements. The project is monitored with review and report to track the project improvement. The approach reduces effort, improves efficiency, and increases test coverage. We maintain a systematic cycle in BAU testing through requirement analysis, design & execution test cases, defect logging & retest, execution sign-off, and maintaining regression pack.

We have proven results in handling multiple BAU testing experiences. We have more than 30 years of collective industry expertise and experience. Our testing process focuses on quality, a systematic approach, and automation by leveraging people, processes, tools, and technology. We reduce the amount of testing with our automation-driven process. Our outcome-based managed services model focuses more on predicting and preventing errors than detecting defects. Our codeless test automation solution is tools agnostic and optimized to provide quality output.

Tenjin Enterprise 3.0 is built-ready for Core Banking Transformation

core banking transformation

We have seen significant changes in the banking and financial industries. Customers’ requirements, growing digitalization, and market competition have accelerated. These factors are propelling banks to transform their core banking systems. Banks, being customer-centric, understand the need to evolve faster than before and adopt modern technologies to support them in the transformation journey. Banks are doing every bit from their side, yet some problems still remain to support the need for quality digital solutions.

Banks face recurring challenges like quick adoption of digital changes, faster product go-live, and meeting customer expectations. All these must be done at a low cost or should be sustainable to yield a high return on investment. Banks would not want to compromise on the product/software/application quality. Financial institutions are constantly looking out for solutions that will address all these issues.

Considering how fast OEMs release new products, banks and financial institutions are driven by the need to be prompt and flexible in adopting the changes. But adopting changes is not always easy. Organizations face multiple challenges like time constraints, cost restrictions, and inefficient implementation of changes. The process can be more complicated if applications run into errors, affecting the platform’s performance, loading, and response.

What are the challenges?

New innovative banking and financial solutions are not compatible with outdated legacy systems. Banks and financial institutions must steadily adapt to sustain the competition around them. Customers are no longer ignorant of the changes brought by digital innovation. They are more informed and updated with the recent changes.

The tech-savvy millennials comprise 35% of the U.S. workforce and will make up 75% by 2030, followed by Gen Z, who are twice tech-savvy compared to millennials. Both these generations are always ready to adopt new digital techniques. They constantly demand updated technologies, and any organization unable to match their expectations and demands is likely to be out of the league.

Hence, banks must pick up the pace of digital transformation in order to hold on and strongly build their brand sustainability and reputation. The drive for digital transformation is two ways,

  • Transforming and growing technologies

  • Customer requirements and demands

Since banks and financial institutions are customer-centric, customer retention is the main objective of their business. Considering the mentioned driving force for digital transformation, banks must let go of their legacy platforms and start incorporating new technologies and updated platforms.

Since organizations have less time between adopting and are always in a rush to release the products in the market, the end-released product can run into errors. Banks and financial institutions cannot risk their system failure and brand reputation. It is inevitable for them not just to be ready for the changes in technology but also to predict future trends and offer quality service. Ensuring the systems’ quality, being future-ready for changes and adapting to it is necessary for the banks and financial institutions to deliver to their optimum capacity.

From many of our previous experiences, we have noticed that organizations have a lot of reservations and doubts clouded in their mind regarding the implementation of codeless test automation tools. It is because they faced challenges maintaining the balance between rapid implementation of changes and quick testing turnaround.

Our research has highlighted some common findings. A few of the familiar questions we have ended up answering are

  • How easy would it be to adopt the codeless test automation solutions?

  • Would the testing team need adequate training or specialized skill and knowledge to handle the tool?

  • Can the codeless test automation solution effectively validate the changes?

  • Will it ensure end-to-end system quality?

  • Will it successfully highlight the significant errors and predict the latest trends?

  • Will it reduce the time to market while detecting and highlighting defects early in the development phase?

  • How much maintenance will the codeless automation tool need to ensure seamless performance and functionality?

  • Can automation testing be effective even without an adequate infrastructure?

This is where our domain expertise, knowledge, & skill come into play.

Yethi is one of the pure-play QA services and solutions providers that offers a 360-degree overview of all testing efforts. From our experience with 100 likewise transformational journeys of banks and financial institutions and closely witnessed the challenges that organizations face. We worked in a capacity to meet strict deadlines for digital releases in a cost-efficient manner. In tune with the continuous changes introduced by OEMs, we help banks and financial institutions test the functionality, performance, and security of enterprise software applications.

We are in continuous innovation, and our intuitive codeless test automation solution, Tenjin Enterprise 3.0, is 5-times more effective, fast & improved with new and futuristic features. The prominent features of Tenjin Enterprise 3.0 are listed below,

  1. Auto-learning application BOTs are Adapter independent & can commence immediately after installation of Tenjin Enterprise 3.0, saving 40% of testing efforts. These independent adapters can auto-learn the entire screen, part screen, and single attribute. 

  2. Auto-execution with immediate installation saves 50% of testing time, and auto-discover test-specific feature improves test efficiency by 70%.

  3. Client-side execution vs server-side execution improves system performance. Transaction execution summary displays the flow of execution & values of each field to track failures. It increases the test coverage and reduces errors & costs by 60%.

  4. It has a high level of readiness & adaptable to recent versions of Finacle, Temenos & FLEXCUBE. Tenjin Enterprise 3.0 comes with in-built adapters for all core banking solutions.

  5. It does not require a specific framework for implementation and is effective from day zero.

To sum it up, Tenjin Enterprise 3.0 can be easily adapted by all major core banking solutions. Since it is codeless, there is little to no specialized knowledge or skills required to execute automation testing on this tool. It auto-learns specific changes in the applications and not only knows the exact changes but also validates them instantly.

Tenjin automatically detects functional errors at the early stages of the applications, ensures end-to-end software quality, and reduces the time to market. Tenjin runs on low maintenance and offers seamless performance and functionality. Tenjin functions even without adequate infrastructure. It requires implementation on the client-server systems, and with easy integration, it executes automation testing effectively.

Challenges faced by banks in multiple API testing

Multiple banks API testing

Application Programming Interface or API is a current trend in the banking and financial industry that helps organizations in their various service lines. APIs have many benefits that result in banks creating multiple APIs to ensure their services spread across client servers to eliminate toggling between ERP platforms and banking systems. Currently, banks are using APIs for UPI collection, Reverse MIS, fetching bank statements, account balance checking, payment enquiry, opening account, and adding beneficiary, to name a few.

APIs have become an integral part of banking transactions as it simplifies the banking processes and eradicates complexities. Banks distribute complex transactions to open-source platforms to offer ease of use to the users and reduce the liability on in-house banking systems. But testing Application Programming Interface (API) is not easy. There are always initial challenges when it comes to testing APIs.

  1. Lack of applicable simulator in sending requests/responses while executing API testing for open-source, commercial and more

  2. Integrating multiple API testing tools

  3. Impact of change, as a small alteration can impede the entire output

  4. Lack of understanding of business application logic and functionality knowledge

  5. Managing extensive test data

  6. Feeding incorrect input values

  7. Inadequate knowledge of combination parameters

Background of API testing

  • Initial setup – Automation testing is necessary to ensure if APIs are sustainable to bear the performance load and pressure.

  • Handling response – It relates to data formatting that ensures if APIs are capable to handle requests and responses.

  • Parameter combination – Another challenge is to test all possible parameter request combinations in the APIs related to problems within specific configurations.

  • Arranging API calls sequence – API calls must be arranged in the correct order to eliminate errors. A proper sequence of API calls can reduce errors. However, the challenge increases while working with multiple-threaded applications or multiple APIs.

  • Validating parameters – Validating the parameters sent through APIs can be challenging for the testing team. Every parameter sent through API requests must capture the correct data type, fits within the length, and value range, and pass the validation criteria.

  • Tracing system integration – It is a challenge to ensure that the API testing systems work correctly with the data tracking systems. It is crucial to monitor API performance to ensure that they bring correct responses or calls.

  • Ensure security as the data is sensitive: Banks must maintain API security in many layers as data is highly sensitive and vulnerable to cyber threats. But maintaining multiple API security at different layers is challenging.

If the additional parameter is included, it exponentially increases the number of possible combinations simultaneously also increasing the challenges. Testing the multiple API integrations further intensifies these challenges.

Why API testing is complicated?

API integration in banks is spread across multiple services and channels. Banks use Application Programming Interface (API) in the areas like,

  • Payment (for single or bulk payment systems like NEFT, RTGS, IMPS, UPI, & FT)

  • VPA-based payment through UPI API

  • Aadhaar-based payment

  • Collection or refunds for collections

  • Real-time validation of collection through various payment modes

  • Refund back to the customer in case of non-validation of remitter

  • Real-time validation of cash collection through branches

  • Cash Deposit Machine (CDM) and status update

Since banks are using and implementing APIs with their already complex multiple service lines, validating multiple APIs become extremely crucial and critical.   

Banks use API to communicate between banks and client servers. It is easy to transfer data between two systems. However, banks must ensure that the API integration is seamless and secured to ensure multiple & sensitive data. API codes are mostly written in XML/JSON. API confirms that the transactions do not have to switch between the ERP platform and banking systems.

Managing multiple APIs in the banking process is extremely crucial now. Banks have included API in mainstream banking. Some of the critical transactions are done using APIs. Moreover, even without being part of banking systems, APIs can pull sensitive customer data to use it to complete transactions.

If banks are using multiple APIs simultaneously, handling calls in orders, responses, and requests will be in bulk. If the platforms remain unmanaged and unattended it will further intensify complexities leading to weak API responses and requests. Multiple API testing demands immediate attention because,

  • API banking is a mainstream banking

  • It handles multiple and critical transactions

  • Weak APIs will disrupt the process flow in ERP platforms and banking systems

  • It will ensure a smooth flow of the banking process

Are the banks doing enough to test multiple APIs?

To understand if banks are doing enough to test the multiple APIs, we must understand the critical areas of testing APIs.

The three critical areas of API testing are Unit testing, Integration testing, and UI testing. In most scenarios, both manual and automation testing co-exist, but when it is about testing multiple banking APIs, it is recommended to automate API testing wherever applicable. Let us explore the critical areas of API testing one by one.

Unit testing – It is critical to perform mock DB for more coverage on testing by covering a wide range of functional areas. Code keeps changing; hence, it is essential to write an extensive test pack. Refactoring of code must be considered while creating test cases. More test cases are automated, and developers can be confident about the software quality. All methods written in the code should be tested.

Integration testing – Integration testing is inevitable and must be performed extensively after unit testing. During the integration testing phase, we must verify

  • HTTP status code

  • Response Payload

  • Response Headers

  • API performance/response time

UI testing – UI testing is a holistic aspect to test the behavioural aspects of the entire application.  

To sum it all up, unit testing is done on a larger scale compared to UI testing. Unit testing is fast, easy, cost- & time-efficient. It promptly highlights the areas where the functionality has gone wrong.

Banks are aware of the importance of API testing and investing sufficient time & effort to extensively test the aspects. It must be consistent and must be in tune with the changes happening in the banking APIs globally.

It is essential to consider the API testing aspects. Unit and Integration testing must be considered in the mid-level range and UI testing from the business perspective to test entire applications.

Essentials of stable and secured banking APIs?

Stable APIs are those that can handle requests and responses with equal ease. At the initial API setup, it is critical to check, if the APIs are sustainable to bear the performance load and pressure. It must be capable enough to handle requests and responses during data formatting. The stable APIs should pass all possible parameter request combinations in the APIs within specific configurations.

A stable API follows correct API call orders and eliminates errors in call orders. The stable APIs capture the correct data types, fit within the length, and value range and pass the validation criteria. If there is any deviation in the parameter order, there will be an error alert. A stable API must bring correct responses and calls and work with adequate data tracking systems.

There are different types of APIs (Open APIs, Internal APIs, Partner APIs, Composite APIs, REST APIs, SOAP APIs, JSON-RPC, and XML-RPC), and it is critical to ensure API security. The security level differs in each of the APIs. For example, SOAP APIs are more secure by design compared to REST APIs. REST APIs do not have any in-built security. It depends on the API design.

It is critical to secure REST APIs while deploying, transmitting data, and interacting with clients. REST APIs also do not have an in-built error handling feature and resending data for occurred errors. The REST API security depends on how they are implemented and the selected architecture. Hence, we can conclude that not all APIs are highly secure and stable in usage. Organizations must put in a little effort to ensure the stability and security of the APIs.

Yethi’s expertise in API testing

At Yethi, we have been associated with many API testing projects. These projects were not entirely devoid of restrictions and limitations. In fact, while test execution, we have seen many such issues. Some of the challenges we have faced are a mix of Encrypted and Unencrypted APIs, multiple encryption levels and data formats, API tunnelling instability/availability, handling multiple security protocols and more.

Our approach is to access the API level and check the functionality, reliability, performance, and security of the programming interfaces. API testing uses software to send calls to the API, get output, and note down the system’s response. It concentrates on the business logic layer of the software architecture.

We offer manual and automated API testing the validate requests and responses at various API layers. Considering that Unit testing is one of the most important aspects of API testing, we follow a strategic step like Unit Testing at a unit level, Functional Testing at each endpoint fulfilment, Availability and Performance Testing, and Security Testing (VAPT), Acceptance Testing – End to End requirement testing,

We have experience in executing various types of API testing as mentioned below,

  • Functionality Testing: To check if the API works and does exactly what it’s supposed to do

  • Reliability Testing: To check if API can be consistently connected to and lead to consistent results

  • Validation Testing: Helps verify the aspects of product, behaviour, and efficiency of an API

  • Load Testing: Is performed to ensure the performance of API under both normal and at peak conditions

  • UI Testing: It involves testing the user interface for the API and other integral parts

  • Security Testing: To test that the API is secure against all possible external threats

  • Penetration Testing: To detect vulnerabilities of an application from an attacker’s perspective

  • Fuzz Testing: To test the API in terms of the limits to prepare for the “worst-case scenarios”

Our intuitive robotic test automation solution, Tenjin, is a functional test automation solution that executes API testing. It is a seamless & effective test automation tool for BA and functional testers. It is proven to be effective across API & GUI-based applications. It can seamlessly execute testing in a simulator and emulator, without having to install an API testing tool separately.

Tenjin Test Automation solution is REST and SOAP API ready. Its features like auto-learn, auto-discover and auto-execute help to learn application interface automatically, access through the path, operation, requests, and responses of different APIs and build data templates for API requests and responses. It automatically executes processes like sending requests and receiving responses. The send request command validates JSON, XML, form data, set header values, set request parameters, Auth: Basic & OAuth2. In receiving responses, it validates response headers, response body, and HTTP Status and captures & references response values.

  • Tenjin learns deployment of API BOTs, learning of API under Test Interface, builds API metadata, & publishes API data template

  • Design & plan test projects, document test cases, build & map test data, sequence and scheduling

  • Execute via various trigger points, combine flow & data, automate API testing in multiple endpoints, & test execution report

Our experience, solution, and services can support the banks taking an approach to managing multiple APIs. We understand banks cannot go wrong testing several critical APIs. If banks have to test many banking APIs simultaneously, they can trust the domain experts and our expertise.

Steps Banks are taking towards Digital Transformation Journey

Digital Transformation

The digital transformation journey is gaining momentum in the banking and financial industry. But when did the journey first start? As per a Gartner report, 69% of organizations believe that the Covid-19 global pandemic has accelerated the digital initiatives, 60% have increased the focus on improving the operational excellence through digital businesses, 50% have increased the focus to drive higher levels of cost optimization through digital initiatives, and 48% are investing on digital initiatives. Covid-19 may not be the sole reason for the growing digital business, but it has sparked the growth.

Banks are adopting new technologies on their digital transformation journey. They are taking every step to digitize the services and move processes online. Banks are also accommodating backend changes which is an essential step towards digitalization and supports the transformation. Any digital move is incomplete without ensuring security against scams and fraud risks. Banks initiate many digital moves but eventually strive to succeed or manage the pace. It is because they lack support or skill in many aspects, which are essential to compete with digital-native solutions. Digital transformation does not end with the integration of digital systems. It is a move that includes meticulous attention to ensuring user experience, security and performance of applications, monitoring infrastructure and more.

In this article, we will explore the objectives and goals banks and financial institutions are setting up for themselves and the steps they are taking toward the digital transformation journey.

Goals and objectives for digital transformation journey in banks and financial institutions

The digital transformation journey of banks and financial institutions did not start overnight. There was a pre-conceived idea behind such a revolution. Banks and financial institutions envisioned their goals and objectives before their journey. Let’s explore them one by one.

  1. Improving customer experiences

Customer requirements have changed with the passing years. Today, customer demands quick and easy solutions. They require digital solutions (mobile devices & digital apps) integrated with new technologies, improved use of data and analytics and more. It enables the customers to get the exact services quickly whenever they want them.

Consumer behavior has changed the way banks look and offer services to their customers. Banks and financial institutions are customizing digital solutions to create digital engagement for customers of different segments, based on the factors such as age, preference, location and more. Consumers have moved to digital platforms from the traditional model of banking services, which facilitates digital transformation.

Consumer’s changing needs are compelling banks to re-evaluate the services and future scope of the branch network. Banks are increasing their digital footprint by moving the branch footprint to a digital platform. They are aligning the services to meet consumer behavior and building new omnichannel sales and service models. Based on consumer trends, they are enhancing cross-channel marketing communications.

  • Improving time and team efficiency

As the digital footprint is increasing, branches have lesser footfall. The banks are offering their services on the digital platform. Even the critical transactions are done using digital platforms. Organizations like banks and financial institutions are investing in the digital transformation journey and improving time and team efficiency. The investment includes expanding the talent base using training and cross-functional deployment to ensure that organization can save a significant amount of time from project initiation to completion.

Domain & application knowledge is critical to facilitating the digital transformation journey of an organization. Many organizations, so far, have been using legacy systems. Handling and managing the system workflow requires hard skills & knowledge. As the process changes by adapting to digitalization, organizations are putting more time and effort into building strong management and highly experienced project teams. Organizations are moving beyond the traditional outlook of using legacy systems. They are adopting digital frameworks to ensure using technologies to their maximum benefit.

Organizations are currently focusing on process and coverage repository. After undermining investment in tools and training for so long, organizations realize the importance of investing in tools and training. They are investing in training employees to be more skilled to keep up the pace of digital transformation. Organizations need the most effective solutions to help them with the quality product launch and faster time to market. 

  • Using modern technologies for maximum advantage

The digital transformation journey is incomplete without development in technologies. Organizations are harnessing the unconstrained potential of technologies and digital solutions. But it is not just about digital solutions; digital transformation involves other aspects of the organizations too.

Modern digital technologies are crucial to transforming the process of organizations. We need a solid technical team to unleash the potential of digital solutions. The entire digital transformation process includes outstanding digital solutions and a competent workforce to handle them. Thus, technology and people work together to transform the organization digitally.

The organizations aim to reduce the time to market quality products, change the approach of the operation, and deliver value to customers. The organizations are deploying new technologies in all their business areas. Banks are among the pureplay in embracing new technologies. Since increasing competition threatens the stability of the banks continuously, they cannot help but emerge much stronger digitally with time. From customer onboarding through video KYC to 30-minute paperless loan approval and virtual customer assistance, banks and financial institutions are leveraging digital technology to their maximum benefit.

  • Promoting Innovation

Innovation is the key to the digital transformation journey. Organizations have come to terms that to move ahead with the digital transformation journey, they must innovate. As digital transformation and innovation are interconnected, innovation drives digital transformation. Hence, in the digital transformation journey organization must be open to an innovation culture.

Let’s consider the Pandemic scenario. As per a report, 70% of complex and large-scale organizations failed to reach their digital transformation goals. Organizations now have an understanding that it is critical to embrace innovation in the digital transformation journey. Thus, banks are changing their ecosystems by promoting innovation to drive a successful digital transformation journey.

Banks and financial institutions are changing the work culture and ecosystem, encouraging employees and consumers to try new technologies and innovations. The changing customer requirement plays a massive role in strategizing the digital transformation goals for the organizations. Technology empowers people and processes to add value to the customer experience. Hence, enterprise solutions are more innovative at the current time with the latest technologies to ensure an outstanding customer experience.

  • Updating process and systems

There are many organizations which still use legacy systems. Organizations spend 75% of their IT budget on supporting legacy systems. There is only 25% of the IT budget is allocated to digitalization. One of its many goals and objectives for the digital transformation journey in banks and financial institutions is to shift the budget allocation to digitalization.

Banks and financial institutions are building strategies for digital transformation. Many banks are digitally transforming the front-end and back-end processes completely. The banks and credit unions are rapidly adopting digital solutions to keep up with the pace of marketplace changes, and many firms are moving to cloud computing and adopting agile principles. It helps processes with enormous amounts of data and insights in real-time and reduces costs.

However, some banks and financial institutions store a massive amount of data on their old legacy systems. The modernization of these legacy systems would either take longer than the anticipated time or would be impossible to migrate. Many enterprises have found solutions to this issue. They have digitalized their entire front-end process while operating a few back-end processes through their legacy systems. 

As a part of their digitalization goals and objectives, organizations are integrating various technologies like Cloud computing, mobile technologies, advanced analytics, cybersecurity, etc. The strategy has enabled financial institutions to offer superior digital experiences to their customers. The digital transformation journey is more of an inside-out approach that focuses on speed, ease of use, and user experience.

  • Preparing the team for the digital transformation journey

The bank’s digital transformation journey is more than using the most updated technology or digital applications. It is about how prepared you are to adapt to the changes. The banks and financial institutions’ goals and objectives are to prepare the team for the digital transformation journey.

Hence, organizations must focus on informing the team about the positive impact of adopting digital technology. The banking and financial ecosystem is changing, and technology plays a significant role in offering value proposition, greater efficiency, and higher profitability.

Steps banks are taking toward digital transformation journey

Being an integral part of banks’ transformational journey, we have seen a few steps that banks are taking towards digitalization. Below are a few instances.

  1. Banks have been undergoing massive digital transformation in the last couple of decades. They are transforming the entire banking workflow and moving the current manual processes into the digital mainstream across all banking verticals and multiple business portals. By now, banks have digitally transformed 40% of their banking workflow, but 60% of the workflow is still manually done. Since the effect of the Covid-19 global pandemic, banks can no longer delay their digital transformation journey. Hence, they are speedily adapting to the changes around them.
  2. Trade Finance has been essentially a back-office platform. However, due to Covid-19, many organizations decided to digitalize their back-office processes. Banks realized the necessity of streamlining the process to seamlessly work with front-office, mid-office, and back-office workflow transformation.
  3. Banks are moving all credit lending from non-system to digitalized workflow systems. Banks have introduced digital platforms to handle the end-to-end lending process, from loan onboarding and video KYC verification to the collection process.
  4. The banking industry is moving to the web, online applications, and mobile applications from branches. Mobile applications are improving the speed, making the process simple and enhancing user experience with continuous service.
  5. Banks are integrating the latest technologies like automation and AI with their online services. Many banks and Credit Unions are integrating these technologies into their service line and functions as robotics and AI technology improve the online services. It allows banks to save money, improve the solutions, and delegate their people to other important assignments.

Conclusion

Typically, a bank’s transformational journey is two ways. The broader categories are application upgrades and new implementation. As we were a part of a transformational journey for multiple banks and financial institutions nationally and internationally, we have executed end-to-end testing and supported the banks in their transformational projects helping them to go-live within strict project deadlines.

We follow a managed testing framework for the transformational projects of banks and FIs. From gathering functional and non-functional requirements, designing, and rescheduling projects, to managing code installations, release notes, and test data. Our process flow includes strategizing, planning, preparation, and execution. We define metrics based on defects management, test effectiveness, test efficiency, and test coverage. We also track defects, test efforts, status, schedule, risks, and issues.  

Our end-to-end testing services include requirements assurance, integration assurance (application suite & system landscape), functional assurance (pre-migration & post-migration), non-functional assurance (performance testing, security, and usability), and test automation, pre-launch testing, regression testing, and testing CoE.

How did banks strengthen their digital transformation & business continuity with evolving opportunities during a pandemic?

Digital transformation

The global pandemic (2020-2021) had led to unanticipated issues such as economic crisis and credit risk. The upcoming years looked uncertain while facing a critical time. To protect from the economic fallout, the leading business entrepreneurs focused on finding out possible solutions that they thought would help them in stabilizing business continuity and serving their customers better.

One of the Gartner’s Business Continuity Survey reveals that as less as 12 per cent of organizations were prepared to combat the effect of a deadly catastrophe like coronavirus. Amidst the threat of spreading COVID-19, the leading financial institutions considered evaluating their business continuity plans and pandemic planning initiatives to ensure they put safety and efficiency first.

Banking and financial institutions considered agile methodology to adapt to the changing global scenario. The unforeseen event urged the BFSI sectors to reflect on their fundamental practices and how prepared were they for the future. The impact of the pandemic was so widespread that banks faced a weak investment return leading to future credit risks and economic uncertainties. Reportedly, the European banks collectively have experienced an estimated credit loss of an average of €700m in Q1 2020. Meanwhile, in the US three popular banks informed that they noticed a significant credit loss of $25b in Q2 2020.

Current Trend and Opportunities

To prevent the pitfall and evolve from this economic crisis, banks seized available opportunities and prepared their next business module. This catastrophe has urged banks to re-evaluate and analyze their core and non-core assets. Under this scenario, 60% of the banks considered the divestment option, a plan to divest in the next 12 months.

The possibility is likely to play a massive role in understanding the type of organizations banks would like to connect with in the future and how conveniently they can transform their existing process. A growing interest in digitalization is driving banks to adopt digital banking products and solutions to cater to customer requirements. They are taking steps to boost their digital transformation plans.

With a growing threat during a pandemic and different phases of the lockdown being imposed everywhere, financial institutions had adopted remote working policies. It provided an opportunity for the business leaders to reconsider working remotely, operating in the long-term, and consider the monetary impact this approach could have.

This situation enabled many banks to understand their resilience and capabilities. They also reconsidered their cost transformation programs to move in tune with the new challenges of this crisis. The future from here on looks promising and inspiring.

From the online purchase of grocery items to electronic goods, banking and financial institutions, companies introduced promotions, special services, and reward points to re-establish their position in the market. The customers’ purchase behavior was requirement-based, as a product was bought and sold based on bare necessity.

Customers were driven more by emotion during the crisis. Hence, for organizations, brand messaging, tone and purpose became extremely important while connecting with their customers at an emotional level. It helped in establishing customer brand loyalty. Customer purchase behavior depends on four principles, as stated below:

  • As customers remain indecisive, empathy and commitment become two ways to win their trust. During the pandemic, consumers reacted positively to inspiring content that highlighted social, financial, and other real-life aspects.
  • Brands should keep informing their customers about the crisis, how to protect themselves and change in the situation. Customers are likely to trust brands that provide reliable and accurate information about the current situation.
  • Engaging and connecting your customers by facilitating and extending social support are assured ways of improving brand loyalty. Social engagement with customer support and responding instantly during this pandemic have helped build brand loyalty.
  • Offering new schemes, promotions, and offers helps your brands to evolve through endorsement. These efforts have an impact on your customers.

Digital Transformation

Digital banking solutions, which have been brewing for a long time, have accelerated during this unprecedented time. This pandemic situation profoundly changed the behavior of retail and corporate banking clients and facilitated the use of digital banking.

A recent survey done by Ernst and Young, reveals that 62% of consumers said they would use less cash in the future, while 59% will opt for contactless payments. The use of digital services and products propelled more expansion when some of the bank branches were closed, and in response, banks accelerated digital and technology transformation programs.

The small and mid-size companies started adopting digital solutions faster than anticipated. There was an increase of new digital accounts by 2.4 times in the first quarter of 2020 as compared to the first quarter of 2019, and a 49% rise in SME digital loan applications in 2020 as compared to 30% in 2019, in one of the Singapore-based banks.

The concurrent situation has led to massive economic uncertainty, and there is a requirement for the bank to endure this sudden disruption. With a low margin, banks opted for digital tools and focused on sustainable digital enablement that helped them save cost and time. Their motto was, “Grow your business with digital innovations to live up to your customer’s expectations”.

When assessing customers’ requirements, it was observed that a combination of UI and UX of a digital platform contributed to customer satisfaction and experience. Since banking and financial institutions were turning their services online, they needed a platform that could improve the appeal and undisrupted performance.

The following instance supports the claim of how banking is relying on digital and online platforms. In April 2020, Lloyds Banking Group decided to provide a tablet to their 2,000 customers over the age of 70. The objective was to provide training and support to help them access online banking. As banks are now adopting the best digital practices and customer-centric solutions, they form a well-connected digital ecosystem and unique value propositions for their clients. The whole objective shifts to serving their customers better through an outstanding and uninterrupted online banking experience.

Banking has been evolving even before the pandemic swept the entire world. Based on customer requirements and expectations, banks are compelled to leverage digital channels, accounts payments or transfers and online wallets. To avoid the risk of spreading the infection, consumers opted for cashless payments during this pandemic situation. Consumers who did not consider online payment and transactions as options were encouraged to migrate to a digital platform. Since many consumers were not fully familiar with the digital platform, banks have taken it upon them to educate their customers for an outstanding experience.

As the cashless transaction became the new reality of the ongoing situation, banking and financial sectors had to speed up their digital innovation process in response to customer needs by leveraging cross-channel, customer-centric metrics and tracking the success of digital banking. To re-align sales, reduce operational costs, and offer excellent customer experience, data and analytics, AI and automation played a significant role.

A Cost-effective Managed Services

A well-panned managed service can offer operational flexibility and ensure uninterrupted business-continuity plans against unanticipated challenges during the global crisis. With the pace at which the market situation changed, the banks and financial institutions could not afford to hold back the digital revolution for long. Organizations realized that if they suspend their online operational transformation, they will suffer business loss. They understood the competitive edge the change would bring and hence started managing the costs more carefully.

A well-managed service allowed the banks to reduce operating expenses for the long term, and the sudden outburst gave a reason to the bank to adopt managed services. Managed services helped banks to formulate a strong business continuity plan. It is during the time of crisis that managed services helped the banks to maintain the system stability.

The financial instability during this challenging time urged banks to develop strategies to encourage their customer to move online and prove their operational flexibility. With this rapid digital growth, banks were compelled to invest in security, virtual collaboration and cloud infrastructure, analytics, artificial intelligence, and automation. The banks and financial institutions were quick to adopt digital transformation. And the one who did could recover from the economic setback and establish a strong foothold.

Since banking operations largely depend on customer behavior and satisfaction, the banks must face and overcome the challenges of maintaining their standard of customer services, while mitigating operational hurdles.

Current Contact Centers

Digital and mobile banking witnessed a sharp rise during this critical situation, along with the voice channel to serve consumers well. Despite the fully functional digital operation, a few of the banks were operating from branches in different locations. It proved that even if we were relying on a digital platform, we still needed human interventions. We realized the importance of both during a crisis like the current one. AI-driven technology replaced this to achieve the objective. AI could smartly detect the call intention and provide real-time data to the users. This technology helped in reducing call time, and improved efficiency, and customer satisfaction.

Rise of Open Banking Solutions

The situation gave rise to open banking solutions as there has been an 832% increase in open banking during the global lockdown. Banks took more interest in the open banking payment initiative to gain more understanding of their financial situation. Consequently, more and more banks used the opportunity and invested in open banking solutions. The European financial institutions witnessed a steady increase, and globally the organizations were eager to have a different perspective. They did not mind sharing the information on an open platform. A recent report revealed that there was a rise of 20-29% of investments in open banking services for two-thirds of the respondents.

Partnering with FinTech

Banks were simultaneously looking to speed up the digital innovations during the prevailing global situation when the economies across the globe were slowing down. Also, during this pandemic situation, many venture capitalists were restricted from investing in FinTechs. Hence, partnering with FinTech in this situation proved to be economically and mutually beneficial.

Many governments slowly eased rules and regulations in FinTech companies to encourage the growth of innovations and balance out economic disruption. It came as a relief against the long-standing rules, which were once imposed on them.

The current situation provided opportunities for FinTechs to strike a balance between digital transformation while creating a secure financial backbone. As banks and FinTechs together collaborated, it helped them to bridge the funding gap.

As banks were in the earlier stages of digital transformation, partnering with FinTech companies proved to be helpful in terms of improving technological expertise. Banks in collaboration with FinTechs could develop platforms for financial inclusion, analyze transactions and other data for deep insights, capability development and deploy automation for compliance.

Mortgage Refinancing & Payment Deferral

The crisis raised lots of dependability on banks as to how they are addressing their customer’s issues. Due to low-interest rates, there was a steady rise in mortgage refinancing in April and May 2020, resulting in high loan volumes for lenders. As the whole world was suffering because of layoffs, and pay cuts, the homeowners found it to be challenging to pay their instalments on time. This catastrophe has left many customers asking for mortgage deferrals.

Many banks waived fees, increased credit card limits, and granted mortgage payment holidays in response to customers’ inability to keep up the monthly mortgage payments. They made a few adjustments with the short-term and long-term financial changes. Banks provided tailored solutions based on the customer’s requirements by leveraging machine learning, AI and analytics and driving improved engagement.

Managing System Performance and Unexpected Risks through QA

The customers looked for additional support during this crisis in terms of credit facilities from the banks globally. Banks had to be prepared for the upcoming risks and take measures to keep their business and customers protected from the financial debacle, as default and bad loan cases were expected to rise in numbers.

Banks had to build a powerful fraud and risk management and strengthen their portfolio using their analytical capabilities. It helped them to generate useful insights, improve the operational process, and decide quickly on process-related matters. The impact of the global setback urged the banks to focus, assess and review their stress testing models. Since banks actively took steps towards digital transformation, they had to ensure that their systems had seamless performance, system integration and customer acceptance of their digital platform.

Efficient software and algorithm were needed to detect fraud and reevaluate the risk modelling. It allowed banks to calculate pricing, and evaluate and measure the credit risk of borrowers. Banks needed real-time data and an advanced risk calculator, as the economic impact during this time turned a large amount of data unreliable. Banks had to develop advanced analytical capabilities to filter data accurately and spot anomalies quickly.

Since the outbreak of the global pandemic, there has been a significant rise in criminal activities, increasing the threat of money laundering. Banks will also have to strengthen their KYC and Anti-money Laundering (AML) programs. It helped the banks and financial sectors to manage risks and keep pace with changing regulatory scenarios.  

Journey Ahead from Here

The rising concern and uncertainty of this pandemic situation have made the global banks sort out multiple ways to address their customer requirements. The customers require extensive support and flexible services, and interaction. As the situation demanded high technical upliftment, banks were likely to adopt the followings that allowed and helped them to meet their customer expectations. 

  • Accelerated digitalization efforts
  • Cloud migration
  • Intelligent workflow management
  • Partnerships with the BFS sector and FinTechs
  • Embedding security and governance across operations
  • Advanced risk modelling

The current condition posed multiple challenges and compelled banks and financial institutions to invest more in the digital future. They are now improving their operations by leveraging innovative technologies and continuing to inspire other industries that have not reached digital excellence. The financial sector is on the right track to reap the benefits and enjoy the success of its cost transformation programs for the future.