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.

Commercial Bank of Africa (CBA) chooses Tenjin, Yethi’s Testing Automation platform to test its T24 banking solution

Commercial bank of africa

27th May, 2019: Commercial Bank of Africa (CBA) has selected Tenjin—Yethi’s Robotic Test Automation platform to test its core banking solution by Temenos (T24 – Version R18). CBA was in pursuit of a low-maintenance, seamless, effective, and easy-to-use Test Automation Solution. Yethi’s Tenjin met their requirements after a detailed evaluation among the leading players in the market. This is Yethi’s first T24 project in the African Continent, which will demonstrate the versatility and robustness of Tenjin given the complex nature of the ongoing T24 upgrade.

Commercial Bank of Africa, headquartered in Nairobi, Kenya, has been rated by Global Credit Ratings (GCR) with a national scale long-term rating of A+ and short-term rating of A1. CBA is a pioneer in leveraging technology innovations and aims to transform the African banking sector with a unique range of banking products and solutions. M-Shwari, a mobile banking application launched in partnership between Safaricom and CBA, reached 10 million customers within 18 months of its launch.

Moses Abwoga – Head of Enterprise Projects Management said, “We have always been associated with using innovative technology to augment the manner of interaction that our customers have with our bank. Effectively testing our banking solution to prevent any future errors is a major step towards fulfilling our motive of creating engaging customer experience journeys. We are extremely happy to select TENJIN to assist us in our testing activities during T24 upgrade. We look forward to reap the benefits associated with Tenjin and reduce our overall testing efforts.”

Speaking on the engagement, Srirang Srikantha, COO, Yethi added, “We are extremely happy to be working with the Commercial Bank of Africa. Tenjin’s core features such as naviflow learner, result validator, test management, and task scheduler will help in developing a robust solution enabling CBA to elevate its customer experience.”

About Tenjin

Tenjin is an advanced test automation tool which meets the changing needs of testing in banking enterprises. Its core features such as naviflow learner and robotic units that spontaneously determine and learn the application interface are the reason why some of the most complicated systems in the world use it to improve the efficiency of operations. As a plug-and-play and banking aware solution, Tenjin works within the bounds of regulatory requirements and is instinctively conscious of different transactions, making it a blueprint for successful testing of banking applications. The high-speed solution includes changes automatically without additional programming, relying on robotic learning for quick integration with high levels of consistency. Tenjin Test Automation works with major core banking and digital platforms and is adopted by banks across 15 countries.

To know more please visit https://yethi.in/tenjin-test-automation-suite/

About Commercial Bank of Africa

Commercial Bank of Africa, headquartered in Nairobi, Kenya, is one of the largest privately owned banks in Kenya. A member of the Commercial Bank of Africa Group, CBA is licensed by the Central Bank of Kenya. Apart from providing a wide range of financial services, CBA’s core mission is to enhance the wealth and financial goals of their customers.

To know more please visit https://cbagroup.com/mission-and-vision/.

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Improving API accessibility with no-code automation testing in the BFS sector

Automation testing in the BFS sector

The scope of APIs in the banking and finance industry is ever-increasing. But the rising vulnerabilities pose a threat to their growth. That could also severely affect cloud service dependencies and internal APIs. As APIs evolve with their newer versions, there is a possibility that the functionality and uptime might greatly suffer. Hence, it is critical to test APIs and improve their accessibility for a reliable backend. Financial institutions must establish a strong API testing backbone to improve API accessibility and enhance business values.

Every time we add new functionality, testers must write a new set of codes, install and test them in the frontend, and finally integrate them with the application in the backend. If the code fails to perform at the initial stage, it might affect the feature after integration without fixing the errors.

Software development and testing have changed over the years, and many technologies like DevOps, CI/CD, the API, and Agile methodologies collectively have contributed to this change. As software and applications become more dynamic, the teams have incorporated new techniques to conduct end-to-end quality testing to evaluate the software. 

Why no-code automation testing for API?

API proves to be a source of outstanding end-user experiences as they gradually become the puzzle pieces for modern banking applications. Financial institutions are hosting API-based cloud services to meet user requirements. Yet there is a challenge that organizations must overcome. Cloud offerings change and evolve, and to keep up with API integrations requires continuous testing.

We all know that continuous testing without automation requires time, effort, and money. Organizations must opt for no-code continuous automation testing to prevent code breakage, poor usability, and accessibility. APIs require regression testing frequently, and the QA team manually conducting regression testing is not a viable solution because repetitiveness, monotony, and frequency nature of continuous can introduce errors in the software and take much time to resolve.

Testing APIs are often time-consuming, which also includes a chunk of investment. Thus, organizations are opting for no-code automation testing to reduce the time, money and effort while eliminating errors. No-code automation testing platforms allow developers to create applications following the visual programming models.

No-code automation makes it easy for the team to create API tests and verify functionality and uptime. More the QA and DevOps teams use the no-code automation testing solutions, the faster they will discover an incomparable way to validate high-quality integrations and their UI representations.

What are the crucial areas that need to be examined in API Testing?

API testing focuses on the three most critical aspects of the testing process – connectivity, response, and performance.

  1. Connectivity – Testing the connectivity with the server is the first aspect of API testing. Users who wish to test the connectivity can dial the API using the service URL. The code of this service command is 200. The users can establish a connection if the server responds to the call. Similarly, if there is no response, the connectivity fails.
  2. Response – The second aspect of API testing is to test the correct response time for different API requests. It involves validating the response command with accurate values and an appropriate status code. Following are the examples of validated status codes commonly found in API testing.
    1. Error response code is 401 UNAUTHORIZED in case of missing or invalid authentication token
    1. Error response code is 403 FORBIDDEN when the user is not authorized to perform the operation
    1. Combining the above two, the error response code will be 404 NOT FOUND owing to security reasons
    1. Error response code is 409 CONFLICT if there are duplicate entries or users try to delete root objects
    1. Error response code is 500 INTERNAL SERVER ERROR when the consumer cannot identify the exact error from their end
  3. Performance – The third most important aspect of API testing is the performance of the API. The API performance is tested and validated by calculating the response time of the API request sent. The APIs must handle the load of many requests. The fast response time and resilience toward high loads are the two criteria for evaluating the performance in API testing.

An API may register multiple users. An API must be able to handle the load by distributing, efficiently performing, and responding to a web service call without disrupting the API performance. The quality of APIs is evaluated based on their core functionality, uptime, speed, and end-to-end performance. The end-to-end API assures that all workflows are functional and in perfect order.  

The use of API in the BFS sector

The covid-19 pandemic has changed the financial and banking sector by creating new avenues for API workflows. The banking and financial industries use APIs to address user requirements through this embedded technology. Financial institutions are using APIs in three ways.

  • Private API: Financial institutions use Private APIs to improve their internal processes, operational efficiency, and productivity.
  • Partner API: Financial institutions use Partner APIs to collaborate with third-party partners like clearinghouses, brokerages, underwriters, and custodian banks, where the partners use the bank’s platform to provide outstanding services to their customers.
  • Open/Public API: Financial institutions use Open APIs to gain business and improve their customer bases. With open APIs, organizations are growing their business by extending their services.

Is API testing difficult to conduct without no-code automation solution?

API testing is critical in short release cycles as there are frequent changes. API testing does not affect the test outputs in anyways with the frequent occurring changes. API testing ensures product quality throughout the CI/CD processes. API testing requires users to handle chunks of JSON responses to match fields and surface issues. However, the difficulty will arise for non-developers to implement as testing API responses involves writing code, analyzing JSON, and writing it to variables.

It would be difficult to test asynchronous endpoints, as asynchronous APIs take a little longer to respond due to the unpredictable behavior of background server processes. It requires an infrastructure for continuous testing to test such asynchronous services. What a no-code automation solution does is blend the API and continuous testing. As the automation testing solution is codeless, it is easier for non-developers to implement codeless testing to validate API responses.

How no-code automation testing improves API accessibility for BFS sector?

No-code test automation solution works best with unit testing and regression testing. Both these tests are an integral part of API testing. To improve the API accessibility, the testing team considers integration testing with unit testing. But the fundamental difference between a unit test and an integration test is that the former covers an isolated part of a system with no external dependencies, and the latter covers more of the system put together, which uncovers bugs when multiple units are combined.

Unit tests cover underlying APIs that measure the accessibility of information or interactions to the right place. APIs include UI components validated by unit testing to gain better accessibility to underlying APIs. Additionally, integration testing can also be automated to improve accessibility. Automating both unit testing and integration testing can help reduce regressions effort, simultaneously improving the value and the quality of the applications.

Automating APIs with no-code testing solutions can help reduce the burden of manual testing for the team. Organizations opt for a no-code test automation solution instead of manual testing to be more efficient in their testing services. By building a clear test strategy and adding coverage for accessibility, teams can ensure and inform the quality of the codes within the process and prevent regression burden from deploying to production.

Conclusion

Adopting continuous API testing is a wise decision as it helps resolve underlying API problems like outages, technical failures, and functional glitches. Continuous API testing helps detect early API errors and reduces mean time to recovery (MTTR).

With a no-code API automation testing solution, continuous integration and deployment happen faster and are validated immediately, helping organizations save time, money, and effort.

At Yethi, we understand that the future looks promising in API testing. An increasing number of applications operating on Cloud platforms using ‘as-a-service’ business models need stable and secure functioning APIs. Driven by constant innovation, we utilize it to help organizations reduce the testing time of their applications. We know what it is like to keep up with the competition in the market, and we help financial industries to maintain their commitment. 

With years of experience and expertise in quality assurance of business applications, we combine traditional testing and modern functional and security testing to ensure the quality of APIs in terms of their functionality and platform security. We have developed a library of more than half a million test cases, including used cases, like UPI and lending. With our codeless test automation platform, Tenjin, we have moved up a level in testing and innovation. We automate your end-to-end software testing cycle and validate the request and response configuration of APIs.

Our services and solution align with the open banking ecosystem, and we offer validation coverage that includes functionalities, API security, performance, and automation. Our solution is built with cutting-edge technology and accelerators, adding significant value to time, cost, effort, and customer satisfaction. Contact us for a free consultation.

5 challenges of testing ERP systems in the banking sector and ways to overcome the challenges

Testing ERP systems in the banking sector

There are multiple reasons why the banking and financial industry needs enterprise resource planning (ERP) systems. ERP system facilitates agile delivery in the broader spectrum of banking and financial services and solutions. The system is used to understand the implementation at a large scale. The ERP systems offer solutions to multiple issues in the banking industry and help with thorough insights for upcoming projects. The ERP system helps in resource planning and increases the efficiency and productivity of an organization. The organizations have seen visible results by implementing ERP systems due to their benefits like,

  1. Improves business reporting – ERP creates one integrated database for all business processes and provides real-time information and comprehensive business reports.
  2. Improves customer services – ERP systems offer better accessibility to customer information with an improved response time, on-time delivery, and order accuracy.
  3. Better inventory costs – ERP systems include only the most essential inventory and avoid common problems like higher overhead costs and longer customer fulfilment times.
  4. Improves cash flow – ERP systems offer better invoicing. It is a superior collection tool that enhances cash flow. Faster cash inflow allows adequate investment for the business.
  5. Improves cost savings – ERP system allows cost-saving with improved inventory planning, customer services, procurement, and vendor relationship management.
  6. Improves data and cloud Security – ERP system has dedicated security resources, which prevent installing malicious software. It improves data and cloud security as the data is spread across multiple servers.
  7. Improves business process – ERP system helps improve mundane or manual tasks and implements smarter workflows allowing you to work more efficiently.
  8. Manages supply chain – ERP systems effectively forecast demand and lean inventory. It reduces the production bottleneck and offers greater transparency in your business.

However, the organization cannot always guarantee the successful implementation of ERP systems. ERP implementation can fail at its pilot phase due to multiple reasons. Poor project management, data inaccuracy or quality issues, implementation without adequate planning, ineffective consultation, inability to reduce the implementation cost, and more are a few reasons for ERP implementation failures. ERP implementation depends largely on the organizational approach. The organization may invest time and money only to see process stagnancy with little to no significant growth.

Testing of ERP systems in the banking and financial industry

ERP systems in banks and financial institutions are a procedure to plan and are commonly used by banks and financial institutions because of time constraints. ERP implementation works best with the right planning and strategy. It enhances the productivity and effectiveness of the process and people, supports business operations, and helps in business decision-making. ERP systems in banks and financial institutions can be tested at the core level and implementation level. The core team validates the static functionality of ERP systems, while the implementation team validates the dynamic and tailored features and functionalities.

The changes in features and functionalities, as we know in the banking industry, are extremely frequent. A small change in the system features can affect the workflow of multiple modules. The changes must be recorded and validated accordingly to ensure that none of the changes alters the system configurations. A system with a massive amount of data requires test automation. The organization analyzes the requirements and designs the automation test framework based on organizational infrastructure.

Challenges of testing ERP systems

  1. Frequent changes and inaccurate data – The ERP system implementation is a long process during which the system performance can fluctuate a great deal. The entire implementation process involves multiple risks that must be addressed in time. Banking systems are vulnerable and open to frequent changes. Due to the frequency of changes in the banking structure, the update must be constant and continuous, which also requires system receptibility. The changes must reflect in the system without delay. If there is a delay in data reflection to the system, there will be a discrepancy in available data that leads to data inaccuracy.
  2. Integration of new data with old legacy systems – Banking ERP systems have a broader scope. The dataset entered in the bank ERP systems is used in the various processes throughout the organization. The data is used in Marketing & Sales, Accounting & Finance, Supply Chain Management, Human Resources and many more. The data is stored centrally in the old legacy systems and referred to by various organizational verticals for different purposes. The main challenge here is it often becomes hard to test these legacy systems due to the absence of adequate tools. As the legacy systems store a high volume of data, the end-to-end testing of the legacy systems becomes necessary. It is a time-consuming and tedious task to test the legacy systems. In the case of banks migrating data from legacy systems to new ERP platforms, there can be a delay in the entire testing project leading because of slow data migration and unavailability of data, which can lead to multiple errors in the systems and banks’ internal processes.
  3. Implementing ERP in rush and without planning – This challenge is common when banks start their operation for the first time. Due to rising demand and customer requirements, banks and financial institutions are sometimes in a rush to implement ERP systems and critical aspects of the ERP systems can be overlooked. The urgency of implementing the ERP systems always leads banks to ignore the critical aspects of ensuring system quality. It also leads to implementing ERP software without adequate planning. If the systems are implemented in rush it might lead to multiple performance issues, data integration and security, data migration issues and more.
  4. Lack of project knowledge – Lack of project knowledge can lead the team to witness challenges of testing ERP systems. The team must have adequate project knowledge and training to learn about the project requirements. Adequate communication and training about project requirements make the ERP testing process easy and convenient for the team. With adequate project knowledge, the testing team can validate various aspects of ERP implementation at the various phases across the business operation.
  5. Lack of technical knowledge and absence of specialized team – ERP testing in banks is not a mission-critical practice, which leads backs to ignore a few critical aspects of ERP implementations. Banks and financial organizations execute testing ERP implementation along with other crucial testing projects. And often, the management team do not feel the need to delegate the most competent team. Banks also do not deploy a specialized team for testing the ERP platform. Banks cannot guarantee the success of ERP implementation testing due to a lack of technical knowledge and a specialized testing team.

Ways to overcome the challenges of testing ERP systems

All the components and modules of the ERP platform must pass through system integration testing. ERP being a central data system is a data source for multiple verticals. If the source data is not integrated efficiently, the processes within the organizations will not receive adequate and accurate data creating an immense discrepancy in the organizations. Banks’ data and information require utmost security and safety against data theft and manipulation. Hence, security testing is critical to ensure the safety of sensitive data.

Due to multiple changes incorporated in the Bank ERP systems, there can be a few alterations in the user interface design. It can also lead to confusion among the users. Hence with each implementation, it is necessary to ensure that the changes meet user requirements. System efficiency is crucial even with effective changes. An adequate module validation can ensure that even with several changes, implementations, and interpretations, the design flow of the interface remains intact. System integration and usability testing ensure that users can use the systems without disruptions.

It is necessary to validate the performance of the ERP system. The ERP system’s accuracy and speed determine its performance. It is crucial to validate the systems of their load, stress, capacity, volume, and scalability to ensure the reliability and stability of the system even with its extreme load. The performance of banking systems comes under heavy scrutiny from users or customers. Hence, testing the software before installation is essential to always ensure seamless performance.

Even a slight change can impact on the system’s performance, and as far as banking systems are concerned, the changes are extremely frequent. Regression testing ensures that the minor changes do not affect another subsequent module. As modules are interdependent, the poor performance of one module can heavily impact another. Through testing, the team ensures that all the modules and features run smoothly without any errors.

Conclusion

Testing ERP systems has drawbacks, but since ERP systems are not among the most critical functioning systems, banks and financial institutions tend to delay the testing of ERP systems or keep it long on their bucket list. It does not reduce the complexities of ERP system testing but aggravates it. The most pertinent approach is to address the issue by testing simultaneously with the implementation process. The most accurate approach is to build an appropriate implementation strategy and plan to avoid resolving the issues at a later stage. It is always a good idea to prevent rather than fix the occurrence.

5 challenges in the digital customer onboarding process and ways to combat the challenges

software testing services

What difference have you noticed between customer onboarding before and after the Covid-19 pandemic? Let’s say you wanted to apply for a loan before Covid. You had to raise a request and enter the details on the bank website, and within 24 hours, the bank representative would visit you at your address to complete all the paper formalities. Customer verification in person was an essential aspect of customer onboarding whether you physically visit a branch or any representative visits you.

Due to social distancing and contactless interaction during Covid-19, the footfall in the branches was reduced. It completely changed the customer onboarding process. A few technologies have played a massive role in determining the customer digital onboarding process and simplifying the process for both customers and banks. Video KYC, geo-location verification, aadhar-based customer verification, and more were the go-to solutions for the industries. Financial organizations and Fintech launched multiple applications (mobile and web) to ensure that the process of digital onboarding can be carried out without disruption and offer a seamless experience.

Digital onboarding is no longer about getting and converting new customers or retaining the old ones. It is more of a service, an added benefit offered by the banks to their customers. It determines the relationship banks establish with their customers and ensures satisfaction over the digital journey of customers. However, the digital onboarding process is at a nascent stage, and the journey is not over until the customers can use the services without any interruptions. There are definitely some challenges that both customers and organizations face and strive to overcome. In this article, we will explore the challenges organizations and customers face with digital onboarding and ways they can overcome them.

Challenges of customer digital onboarding

  • Platform Security – The platform security of digital onboarding is a vital challenge that customers and financial institutions face daily. It is hard to protect both customer and organizational data in traditional banking. When the data are shared on the digital platform, it requires a stringent security mechanism to protect data from stealing and manipulation.

The traditional customer onboarding process is lengthy and time-consuming. It has several steps like document submission and verification, a branch visit followed by an online application, and approval waiting. With digitalization, customers no longer prefer the long awaiting time of traditional ways of onboarding. Hence, many financial institutions, the majority of them have opted for the digital onboarding process. The customer in the digital onboarding process must follow the entire process, but instead of visiting the branch, the whole process is taken care of on the digital platform.

Before the pandemic, the onboarding process was a mix of digital submission and branch visits. But in 2020-2021, much has changed. The recent trend is the end-to-end onboarding process is done on the digital platform without the need for customers to visit the branches for formalities. Since customer uploads all documents on digital applications, security could be a concern for banks. Each bank may have a set of challenges, including identity verification compliance and security issues.

  • Complex UI features – It is a massive disappointment for customers if they are required to navigate through complex UI functionalities during their onboarding journey. Customers cannot relate to applications with complex UI designs. Hence, the banking and financial industry faces an immense challenge in keeping up with customer expectations for a simplistic and user-friendly application. Several survey reports have confirmed that customers tend to appreciate digital platforms with clean UI design. If you feed in too many irrelevant and unnecessary features like pop-ups, action buttons, or others, customers would not think twice about leaving the site and would not return.
  • Performance glitches – Performance errors in digital applications are frequent. Banks create service-based APIs to establish connections between the application and customers’ bank account details. The API can retrieve financial information from the banks and send the information back to the banks. The digital platform for the onboarding process can face a tremendous setback if the platform does not meet up to the expectation of handling multiple requests simultaneously. If the applications cannot bear the request volume and the load, they would easily face the performance bottleneck.

A poor digital onboarding platform performance can disappoint the customers, who might discontinue using the platform. Customers using the digital onboarding platform continuously can also create immense stress on the platform. If the platform is not robust and capable, it will not be able to endure the maximum system usage and might face performance errors. Most digital onboarding platform fails because of these performance errors. Customers associate themselves with systems that are stable and have longevity. A poor-performing digital onboarding platform will not be able to retain customers.

  • Lack of personalization – Not all customers want the same services. Different customers have different needs. Hence, personalization is crucial to retaining the most loyal customers. Most digital onboarding platform fails to personalize the applications based on customers’ needs and wants. It is challenging to keep up with customer expectations as customers’ needs may vary. Lack of personalization leads to dissatisfied customers. Users will not engage with the platform if the platform fails to meet with adequate and personalized digital services.
  • Delay in resolving grievance redressal – Since digital platforms are a combination of services by multiple third parties, it is hard to track the complaints. In the case of digital onboarding, there may be multiple agents integrating their services with a single platform. If any grievance arises, the users will not know whom to raise a complaint to and how long would it take to resolve the issues. The apprehensive customers will either solve the errors or leave the platform without even informing regarding the discontinuation of services.

Following are the instances of consequences that organizations must face if challenges remain unresolved.

  • Users may sign up for a month’s free trial and discontinue using the service. As per a report, 40 to 60% of users who sign up for a free trial use a product once and never come back. As low as 2.97% continue the service even after a month.
  • Many customers lose interest after using the platform for a week. As per a report, almost 75% of new users leave in the first week.

It may be noted that organizations gain 65% of the business revenue from their existing customer and the chances are that most satisfied customers will recommend your business. Hence, organizations must address the challenges before it becomes too late to address them.

Ways to overcome these challenges

Customers are the ones who use your end products. When you think about your products, you must have customers in your mind and think from their perspectives. Banks and financial institutions have already handled customer onboarding traditionally. They know what their requirements and customer expectations are. Hence, while tackling customer onboarding digitally, they can enter only those fields that are necessary for customer onboarding to avoid the lengthy onboarding process.

For a successful customer onboarding process, the lesser features always guarantee a better user experience. Include only the necessary UI features and leave out the rest. The most relevant features can add value to your digital application and help to retain your customers. Avoid complicated User Interface design and opt for the most minimalist layout with the right combination of adequate features and nothing more to clutter your application with unnecessary action buttons, service menus or more. User retention is based on building the application with simplistic designs. If you notice your customer engagement with your platform outnumbers the time, they begin using the application for the first time, it will determine your customer experience. An outstanding customer experience is worth all your effort. Functional UI testing ensures that all fields, navigations, pop-ups, buttons, and other functional UI elements are working without any technical error. 

Usability testing is important as it tracks the user to transition from the time they sign-up to using the product for the first time. By conducting usability testing, organizations can examine and verify the points that conflict with user expectations. For a smooth digital onboarding process, financial institutions require a clean user-friendly interface. It enables the business to gain direct revenues.

Security testing is a critical way to ensure the security of the digital onboarding platform. It ensures that the platform maintains identity verification compliance and overcomes security issues and challenges.

Performance testing ensures the system’s capability and stability during the onboarding process. Performance testing ensures that the APIs manage the load and perform as expected. It removes the performance bottleneck and reduces the resolution time.

A personalized digital onboarding process is key to engaging your customers. Customer seamless onboarding experience will make them delighted. And they will return to your site without hesitation.

Do reach out to your customer and collect their feedback. The customers feel connected to the businesses that value their opinion, suggestion, and feedback. Most organizations add online feedback forms to help them immediately capture customer reactions and avoid losing them. It is a dynamic step that can help you to retain your customers. The most honest feedback can help you to improve your digital onboarding processes and help you to serve your customers with no regrets.

At Yethi, we have tested the digital onboarding process for a few of our clients. We have supported our clients in transformational projects to the digital platform by offering them end-to-end testing. From security testing to performance and functional UI testing, we have helped our clients to serve their customers with outstanding services and gain high ROI on their business.

Our 5th generation robotic test automation solution, Tenjin, is easy to integrate with all major banking platforms. This intuitive solution can reduce the time to market and help you save money and effort.  

Digital payment in the banking ecosystem and managing fraud risk

Digital payment in the banking ecosystem

Countries believe there is unfathomable growth of digital payment in the banking  ecosystems. In fact, many countries are including the plan to boost the digital payment ecosystem in their budget report. India, for example, has a plan to offer financial support for the digital payment ecosystem, which is included in the Union Budget 2022-2023. As per a report in Statista, “total transaction value in the Digital Payments segment is projected to reach US$8.50tn in 2022.” The report further highlights that “total transaction value is expected to show an annual growth rate (CAGR 2022-2026) of 13.10% resulting in a projected total amount of US$13.91tn by 2026.”

Let us discuss some of the distinct global digital payment features. Digital payment allows instant money transfer between wallets and different bank accounts in seconds. It helps in easy bill payments, both prepaid and post-paid. Users can also manage physical and virtual card operations without any issues. Digital payment services help in easy merchant payments using contactless technologies like (NFC codes and QR code scanners). Digital payment platform uses multiple technologies like tokenization, passwords, biometrics, security questions, point-to-point encryption, out-of-band authentication, and one-time password (OTP) via SMS to protect digital transactions. A lot is happening in the digital payment platform, which requires strict attention to follow the security guidelines.

Background of digital payment

Organizations have seen the challenges associated with maintaining the platform security for the digital payment platform. The scope of digital payment is not the same as it was in the mid-1990s when Stanford Federal Credit Union offered the first online payment systems to clients as a first organization. Today, digital payment systems provide services in various fields. From money transfer to bill payment and loan origination, the digital payment platform handles multiple services.

Millicent and Ecash were the first companies to launch digital payment in 1995 and 1996, respectively. They specialize in digital cash, e-money, and tokens modes of digital payments. The emergence of PayPal in 1998 changed the digital payment trend completely.

Digital payment in the banking ecosystem

The massive technological development in today’s era has led to the growth in online shopping, banking, and other services. The digital payment structure has seen significant expansion in the past few years, and it is further accelerated with mobile devices. As per a report in Statista, 950 million users carried out mobile payment transactions globally in 2019. And the projection says there will be a whopping growth of 1.31 billion users by 2023. Amidst all these growth and developments, the organizations have much to worry about the platform security, performance, functionality, accessibility, and usability. Organizations must establish a strong foundation and control over the digital payment platform if they have to manage the unrelenting growth of digital payment.

To initiate and encourage the growth of digital payment, banks are embedding futuristic technologies like AI, Machine Learning, IoT, and Robotics with their products and solutions. Digital and contactless payment have increased in the recent past. Not just in the major cities, the smaller cities are also adopting contactless payments. Users can carry out transactions by simply scanning the QR codes or in a single swipe.

Banks are collaborating with multiple digital payment platforms and third-party platforms to extend their services beyond the conventional banking systems. The tap-and-go payment options have enabled many vendors and retailers to embed the advanced technology into wearable devices that allow consumers to purchase products and services using smartwatches, smart rings, and wristbands. The only concern is how secure these devices are. To put all speculations to rest, retailers and vendors are doing enough to ensure the platform’s security by eliminating anomalies and errors from the payment platforms.

There is an increase in e-commerce transactions. Restrictions on movement during the Covid-19 lockdown could be one of the reasons but are not the only one. Banks have made their services available to the customers on digital platforms before Covid-19. But we cannot take away the fact Covid-19 has fast-tracked the process, and whatever was brewing beneath the surface has emerged strongly. Digitalization has changed the payment structure. E-commerce sites today have access to the user’s bank accounts. Banks are also collaborating with e-commerce sites to provide exclusive offers to consumers. The process has influenced people to rely on e-commerce to purchase groceries, health products and other essentials. The offers from banks and the benefits and advantages of these transactions have surpassed conventional buying and selling behavior. Hence consumers prefer to shop online and access remote commerce and digital payments.

Customers have payment flexibility using QR codes. It is easy to implement and use. The banks have integrated the services and made them available to their customers. QR codes carry transaction processes without any hassles saving significant time. Investment banks are adopting cryptocurrency to help people inspire to invest in digital gold. The financial market has seen a prominent surge in crypto investment, and it is evident that cryptocurrency is here to stay.

Fraud risk in digital payment

The growth of digital payment attracts multiple fraud risks as hackers are trying to gain access to customers’ personal and banking details. Following are the types of fraud risks that banks and customers are facing on a regular basis.

  1. Phishing – The scammers create identical bank website and send the links to the customers. The fake websites are used to capture user ID and passwords, Card numbers, ATM PIN, CVV, and OTP and misuse them.
  2. Vishing – It is a simple method where scammers use Voice over Internet Protocol (VoIP) technology to contact customers and seek personal and financial details over the phone.
  3. Smishing – Using this method scammers send text messages to the customers with links to call back, visit websites, download documents, and information about job offers, lottery wins, ATM deactivated and more.
  4. Identity Theft – Scammers use different methods to acquire customer personal information date of birth, passport number, Aadhaar details, PAN details and more to access customer bank accounts and carry out transactions.
  5. Sim Swap Fraud – The scammers obtain customers’ detail through phone calls, messages, and more and get a new Sim card issued in customers’ names to carry out illegal transactions.
  6. Social Engineering Fraud – The scammers update fake number that resembles bank toll-free number on various digital platforms or caller identification apps to deceive customers. 
  7. International Transfer Scams – The scammers create fake stories and trap customers to share their personal and bank details. They use this information to withdraw a large sum of amount from customers’ bank accounts.
  8. Money Mule – This method is used to entice customers with attractive commissions. Once customers share their bank account details and personal information, the amount which is already stolen from one account to transferred to the customers’ account.  
  9. Juice Jacking – The scammers install the malware in public charging ports. If the customers do not have their own charging device and they happen to charge their mobile devices in any of the public charging ports, scammers can get easy access to the customers’ details stored in the mobile phones.
  10. Cerberus Trojan Threat – It is malware that steals customers’ banking details like credit card numbers, CVV and more. Cerberus efficiently captures screenshots, and get easy access to SMS text, contact lists, account credentials, and more.
  11. Covid-19 Phishing Threat – Covid-19 has been used by many scammers as an opportunity to steal and manipulate customers’ personal data and financial details bank account and debit/credit card details, CVV numbers and secret passwords to gain access to customers’ bank accounts.
  12. IDN Homograph Attack – The scammers can create and use a domain or website name that resembles an established name to trick the customers.
  13. Loan Fraud – The scammers trick the customers by publishing fake advertisements for quick and easy loans and offer them low-interest rates, easy repayment, or without any security needs.
  14. Online scams through the classified marketplace – The scammers create a fake profiles with fake social media addresses to contact customers who post their advertisements. They trick the customers to share their personal and financial details.
  15. Aadhar-based Payment System Fraud – The scammers can use the gums and glues to replicate customers’ fingerprints and use them to carry out transactions.
  16. Broadband Internet Security Fraud – The scammers may call customers to pretend that they are calling from telecommunication or internet services companies and ask for customers’ banking and personal details.
  17. SMS Spoofing – The scammers may call or text customers informing them about the KYC process being incomplete, debit and credit card being blocked or expired, SIM cards expired, accounts credited with a significant and more.

Managing fraud risk

The digital payment platforms need a high fraud detection mechanism. It is critical to have security measures, but it is also crucial to ensure the platform is functioning without any errors. Digital payment platforms must adopt a few security measures to establish a secure connection in a high-speed transaction process. Every secure website must have SSL certificates as it creates a foundation of trust. HTTPS is safe compared to HTTP as it avoids redirection links. It requires a digital certificate to establish the website as safe and secured, and HTTPS websites have security certificates.

The digital era is all about real-time payments, and the digital payment platform is driven by technology. Considering the amount of fraud in digital payment, fraud checks, authentication, authorizations, and data analysis must happen simultaneously. Banks are improving the API ecosystems to integrate their services into the third-party platform and make them available to the customers. As in the real-time payment, the sender and the receiver send and receive the amount at the same time; it is crucial to have the notification and alert of all transactions in place to limit the chances of data manipulations.

The digital payment platform is customer-centric; hence it must be customer friendly. Customers would not want to be pinned by unnecessary compliance requirements. But digital payment platforms cannot be open to cyber threats. Hence, the platform must follow the necessary security guidelines without overdoing them. In today’s world, digital payment platform follows blockchain technologies and are visible to the customer. This technology helps in detecting illegal transactions and malicious user behavior. Organizations are investing in technologies to tighten security knots and prevent monetary losses. Companies would not compromise on external and internal security.

As important as it is to maintain the security of the digital payment platform, it is also critical to test the platform end-to-end for seamless functionalities and error-free performance. Without an adequate testing solution, the platform would miss out on important alerts.

Conclusion

It is crucial to create a tenable cybersecurity framework and it is also important to ensure the integration, performance, accessibility, and usability of this framework. Organizations must adapt to digital channels and platforms to retain their customers. Digitalization is making it easier for organizations to acquire customers and serve them digitally. Accessing funds and payments is becoming more convenient.

The organizations need support to promote and build products with the right features and capabilities. The banks see growth in their ROI when the people use these digital platforms. Organizations would witness a significant cost reduction in delivery when people use the platform for many years. Digital payment testing is a method to validate the platforms’ sustainability and tenacity for long years.

User experience is the most vital point as the users’ attention span is less, and any unsatisfactory designs would bring down their interest leading to the lowering of companies’ investments. The usability and accessibility of the digital platforms are the parts that the organizations must focus on. Testing the platform ensures customer experience with the UI design, platform usability, and accessibility. We have seen clients coming back with requests to understand if their application performances are consistent across multiple devices and operating systems. As banks are slowly moving to multi-channel from mono-channel, which means that banks are interacting with their customers and offering services on multiple channels. Hence, integration, performance, functionality, and security are the most essential areas that require adequate validation.

There is a significant growth in API channels as in Yethi, we have witnessed several instances where banks had requested upward of a thousand APIs to their partner networks. Our partners have contacted us to build an infrastructure that could validate the APIs. The CIOs may face challenges if somebody releases a patch set in a multiple-interconnected network, which could lead to disruption of ongoing processes. The banks need to ensure their reputation as any of these instances could cause heavy damage to their business flow.

Transaction Banking Evolution and Testing

Transaction Banking evolution and testing

Transaction banking plays a significant role in the functioning of corporate and banking institutions to allow a smooth and safe flow of cross-border transactions, trade financial deals, mitigation of risks, cash flow management services, and security services. Transaction banking improves the relationship between banks, customers, and partners. It offers treasury solutions allowing a safer, secured, and effective flow of cash and financial securities across the international financial systems. It facilitates trade finance and offers cash flow management and securities for public and private entities.

The services of transaction banking are cash management services, online services, trade finance, and security services. Cash management service is a part of transaction banking that entities offer as a solution to manage the cash inflow and outflow effectively. Through online services, transaction banking provides a single point of cash access, trade, and security services to help streamline the workflow process for corporate, institutions, and small-medium enterprises. Transaction banking services for trade finance offer a range of global trade finance deals, including import and export services, buyer and seller financing, and open account receivable management. Through security services, transaction banking aims to improve the services and relationships between banks, clients, and partners.

In this article, we will explore why there is a surge of technology and innovation in transaction banking. We will track the evolution of transaction banking and highlight the business and regulatory issues. We will also investigate the scope of testing the transaction modules in banks and examine the products that are covered in testing the transaction modules and platforms.

Technology and Innovation in Transaction Banking

There is stiff competition in transaction banking that arises with changes in the regulatory compliances. With changes in regulatory requirements, banks and vendors are making considerable investments to remain competitive and ensure the quality of transaction banking platforms.

The banks no longer build their proprietary solutions. Instead, they rely on technology vendors to deliver corporate solutions. It significantly reduces costs and frees the internal resources to focus on more value-added services. Banks are investing to make the data easily available to companies and help them achieve straight-through reconciliation. Banks are focusing on collaborating with external vendors for payments. Mobile payment systems are emerging which is evident from different mobile payment platforms collaborating with Google, MasterCard, and Sprint.

Transaction banking is changing the relationship between banks and their technology vendors. Banks are improving their collaboration with the technology vendors to ensure that they offer quality banking services to the customers. Banks are utilizing the technology to the fullest to make their services flexible. With the inclusion of mobile technologies and Cloud services, banks are evolving and improving their services; banking services without these recent technologies now seem incomplete.

Evolution in Transaction Banking

Banks have reorganized their internal operation to improve different transaction banking units. The current structure unifies cash management and trade finance activities. The evolution of transaction banking has had a significant impact on the banks’ service lines. The quality of products and services like trade finance, payments, supply chain, cash management, liquidity management and more are now improved with the technology used for transaction banking.

Large corporations are using the effect of globalization on the economy to manage their cash and liquidity. They have standardized their finance processes by creating regional shared service centres and executing centralized back-office systems across regions. The earlier payment factories that used to process payments have now evolved into extensive corporate transaction banking systems utilized to manage the transaction flow between the partners, banks, and clients. Technology has helped corporates to manage and use their internal cash flow more efficiently. They have improved the visibility of cash transactions. But one area that can be challenging for treasury is to gain access of the cash once it is identified.

The situation can be grave in the countries where there are some rules imposed on tax. It prevents the easy movement of liquidity outside of the country. To facilitate this movement there are many large cash management banks present across countries that advise their clients and leverage the network to offer them value-added services. It offers greater visibility to the corporate treasurer over their cash status. They can manage the cash movement and access the cash without being worried about adverse situations. The organizations can reduce the need for short-term borrowings by up to 30-40%.

Working capital is extremely important for organizations since the liquidity risks can turn an organization into bankruptcy and counterparty risk is rising high. It is not just enough to have funds for a corporate they must manage the funds to make it more accessible and visible.

Liquidity Risk & Counterparty Risk

Liquidity risk and counterparty risk are the two common types of risk that transaction banking face. When an individual investor, business, or financial institution cannot meet their short-term debt, it raises the concern of liquidity risk. On the other hand, counterparty risk arises when the second party in credit, trading & transaction, and investment cannot fulfil their role in the deal and becomes a defaulter in a contract. An effective liquidity risk management and counterparty risk management program help banks meet their obligations to pay within due dates to avoid adverse scenarios.

The Scope of Testing Transaction Banking

The scope of testing transaction banking is spread across the area of its services. The service line of transaction banking is the flow of cross-border transactions, trade financial deals, mitigation of risks, cash flow management services, and security services. The scope of testing transaction banking includes testing the cash management, payment transactions, supply chain finance, collection and receivables, trade finance, and back and front office transaction banking modules.

Transaction banking is available through multiple sources and channels. Testing transaction banking includes testing the transaction origination medium like bank branches (back office and front office systems) and channels (internet and mobile).

Yethi’s Testing Approach and Methodologies

At Yethi, we have worked with some of the major national and international banks. We have tested prominent transaction banking applications. From User Acceptance test design & execution to regression testing and performance testing, we have conducted end-to-end testing of different transaction modules. We have also executed security testing of all the transaction banking applications.

We have tested the following modules,

  1. Payments
    1. NEFT/ RTGS/IMPS
    1. Bulk Transfers
    1. A2A Transactions
    1. UPI/NACH-based transactions
    1. Instrument Series
    1. Tax Payments
    1. ECS
    1. Products Maintenance
  2. Supply chain Finance
    1. Vendor Finance
    1. Dealer Finance
    1. Payable Finance
    1. Receivable Finance
    1. PO Finance
    1. Reverse Factoring
    1. Export Factoring
  3. Collection and Receivables
    1. Collections
    1. EOD BOD Reports
    1. Receivables
    1. All other Reports
  4. Trade Finance
    1. Bill Collection,
    1. Letters of Credit,
    1. Bank Guarantee
    1. Open Account for Trade,
    1. C2C Transactions for Trade
    1. B2C transactions for Trade

We follow strategic testing methodologies and execute testing in phases across different modules like Payments, Supply Chain Finance, Collections and Receivables, and Trade Finance. Our testing method includes identifying various business processes in the bank and customizing software based on the volume and value of transactions supported by each process.

Our testing focuses on the processes deemed to be at high risk, based on an algorithm built in conjunction with the bank. We design and execute test cases based on our analysis. We offer end-to-end and improved test coverage across all the modules and products in transaction banking. We help banks in identifying the defects at the early stage, thereby minimizing the defect leakage risk. We detect rare issues and errors and increase the overall productivity of the application.

Rising Customer Risks in Digital Lending, how efficient test automation can help?

Digital Lending for test automation

The traditional lending process was time-consuming as the time for credit appraisal and disbursal used to be around three to four weeks, and the average time for account/money processing used to be approximately 60 – 70 days. In the traditional lending process, customers have complained that due to 30 days of the moratorium, the EMI would have started way ahead of the lending amount credited in their account. Often, customers used to opt for 6o days of the moratorium to avoid the inconvenience.

Soon organizations realized the need for digitalization to reform the lending process. Leading banks worldwide adopted digital lending to slash down the processing time to 24-hours. Digitalization brought a transformative change to the entire lending process. There has been a significant shift in end-to-end credit journeys, including the customer experience. Digital transformation has supported the credit processes. Digital transformation has improved revenue growth and achieved significant cost savings.

Digital lending allows customers to submit loan applications online. From applications, to documentation, verification and amount credited to your bank account, the entire process is carried out on mobile applications, and it takes less than a day to credit the principal amount to the customer’s bank account. From three weeks and 60-days, the time to cash is now reduced to 24-hours.

Rising customer risk in digital lending

Banks are enhancing the process by adopting paperless loan approval. They are automating the entire process to improve time and quality. But digital advancement has its own limitations. There is a rising concern for customer risk associated with digital lending. Customers share account details, personal information, credit history, and more on these applications. Hence, organizations must ensure that they maintain the stability, security, performance, and accessibility of these platforms.

The organizations are currently digitizing the credit and lending process. The banks are focusing more on improving customer experience by reducing the time taken for lending process. While organizations reduce the lending time, there is a major concern arising from customer risk. Let us look into the types of customer risks associated with the digital lending process.

  1. Multi-layered transaction process – The digital lending transacti0n is multi-layered as various lending services are outsourced to different entities. Multiple Fintech companies operate behind the operation to create a platform for transactions. As the customer uses these tech platforms for transactions, it becomes increasingly complicated in the cases of grievance redressal, like who will address the customer complaints, what actions should be taken and by whom to ensure that the services are more effective.

The platforms are integrated by embedded finance that forms a layer of services by different fintech modules. These platforms also work based on an algorithm that matches borrowers to lenders. While this algorithm creates efficiencies because several activities are performed simultaneously in a broader lending spectrum by outsourcing it to many Fintechs, there can also be certain drawbacks. If the borrower has appointed a defaulter as a guarantee, Fintech will address the loss. However, at the time of collection, customers will face many challenges.

  • Irregularity in information during loan origination process – The terms and conditions in the lending process are lengthy. The lending process becomes complex because not all organizations will have similar terms and conditions; some will have more than others. It increases the customer risk because customers may not have thorough knowledge and understanding of the repayment terms while signing the loan agreement. The customers may not comprehend the information like the interest rate, processing fees, overdue charges, annual percentage rate and more if not informed by the lenders. They would also not know the consequences of repayment delay, credit score impact, and implications of NPA.

Customers are also not aware of the payment recovery actions that organizations adopt. All this inadequate information makes borrowers make uninformed choices and affect their credit ratings. The loan disbursal is quick in digital lending, but without adequate information about the charges and consequences of non-repayment, the risk will increase.

  • Effects on unfavourable credit history – The previous point brings me to the current one that if the customers are not informed about the adversities of repayment delay or repayment overdue for months, it will affect their credit records. Most customers are not even aware that non-repayment or delays can affect their credit eligibility for future loans. Once the credit score is evaluated low, the customers must take multiple measures to rectify them or obtain credit approval to avail future loans. A low credit profile can lower the credit records making it difficult to apply for a new loan.
  • Lack of communication and transparency on assessment of creditworthiness – Digital lending, unlike the traditional lending process, which follows a thorough process of evaluation of customers’ credit profiles, does not engage in interaction with the customers, which is a requirement to analyse the customers’ creditworthiness. Digital lenders spend a lot of time on automated IVR, text messages, and social media advertisements to create awareness and push their services. Borrowers are not even aware of how the lenders have procured their contact details and credit history. It is not even clear how the lenders have evaluated the credit eligibility of borrowers. It creates a lot of confusion regarding whether it is spam or a genuine approach.

Like traditional lending, digital lending also considers two important aspects of the lending process; the customer’s willingness to pay and the ability to pay. While the first intention is evaluated through the customer’s previous credit history, the second intention is evaluated by the customer’s salary credited in the bank account, debit and credit history, investments, liabilities, and more. While applying for a loan, the digital lenders request access to contact details saved on customers’ phones. The lenders use this alternate data model to cross-verify borrowers’ credibility and positive intentions.

  • Lack of suitable assessment device – It is easy to avail of loans digitally as the processing is quick. But there is a lack of borrowers’ credit worthiness assessment that complicates the entire lending process. Often lenders provide top-up loans based on the timely repayment by the borrowers without a suitable assessment. This added loan sometimes may not flow well with the borrowers, and they may end up in high overdue.

The overdue reason could be the high-interest rates imposed within a short loan tenure. Several instances in the past highlighted that customers ended up being loan defaulters, and organizations had to contact them and force them to repay the loans. The collection process in digital lending happens digitally (mostly auto-debit). If customers miss one EMI, it will lead to a serious outcome, and lenders might look for alternative ways to recover the loans. Both borrowers and lenders face harassment.

  • Lack of grievance redressal – Digital lending lacks promptness in addressing customer complaints. In fact, the grievance redressal is not as quick as the loan disbursal process in digital lending. It also lacks transparency for customers, which their trust in digital lending. The digital lending ecosystem evolves multiple service layers offered by many fintech, making the customer interaction complicated and confusing and finally leading to failed redress. For most lending fintech, the only option for redressal is either through an integrated chatbot or WhatsApp chat sessions, which have certain limitations and do not always suggest adequate information. All these increase the intensity of redressal issues, and customers face problems.
  • Risk of compromised personal data – The unique selling feature of digital lending is how they gain access to customers’ personal data and use these alternate data for customer onboarding and credit appraisal processes. But it can be equally detrimental if the data points are sourced from external data agencies. Sometimes the borrowers sign two agreements in case the digital lending happens through a third-party service provider. In the above kind of agreement, the first signed agreement would be between the borrower and the lending app, where the lending app would be entitled to a different entity.  This structure allows the third party to gain access to customer data to collect all necessary information. These sourced data can be misused without the knowledge of the customers.

Why testing is an important digital lending platform?

Let us consider a scenario; you enter all your details, and suddenly the application stops responding with a notification message for you to close the application. You have to turn off the application, unaware of whether the application has recorded the details you have already entered. Or, you upload your documents and click your image, but the image does not get saved. The digital lending platform might have to contact the customer to inform about the missing information and ask them to upload all details again. Customers relate to the digital lending platform because of its seamless functionalities, easy navigation, superior performance, and security. If any of these is compromised and has errors, customers would not think twice about discontinuing using the application.

As per a report in Statista, “Digital lending is one of the fastest-growing fintech segments in India and grew exponentially from nine billion U.S. dollars in 2012 to nearly 110 billion dollars in 2019. It is expected that the digital lending market would reach a value of around 350 billion dollars by 2023”. We can imagine the growth of digital lending in the upcoming years with a 13.5% CAGR. The projected data give us an idea that the number of the digital lending platform will increase, which implies that it would need rigorous testing to ensure that the platform is top-notch without any technical errors. Each Fintech must also ensure that no organization loses their business to their competitors due to technical glitches of applications.

Let us investigate how efficient testing can improve the digital lending experience.

  1. UI/UX and integration – Customers seek platforms that are easy to use and navigate. Testing can evaluate a clean UI design and integration point to ensure that the customers enjoy a seamless experience of the lending platform.
  2. Performance – It is a massive turn off for customers if the application stops responding or if there is a performance error. Performance testing can ensure that the digital platform eliminates the possibilities of performance issues in the lending application.
  3. Accessibility and functionality – Customers relate to applications with easy accessibility and functionalities. They will not prefer using an application filled with features and functionalities. It confuses customers with the click-boxes and fields that do not allow them to navigate through the window command. Functionality testing helps detangle the application so that customers can easily access the applications and ensure that the platform performs at an acceptable standard.
  4. Security – Security is an important aspect of a digital lending platform. Customers share data with an expectation that the platform will maintain customer data confidentiality. The digital lending platform must ensure that the security of borrowers’ details is not compromised. Security testing can ensure that digital lenders maintain data security under the proper protocol.
  5. Regression – Changes, modifications, and addition to the digital platform are extremely frequent. Each change implemented in the application can harm the entire application functionality if not validated properly. Regression testing ensures that the new features are integrated adequately and correctly without disrupting the previous application features and functionalities.

Conclusion – Test automation is an effective solution to scrutinize the workflow of digital lending systems workflows. It validates the end-to-end process and saves time and effort for each implementation. Digital lending platforms have a high degree of inter-connectedness, which requires repeated testing to minimize manual efforts and achieve optimal coverage.

At Yethi, constantly upgrade and update your LOS and digital lending platforms to make them flexible and agile. The major challenge in testing these systems includes usability, performance, security, UI/UX, and Configuration. With Yethi’s robotic, 5th generation codeless test automation solution, Tenjin and deep domain expertise, the experts address the above challenges. Our team help banks and financial institutions drive their testing operation and ensure that their customers achieve their business goals within the stipulated timeline. Our intuitive solution – Tenjin, reduces 60-70% testing turnaround time.