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

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.

Tenjin handles SWIFT message automation – MT & MX

Payments are considered the backbone of banking transactions. It is the lifeline of Corporates / Retail customers for their day-to-day dealings with the Bank.   

Across assets, Liabilities, and internal fund transfers, transactions are confined within a bank. For payment transactions outside the Bank, there would be an additional leg of the transaction. It can be bilateral with another bank or multilateral where the concept of clearing settlement bank or correspondent bank will come into the picture.  

 For payments, there are two aspects,  

  • one is message format where details of the transaction amount, date of settlement,  transaction amount, date of settlement, initiating / beneficiary customer details, initiating bank/beneficiary bank details, remittance information etc., are conveyed.  
  • Another aspect is funds settlement between Initiating bank and the Beneficiary bank. Communication between the bank and the correspondent bank happens through a secured network. Both banks follow a pre-defined format for communication exchange that is decided either by the clearing settlement bank or the secure network.   

A payment transaction will involve multiple parts of the bank, such as,  

  • Treasury for exchange rates, when the currency of transfer is not the same as a customer account currency.   
  • Liquidity ensures that the bank has sufficient funds in the clearing & settlement bank or correspondent bank – it is like a customer needs to have sufficient funds in his account before initiating a transaction. 

Apart from the debit customer’s account, a payment transaction will typically capture 

  • transfer currency,   
  • transfer amount,   
  • the name of the party & account details are referred to as beneficiary; 

The beneficiary should receive the transfer amount and information from the customer to the beneficiary, and then the regulator can capture the purpose of the payment. The payment processor will enrich the data, such as deciding the correspondent bank, name, and address of the ordering customer. 

Further steps – 

  •  Validate the transfer currency; if needed, fetch the exchange rate to decide the amount the customer needs for executing the transaction.  
  • Validate the transfer currency and decide on the correspondent bank.  

  • Cross-check for funds availability in the ordering customer account, collect the charges and do the accounting.  
  • Create the payment chain or routing to reach the beneficiary bank and the network through which the message(s) are sent.  
  • Format the payment message(s) in the appropriate formats and send the needed information to the screening system.  
  • After successful screening completion/compliance approvals, the message(s) will be pushed into the appropriate network. 

This completes one major part of the payment transaction.  

The payment message thus transmitted will be responded to by the beneficiary bank/correspondent bank after a period. The response received will be processed as an incoming message by the ordering bank. This is referred to as asynchronous processing indicating that the sending bank will not wait for an immediate response.  

The Payment message generated through the payment chain/network will reach the beneficiary’s bank; which will credit the beneficiary’s account and confirm the credit through a message or notification. Correspondent banks will pass the necessary accounting entries in their book and send a statement and/or notification through the payment network.  

The bank on receiving the credit notification from the beneficiary or based on the notification received from the correspondent bank will confirm to the ordering customer that the payment has been affected. 

This completes the full payment transaction. 

This payment transaction is reflected in the ordering bank’s books as an entry in the account of the correspondent bank/clearing & settlement bank. The ordering bank will receive the statement from the correspondent bank. The entries in both books will be matched for this bank’s use of a Reconciliation System. 

The payment transactions in the customer account are monitored as part of Anti-Money Laundering Monitoring with the customer’s overall transactional activities based on the compliance rules set by the bank as part of the AML System.   

Messages carrying payment transactions are to be validated both at receiving systems like CSM* or SWIFT or at beneficiary banks.  Due to the financial risks involved, participating Institutions validate  

  • the authenticity of the payment origin  
  • encryption/decryption (if stipulated) 
  • syntax control as pre-validation of an XML file (in case of MX messages), duplicate checks 
  • logical controls at Group Header and Payment Information Level 
  • receiving/sending acknowledgements for the payment messages sent/received 

  • handling functional/technical failures across the end-to-end flows within cut-off time and others 

While banks work with OEM IT vendors to ensure the above critical checkpoints, testing teams must ensure that all the scenarios in the end-to-end flow across all involved applications are tested thoroughly with seamless message flow and acknowledgements.    

There will be instances where rules/procedures of payment types are changed due to regulatory/operational perspectives in time.   During this time, change requests would be implemented by OEM companies.  Complete regression testing of existing functionalities, together with all interfacing applications, must be undertaken so that there is no break in any transactions when deployed in production.  To efficiently handle this, automation of existing flows must be ready as manual execution of regression test cases would be time-consuming, delaying the deployment of upgradation.   

Tenjin Enterprise is the Testing Automation Solution of Yethi with exciting features – 

 

Tenjin Test Automation Solution Abilities

Summary 

 Payment Systems are going through a sea change in technologies and transformations globally. Yethi and its flagship test automation solution, Tenjin product, is geared to navigate this sea of changes with customers, fintech and financial institutions with deep functional expertise and automation abilities across layers. Tenjin utilizes reusable test assets from our vast experience across payment systems. 

Write to us for a joint discussion in your Payments business areas. 

We will be happy to combine Tenjin with your business processes. 

Tenjin helps with Payment Systems Testing and Automation specifically! 

Write to us at info@Yethi.in for a demo and further automation into your Payments Solution Landscape. 

Do Banks Need Special Approaches to Manage and Test NRI Banking?

Every bank has specially curated services for their customers residing anywhere around the world. But why would an NRI need special financial services? The NRI (Non-Resident Indian), Person of Indian Origin (PIO) or Overseas Citizen of India (OCI) needs NRI accounts to allow a smooth flow of funds within India and overseas. With an NRI account, it is extremely convenient for account holders to access their funds and income from abroad. 

What is NRI banking?

The NRI account or NRI banking is a critical process that requires many financial regulations and has many obligations. Banks authorized under the Reserve Bank of India can open NRI accounts for Non-Resident Indians, Persons of Indian Origin (PIO), or Overseas Citizens of India (OCI). Banks provide various banking services to NRIs. NRI may receive funds from any foreign countries or within India. The money received from any foreign country can be deposited in the NRE account and money received within India must be routed through the NRO account only. The amount received in either of the accounts is taxable. The amount they may receive from primary income sources (jobs or business) or any other investment of NRI customers.

Different types of accounts that an NRI can open in Indian banks

The NRI Accounts are classified into three types, Non-Resident External (NRE) and Non-Resident Ordinary (NRO), and Foreign Currency Non-Resident Account (FCNR). Each of these accounts offers specific services tailored for its NRI account holders. It helps the account holder to manage their investments, remittance to their home country, payments, and more. The salient features of the different accounts make it easy for the Government and banks’ regulatory systems to track the inward and outward movement of money.  

NRE saving accounts – The NRE saving account is created to help people save their foreign income earned outside India. Indians residing in foreign countries can freely deposit money in their account. They can also enjoy the full repatriability of their money with the tax being waived off as of now in India. NRI family members living in India can access the account anytime and anywhere only either by Power of Attorney or a consent letter. A few of the banks do offer NRE accounts to marine officers as well as students pursuing careers abroad. 

The NRIs can open and maintain NRE Accounts with the income they earn from their employed country. The accounts must be denominated in Indian Rupees. An NRI can and can open a current, savings, recurring deposit account, or fixed deposit account and jointly maintain and operate the NRE account only with another NRE account holder. The deposit maintained in this account can only be from the money earned in foreign countries and not from India. An NRI can withdraw the saving in the country currency where the NRI resides. Hence, the amount may fluctuate based on the current currency exchange value.

The account holder can transfer the fund of one NRE account to another NRE or NRO without disruption. The principal and interest amounts are exempted from taxation, making the income from the NRE accounts a tax-free account. The NRE accounts allow the NRIs to invest in India. NRI customers however cannot deposit cash in Indian Rupee Currency in the NRE accounts, but they can withdraw the Cash in Indian currency. No cash in Indian currency can be deposited in the NRE Accounts.

NRO saving accounts – The NRO saving account is created to help people save their funds gathered from earnings in India. Indians residing in foreign countries can freely transfer money at competitive exchange rates to the NRO accounts, which the NRI family members or dependents living in India can also access through Power of Attorney or consent letters.

An NRI can open an NRO account with earnings arising from India. The source of income can be many like rent, pension, dividends, interest, and more. An NRI can deposit in Indian INR or other currency in an NRO account but can withdraw the amount only in INR. The NRO account can be managed or operated jointly by an Indian resident or an NRI. The interest accrued on the income in the NRO account falls under taxation. The main objective of the NRO account is to save the amount that the NRIs earn in India.

FCNR accounts – FCNR is a kind of fixed deposit account opened to deposit income earned overseas. The accounts are maintained in foreign currency. NRIs, a Person of Indian Origin (PIO) or Overseas Citizen of India (OCI) can deposit amounts in FCNR accounts. The amount in FCNR account can be deposited in currencies like US dollar (USD), Pound Sterling (GBP), Japanese Yen (JPY), Euro (EURO), Australian Dollar (AUD) & Canadian Dollar (CAD). In India, the Reserve Bank of India approves the currency in which the money is deposited in the FCNR account.

FCNR accounts are term deposit accounts instead savings accounts. Fixed Deposits (FD) are designated in INR currency popularly known as NRI FDs. The interest rates do not fluctuate throughout the tenure of the deposit. As deposits and withdrawals are made in foreign currencies, the rate of interest remains stable in FCNR accounts till maturity. The NRI account holders can jointly operate and maintain the FCNR account.

The tenure of maintaining an FCNR account can be in between 1 year to 5 years. The minimum period of opening an FCNR account is 1 year or above. If the term deposit account is pre-mature and closed within a year, the account holder will not be paid any interest amount. The principal and interest amounts are exempted from taxation as income from the FCNR account are tax-free. A roundabout of 360 days is considered one year for FCNR deposits.

Irrespective of the types of accounts NRIs hold in banks, there are many rules and regulations applicable for the NRI account holders to operate and manage their accounts in India from foreign countries. However, the applicable rules and regulations may vary from country to country for transferring the money and repatriating the amount.

Common issues faced by NRIs to invest or house their money in India

NRIs face many issues and complications whether they wish to open an account and invest in Indian banks. A few of the common issues are mentioned below, 

  • Investing in the Indian market for the NRIs is complicated as an NRI must undergo stringent regulations while investing in the Indian market. There are many restrictions applied to NRIs investing in the Indian market. Let us take an example to understand the limitations fully. While accepting investments from US-based NRIs, only a few banks acknowledge investments from NRIs living in the US. Let us consider a US-based NRI willing to invest in Mutual Fund in India; they must sign many formalities (paperwork and compliance) to gain investments from the American and Canadian NRIs. It is after the Government implemented Foreign Account Tax Compliance Act (FACTA) over the NRI investments. On the contrary, the NRIs residing in other countries must update their residential status by submitting necessary documents.
  • NRIs also face two common issues avoiding tax or double taxation. If an NRI earns income in India that exceeds the specified amount through interest from the NRO accounts, mutual funds, equity shares, domestic fixed deposits, rents, capital gains, etc., they must file income tax. Vice versa, an NRI might end up paying double taxes against their investment in some countries. However, India has signed a treaty with over 90 countries known as the Double Taxation Avoidance Agreement (DTAA) to avoid the issue of paying double taxes. NRIs can pay taxes in either of the countries – a country they currently reside in or in India, where they have earned their capital gain.
  • NRIs most commonly invest in traditional fixed return assets in India, like fixed deposits in banks, gold, real estate, etc. There are many regulations, transactional compliance, limited information on the Indian market, market volatility, applicable taxes and more that restrict NRIs and refrain them from investing in other assets. However, NRIs have multiple investment options that can offer them high returns in investments, like mutual funds, IPOs, direct equity, ETFs, and more.
  • Millennials and Gen-Zs NRIs are driven technologically. They wish to invest in digital assets like NFTs and cryptocurrencies. However, the market volatility and ambiguity and the apprehension regarding their legality in the Indian market do not allow the NRIs to explore the possibilities and put their financial portfolio at risk. 

Why do banks need special approaches to manage NRI banking?

Security, flexibility, accessibility, usability, and functionality are the main aspects of managing the NRI accounts. For a complicated process like NRI banking, validating the touchpoints are essential. NRI banking involves a massive volume of critical transactions. Hence, banks must protect the NRI accounts from Anti-money Laundering and cyber threats, maintain system compliance, follow strict regulations, and more.

Banks nominate Relationship Managers / Officers to focus more on NRI clients. They treat them with special attention by bundling services like Portfolio Management Services, Handling Execution of Wills / Power of Attorneys, Taxation etc., and linking these special services with the deposit accounts of the NRI clients.

The banks that offer specially tailored services to their customers are less in number. A few that offer all the banking services may not have branches in all the countries. Sometimes the representatives would not be able to guide the customers adequately. These create roadblocks for the NRIs to bank conveniently, efficiently, and safely. Banks must adopt special approaches to ensure they do not disappoint their NRI customers. Let us break down the approach banks must take to offer the services anticipated by the customers from their banking partners. We will further explore why the customers need these approaches.

  1. Digital experience – An NRI needs many online banking and financial transactions like new bank account opening, investments, remittance, loan applications, etc. Banks can tailor digital services and offer strong digital banking support to the NRI customers based on their specific requirements. Since NRI customers live in countries that may be in different time zone and have many constraints, NRIs require 24/7/365 digital support. They must be able to access the banking services without any disruption. Hence, offering an outstanding digital experience becomes necessary for managing NRI banking.
  2. System support – An NRI may send transaction requests anytime. It is hard to determine the traffic of these requests. Sometimes it may arrive in bulk, and other days it can be significantly less in numbers. The banks’ systems should be up and running without any performance and functionality errors to ensure that the NRI customers do not face any inconvenience in transactions due to system errors.
  3. Security measures – An NRI may face multiple security breaches owing to the massive number of transactions. NRI accounts are highly vulnerable to a security threat and come under direct cyber-attack. The NRI banking requires special security measures to prevent cyber-attack, anti-money laundering, and other security threats. NRIs tend to have confidence in banks that take extra care to ensure platform security. 
  4. Grievance redressal – NRI customers require a specialized grievance redressal cell to resolve many technical, system, and process errors that may arise during a transaction. Banks must efficiently and promptly resolve issues; so that the customers do not face any significant loss because of delays in addressing the errors. Also, the errors must not affect the transaction flow.
  5. Customer support – NRI customers require outstanding customer support. Banks cannot delay responding to customer requests as it may disappoint them. If there is any delay in response, customers will not think twice about discontinuing the services. Banks must manage their NRI accounts by addressing customer requests quickly.

Testing approach for NRI banking

Security – Security is a vital factor when it comes to testing the NRI banking process. As cited early in the document that NRI accounts are a mesh of critical transactions, which requires thorough testing to ensure that the remittance and other transactions are carried out without violating the secured account information of NRI customers. It puts banks in a bad light if banks fail to maintain sensitive account information for both them and the customers.

Functionality – Banks must handle multiple requests from NRI customers. The entire customer request and system entry require special attention and testing practice so that banks can smoothly execute and validate test results. Banks must enter the details like onboarding customers, feeding the information in their systems, converting to foreign currency on repatriation, calculating interest (360 days for FCNR), and handling the maturity phase. Functional testing becomes an essential part of ensuring that the system allows the entry of multiple information at the same time.

Performance – Not all NRI customers will send transaction and remittance requests at the same time. Hence, the traffic for NRI customers will vary from time to time. Sometimes there will be a bulk of requests sent by the NRI customers, and at times the requests will be fewer. The performance testing is crucial to validate the performance load on the system with multiple requests at a specific time. It confirms the system’s sustainability to withstand the performance load on a busy day.

Accessibility – Accessibility testing is critical to ensure that all NRI customers and their dependents of all ages, and physical or cognitive conditions can access the banking services without any inconvenience. NRI customers demand user-friendly applications, platforms, and solutions that offer ease of use.

Usability – Difficulty in using the application can be one of the reasons that NRI customers might discontinue using the applications. Users require interactive applications that work efficiently and meet all the user requirements. NRI banking must undergo thorough usability testing to check the user-friendliness, efficiency, and accuracy of the user platform.

Digital – The NRI customers require digital platforms for online banking, remittance, lending, and more. Banks are extending round-the-clock digital banking support to their NRI customers. Hence, digital testing is an essential factor for NRI banking. The quality performance, security, and functionality determine that the online transactions and other banking processes are carried out safely without any errors or disruptions.

User acceptance – Banks build applications keeping users in their minds. User acceptance is based on how users use the service and applications offered by the banks. User acceptance testing confirms that the NRIs can use the applications conveniently.

System Integration – Banks build their systems with adequate and applicable features and functionalities. However, there are frequent changes in the application features that can create issues if banks fail to test them on time. System integration testing helps bank test their application to ensure that all their system integration points are functioning without errors. Banks want to ensure that their NRI customers receive the apt services by addressing all customer requests without delay.

Conclusion

NRI banking is a little sensitive area of service because of its high volatility in compliance and vulnerability in maintaining security. Banks must be extra vigilant while catering to their NRI customer. NRI customers are maximum susceptible to cyber-attacks. There are multiple guidelines that banks and their customers must follow while investing and withdrawing the amount entirely to their current residing country. The Government imposes multiple rules on customers residing in countries under strict scrutiny. Banks have a very different approach while dealing with their NRI customers and must be extra vigilant towards managing and testing NRI platforms.

Yethi’s testing experience with NRI banking

Yethi has executed several transformational, business-as-usual, and upgrade projects across multiple services modules and platforms. We have tested numerous applications, including core banking solutions, channels, lending, payments, trade & treasury, etc.

Our 5th generation robotic test automation solution, Tenjin, is easy to integrate with all leading platforms. It reduces your testing time to 45% and enhances the quality of financial and banking software.

Importance of test code quality in continuous testing of financial applications

We cannot overlook the massive digital transformation occurring around us. The growing technology has already set the pace, and the pandemic situation has triggered digital advancement. The impact of this transformation is felt more strongly in a few of the sectors compared to others. Banking and the financial sectors are one of them.

Banking and financial operations are complicated, with multiple users and touchpoints. It adds to the complication more when you have complex software with heavily loaded features. Organizations cannot afford to lose their businesses and loyal customers due to technical glitches arising from the lack of quality check-ups of critical software. Hence, quality assurance (QA) of all financial applications becomes necessary. To determine the overall quality of the software, the software developers must ensure that they maintain the high quality of the test codes.

The current trend of financial applications

We have come a long way from traditional banking, where people had to form a queue for each transaction. The current age of banking follows a digital trend, which means that from money transfers to loan disbursement and transactions at the merchant outlet, pretty much everything is done using software and applications. It creates an immense load on application functionality and performance due to high user dependability and usage. It adds more to the burden when testers and developers have to ensure the application’s security. We cannot put aside user demand for innovative apps. It drives many developers to constantly design, create, incorporate, and test the changes in functional elements.

App developers and testers adopt new trends to understand the user demands and scenarios. One of these trends is adapting the agile framework in Software Development Lifecycle (SDLC). To follow the agile methodologies, the DevOps team incorporate and deploy the changes continuously, followed by continuous testing, which is a vital step to ensure that your financial applications are performing as per the industry standard even with the launch of frequent changes. It is impossible to gain the level of accuracy if the developers are making an error and failing to keep up the quality of the test codes. This article will highlight the importance of test code quality in the continuous testing of financial applications. Let us walk you through,

Benefits of maintaining code quality

  1. Test code quality impacts software quality  

The codes frequently change in the CI / CD pipeline, which may disrupt application performance. Financial applications are usually feature-packed, and it is challenging to introduce new code without testing and validation. Checking the code qualities are essential in financial applications. It avoids technical glitches and unstable performance, ensuring the overall quality of the software. Good quality codebase impacts software quality ensuring safety, security, and reliability of the codebase. It is critical to maintain high-quality codes and develop safe and secure systems. It brings me to talk about another benefit of maintaining code quality.  

  • Test code quality impacts software security

Financial applications are built with high-sensitive codes, which helps in protecting critical information. Writing codes for financial apps, which usually store, and process customer and financial data could be challenging. If developers have to write the codes frequently with each build, it would be necessary to test them continuously. If the quality of the code is not maintained, there would be errors popping up whenever the software would be tested. It would lead to compromising software security. The developers write the codes based on their knowledge and skill, but in the CI / CD pipeline, this may alter the functional elements of the software. Continuous testing supports these high-quality codes to ensure the security of financial applications.  

  • Test code quality impacts software performance

Due to the high volume of usage, financial applications have undergone sudden performance disruption and bottlenecks. There have been incidents in the past where the financial platforms suddenly stopped responding due to heavy traffic, hurling immense damage to brand reputation and customer disruption. Writing codes for volatile financial applications need domain knowledge and skills. The developers should be flexible to make frequent changes based on user requirements. We are already aware of how frequently users demand change. Based on this, the enterprises must adopt continuous testing. Through it, the financial sector would be able to maintain the test code quality and improve the performance of their software.  

  • Test code quality impacts software functionality

A recent survey reveals that 97.8% of users demand applications that have functionalities with user-friendly navigations. Developers do not almost immediately start writing codes with project discussion. Instead, they lay a foundational design and plan how they would like to execute it. Based on the requirements, a design could ideally be Architectural Design, High-level Design or Detailed Design. At each design level, maintaining the quality of the codes becomes vital. The importance of code quality increases in the CI / CD pipeline as there is a need for continuous testing to ensure the quality of the codes. Financial applications to be feature and functionality enriched, it is critical maintaining the code quality with robust testing.

Matrix to measure the quality of codes

Defect Matrix

There are two critical aspects in the defect matrix, the number of defects observed and the severity of the defects. To measure the code quality, it is essential to identify the errors at the stage when they originate, the number of defects reported, the time it takes to identify them, and how frequently they occur.

Complexity Matrix

Measuring the quality of test codes can be done through a complexity matrix. The cyclomatic complexity matrix measures the number of linearly independent paths through a program’s source code.  

How to Improve Code Quality?

  • Coding standards in a uniform protocol ensure that all users use a uniform and accurate style. It improves the quality, consistency and readability of the codebase while reducing the codebase complexities. It would be the best way to use coding standards to ensure the high quality of the code,
  • Ensuring the quality of the codes at the very beginning of the development stage can save a considerable amount of time, money, and effort in fixing the errors. In the agile framework or DevOps, the codes are analyzed at the code creation phase, which allows the developer to improve the code quality at the earlier phase.
  • The code review improves the overall software quality. Hence, a code review is an important step to verify the intent of the code.
  • Refactoring the existing legacy code is necessary when there is a need for cleaning the codebase. It improves the quality of the existing codebase by reducing the complexities.

Why Yethi for Continuous Testing of Financial Apps?

Financial apps are feature-packed and need frequent feature updates based on user requirements. In the CI / CD pipeline, organizations must adopt strategies and a well-structured and planned environment for continuous testing for their CI and CD efforts to be successful.

At Yethi Consulting, we follow an agile test automation framework. Our codeless test automation platform, Tenjin, is a plug-and-play solution built for the banking and financial sector. Its robotic capabilities enable it to learn and adapt to the application and its updates. Regardless of the complexity and number of updates, Tenjin facilitates continuous testing, minimizing the manual effort and speeding up the test execution.

We have a test repository of more than 850K test cases created with high code quality, which can be reused for test execution to help you save time, money and effort and ensure high business ROI.

Improving API accessibility with no-code 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.

Is there a difference in QA services for Retail and Corporate Banking?

The need for QA services in the banking and financial industry is increasing with the rise of technology and innovation. Following the digitalization trend, banks and financial institutions are transforming their front-office and mid-office. The back-office operations, which were still on pen and paper, are slowly brought into the digital platform. And with this sudden burst of digitalization, banks cannot long put their QA needs on the back burner. On the contrary, alongside the digital transformation in banks and FIs, the quality assurance services are also going through a massive digital transformation.

Banks’ digital transformation journey has been in the limelight for over a decade, but the years 2020-2021 have been significant when it comes to growth in digitization. As per a report in Sensor Tower, nearly 1.24 billion financial applications were downloaded in the second quarter of 2020, which in the first quarter of 2022 has gone up by 1.74 billion.

Banks’ digital transformation journey is driven by customer demands, new trends and technologies, and market competition.  Banks have no other options but to evolve and embrace the digital transformation journey. If we track the current trend in the banking sector, we will understand that banks are currently using advanced technologies like artificial intelligence, machine learning, cloud services, and blockchain to digitize the banking systems. If banks must cater to customers and ensure customer satisfaction digitalization is the only option. However, in this digital transformation journey, customer experience and data security will be on focus for banks and financial institutions.

Whether in core banking, capital markets, retail banking, or corporate banking, digitalization has become a revolutionary movement across all financial and banking sectors. The financial industry now depends greatly on technology. They deal with multiple clients and handle various transactions daily. Banks need to have essential QA strategies to ensure that the systems work at all times without any disruptions. QA testing helps banks improve their systems and products and ensure customer satisfaction with an error-free transaction mechanism.

In this article, I will compare the QA services in corporate and retail banks. Is there a difference in the QA services for retail and corporate banking? What is the striking factor differentiating the QA services in these two banking segments? We will also explore the service lines in these two banks and the types of QA services offered to ensure the quality of their services. 

Understanding the Retail Banking

Retail banking is also known as consumer banking or personal banking. The services in retail banking are tailored to cater for individuals and small companies. Many banks offer a basic range of services like account maintenance, lending, line of credit, mortgages, credit and debit cards and more.

Retail banks offer branch banking and online or digital services based on specific customer needs. Retail banks help the consumer maintain saving accounts, earn interest on saving accounts, withdraw funds, pay for products, loans, and more. Retail banks in the current time have undergone massive digital transformation. They are offering a range of services on the digital platform to ensure customer convenience.

Services and digitalization in retail banking

Retail banks offer the following services to consumers,

  1. – Customers open bank accounts to keep a track of their money, savings, transactions, and more.
  2. – Customers can keep their jewellery and valuables in the safe lockers available in banks.
  3. – Customer can maintain their deposits through CDs as the accumulation of interest amount is higher in CDs than in saving accounts.
  4. – Retail banks provide various loans to the consumers like home loans, auto loans, education loans, personal loans and more based on individual requirements.

Apart from the services mentioned above, a few commercial banks offer services like investment banking, commercial banking, and more. Some investment and commercial banks have dedicated services for retail customers to expand business relationships.

Digitalization in retail banking – Retail banks are building mobile applications to offer various services to customers online.  Through mobile applications, customers maintain their accounts, transfer from one account to another, pay bills, pay for products and services at the merchandise, and more. Consumers can also avail of loans online without any paperwork.

These days customer bank accounts are linked with the Unified Payment Interface (UPI) platform to provide a range of services to the customers through APIs. As per a report by Business Standard, UPI processed nearly 6 billion transactions worth Rs 10 trillion in May 2022, the highest volume ever recorded since the launch of the UPI platform in 2016.

QA services in the retail banking

The number of customers in the retail banks is more. Because of the services retail banks offer their customers, the banks tend to receive multiple requests at the same time. It creates an immense load on banks’ servers and systems. Consider a scenario; a bank receives multiple customer requests on a busy weekday building a performance load on their systems. If the bank’s systems cannot handle the load and send delayed responses to the customer, it will create a negative impression on the customers.

Bank systems are expected to be up and running all the time. Ensuring that the systems perform as expected even during high traffic requires an adequate QA service. However, the QA services are not just about checking the performance criteria of the banking systems. The scope and scale of quality assurance are much broader in retail banks. From system integration to functional acceptance and maintaining system security, the banks’ systems must undergo end-to-end system validation to ensure that they offer outstanding customer services without disruption.

Ensuring the quality of systems requires thorough strategizing, planning, preparation, and execution. Standard QA services for retail banks must encompass the ability to validate core banking solutions, lending platforms, CRM, payment, various channels, digital platforms, and more. The following comes as a bundle of QA services that retail banks require to ensure the quality of the banking systems.

  1. Requirements Assurance – Organizations do a thorough requirement analysis of the application under test before starting with the test process. As the scope of testing is wide and varied in retail banks, it is critical to gather the requirements before executing the test.
  2. Integration Assurance – The systems running in retail banks need multiple features to be integrated. The integration must be validated with the application suite and system landscape. The system integration ensures that the application has all the required fields added to the applications and systems.
  3. Functional Assurance – The retail banks’ systems will fail if users face accessibility or usability issues. The retail bank systems must pass the functionality tests to ensure that they conform with user acceptance.
  4. Non-functional Assurance – Due to the heavy volume of transactions, the systems in retail banks face two common issues performance bottleneck and security. Both are essential aspects when it comes to ensuring the quality of the systems. An adequate quality assurance service cannot do without validating these critical aspects.
  5. Automation Testing – The time to market the banking services and products has reduced significantly due to rising customer demand. Financial software is one of the data-intensive applications and the time-to-market is less. Hence, banks and financial applications require extensive test automation. Automation testing significantly reduces the time of product launch, improves accuracy, enhances team productivity, and most importantly it saves money.
  6. Regression Testing – Regression testing is one of the essential testing processes for retail banks. As retail banks serve multiple customers simultaneously, the applications in the retail banks require frequent changes in the features and functionality to enable them to offer personalized services to their customers. By adding new features and functionality, the existing features may respond with some errors. Regression testing in retail banking systems ensures that the existing application features work just as fine in collaboration with additional new features.

Understanding the Corporate Banking

Corporate banks are a part of business banking that offers their services only to the corporates. Corporate banking offers several benefits to its corporate customers. Since the services are tailored to suit the requirements of the corporate customers, corporate banks offer unique propositions on customers’ salary accounts, regular salary updates on websites, corporate card facilities, multiple reimbursements, and allowances such as meal vouchers, medical reimbursements, leave travel allowances, gift cards, conveyance, fuel allowances, and more.

Corporate customers can also receive special rates on National Pension System, captive ATM within the company premises, travel cards, working capital, long-term loans, and structured finance. Many corporate banks offer transaction banking like trade finance, supply chain solutions, remittances, cash management and escrow services to their corporate customers. Corporate customers can also get facilities on investments like term deposits, mutual funds, and structured instruments. Corporate banks also offer treasury services like debt capital markets, forex and derivatives. To cater to corporate requirements, some corporate banks also offer value-added services, like cloud solutions, travel services, tax assistance, concierge services, and more.

Services and digitalization in corporate banking

The services in the corporate banks are value-intensive and tailored to suit the specific requirements of corporate customers. Following are the types of services that corporate banks provide to their customers.

  1. Corporate banks offer loans and other credit products to their customers to help their businesses expand
  2. It offers treasury services like debt capital markets, forex and derivatives and cash management services, and trade finance
  3. Corporate banks also offer equipment lending to help their customers grow their business
  4. Corporate banks also handle commercial real estate requirements and employee services

Digitalization in corporate banking – Corporate banks offer a bundle of services to their customers. They offer packaged offers to the employees of their corporate customers. The banks that serve both retail and corporate accounts, build mobile applications and based on their requirements offer tailored services to the customers. Through mobile applications, customers maintain their corporate accounts, apply for loans, invest in mutual funds and stock markets, apply for business and travel cards, and check the Forex market.

QA services in corporate banking

Corporate banking is more value intensive. As it caters to a specific customer segment, the products and services are more exclusive than services in retail banking. QA services in corporate banks are much more complicated than in retail banks. It does not follow the same line of services but customizes based on client requirements. Consider a scenario; the first payday, when companies are to credit the salary accounts of their employees. The performance requirements of banking systems will not be the same as all other days as there will be an immense load on banking systems due to their maximum usage on that particular day. There will be a delay in salary processing if the system faces performance issues. When banks opt to cater to their corporate clients, they must ensure system capability and sustainability on the days when the traffic is at its peak.

Corporate banks need quality assurance services to ensure that their systems are tenable during the days when customer traffic is high. In addition to checking the performance of banking systems in the corporate banks, it is also essential to check other quality aspects of the banking systems. Corporate accounts have distinctive features and do not follow the conventional line of retail services. As mentioned, banks customize corporate accounts based on clients’ requirements.

The corporate accounts are a mix of corporate and retail services. Hence, the applications require adequate validations. It is crucial to ensure that the systems’ elements of both the services are integrated without errors and working without any issues. It is also essential to check for the system’s security as it contains more than individual data like customer mutual fund details, investment records, loan details, and more. Corporate banking systems must also undergo thorough end-to-end testing to ensure seamless system performance.  

Ensuring the quality of corporate banking systems is equally important. Banks must strategize, plan, and prepare before the start of the test execution. Standard QA services of corporate accounts encompass validating customers’ lending platforms, trade and treasury accounts, digital platforms, and more.

  1. Requirements Assurance – The services in corporate banks are heterogeneous in nature and tailored to suit the specific requirements of customers. Requirement analysis of corporate banking systems is necessary to understand the requirements of the application under test.
  2. Integration Assurance – As there are multiple services bundled together it is also essential to validate the feature and functionality integration with the application suite and system landscape. The system integration ensures that all required functionalities are added to the applications and systems and work seamlessly.
  3. Functional Assurance – Since the functionalities in the corporate banking systems are diverse it is essential to validate the response of features and functionality. Based on the customers’ requirements it is critical to ensure that the added functionalities are working as per customer expectations.
  4. Non-Functional Assurance – As the corporate banks deal with valuable information maintaining the security of these corporate platforms is of the highest importance. The corporate banks’ systems might face security and performance issues. Quality assurance services remove performance bottlenecks and address the security issues of corporate bank accounts.
  5. Test Automation – The customer needs faster access to financial applications. But it is impossible to release financial applications in the market without thorough testing. For a data-intensive applications like financial apps automation testing is an easy solution. Automation testing significantly reduces time to market and money. It enhances accuracy and team productivity bringing the application nearer to customers faster.
  6. Regression Testing – Corporate banking applications undergo frequent changes in application functionality. Regression testing in the corporate banks is necessary to ensure that the existing application features remain unscathed with new additional changes.

Comparing QA services in retail and corporate banking

Even if on the surface, we do not see many differences in QA service for retail and corporate banks, there will be a significant underlying difference between the QA services of both banks. The systems in both banks require thorough end-to-end testing. Retail banks have a high volume of transactions, whereas corporate banks focus more on value. Performance testing for the systems in retail and corporate banks is essential, but in retail banks, the requirement is more intensive than in corporate banks.

Risk-based testing is important to validate the systems in both banks. But since corporate banks emphasize more on value, it is critical to maintain the risk index score matrix for corporate accounts. The systems in both the banks are validated based on the risk parameter like regulatory, financial impact, customer servicing, operations, and systems risk. For value-intensive accounts like corporate banks, the parameter of the risk score will be higher. Corporate banking handles many critical transactions, where the risk factor will always be on the medium to high scale as compared to retail banking, where the risk factor will be low to medium on the risk scale.

Since corporate banking combines several services to form a package, microservices testing is essential for corporate banking. Testing of corporate banking systems requires both banking and testing expertise to segregate between the intensity of test case scenarios. Corporate banking offers services like trade finance, supply chain finance, and more that require extensive testing to ensure error-free performance. The regulation impact is higher in corporate banking and testing corporate banking systems is tougher and impossible without adequate domain and testing knowledge. Corporate banking is more requirement based as compared to retail banking.

Retail and corporate banking both have a digital impact. Retail banks have undergone a digital transformation of their front-office and back-office processes. Whereas corporate banks are digitalizing their workflow in front-office, mid-office, and back-office processes. In the process of ensuring the security between value and volume, corporate banking has complex system architecture, which requires a specialized risk team to ensure the platform security.

Conclusion

Testing the systems in both banking segments requires specific knowledge about the platform, modules, and technologies used in retail and corporate banks. If a team has to execute testing for systems in either of these two banks or the exclusive part of the retail segment in corporate banks or exclusive corporate services in retail banks, they must have adequate knowledge to differentiate between the critical aspects of testing the systems in retail and corporate banks. 

At Yethi, we have a combined industry experience of more than 30 years. We have executed functional (functional acceptance, user acceptance, integration, regression, UI/UX) testing and non-function (performance, usability, security, data migration) across more than 22 countries globally. Our testing centre of excellence (TCoE) is formed with domain and testing experts who have successfully offered services and transformed business for more than 100+ clients.

Our 5th generation robotic test automation solution, Tenjin, can be integrated with a major banking platform. This intuition test automation solutions speed up your testing process, reducing time-to-market and money. Our QA services are a combination of tool-based and solution-based, always ensuring the quality of your banking platform.

Is India’s digital lending market equipped to manage the QA risk for appropriate digital experience?

Technology has made Indian banking systems move from physical to digital platforms. Amidst the rising concern of the global pandemic, when the entire world moved within home confinement and physical touch and interaction was restricted, banking needed a massive transformation. Since banks and financial institutions started digital transformation journeys, banks have elevated to internet banking and digital means of payments, digital account opening, digital lending, wealth-tech, and invest-tech solutions. Banks have moved further and adapted neo-banking models and became ‘Banking-as-a-Service’ (BaaS) platform providers.

Like all other channels in banking, the lending market is highly influenced by digitalization. With deep penetration of internet facilities, growth of services available on the digital platform, advanced technologies, regulatory changes, and more have triggered the growth of digitalization. Customer expectations have increased as the demand for virtual banking has increased like never before. It becomes a priority for banks to meet customer needs without compromising on superior customer experience. With the rise of fintech, the growth of digital banking has become inevitable.

What is QA risk in lending?

With the digital expansion, lending companies are faced with challenges like unethical business practices, mis-selling, cybersecurity, and data privacy concerns. Maintaining Quality Assurance for financial applications is crucial because it ensures that customer details and money both are protected. By testing the financial applications, organizations can validate the regulatory and reliability of the applications. However, there are some potential QA risks in the lending market.

Some of the common risks in software testing and QA of financial applications are,

  • There is a lack of communication and interaction between the lender and the borrower. An inadequate regulatory framework for digital loans like consumer loans, instant loans, etc., makes the matter more grave. It may lead to delinquency and potential fraud, which require safeguarding mechanisms against fraud in the lending platforms. Possible interaction, adequate regulatory framework, and applicable verification are necessary to prevent undesirable outcomes. Organizations must formulate an apt quality framework to save valuable resources and meet deadlines.
  • There are frequent changes in applications that may arise due to customer requirements. The request for changes is so frequent that it leads to resource gaps or exhaustion. Organizations must ensure product quality while meeting the launch deadlines. It creates immense pressure on the team to manage the risk while handling the project deadlines.
  • Sometimes, a lack of prioritization may shift the focus to insignificant aspects. The situation can be more critical if there is a lack of monitoring mechanisms for lending service providers and digital lending applications. The team pays more attention to the insignificant features ignoring the primary ones. Hence, it is critical to prioritize the main functionality and product highlights and build a monitoring mechanism to define and monitor the core functionality.

From loan origination to collections, the lending lifecycle has become digital. To render lending services, banks are collaborating with several third parties like fintech, distributors, SaaS providers, thus exposing borrowers and lenders to new and heightened levels of risk.

Importance of QA in lending service for outstanding lending experience

The importance of QA increases to ensure that the customers have an outstanding digital lending experience. The innovative operating models and structures evolved around digital lending demand the need to evaluate the risks and protect the customers and lending organization data. QA in lending services is critical as it helps in monitoring the system performance and functionality to manage the risk.

The risk management frameworks of banks and NBFCs have started utilizing digital touchpoints for a proactive risk assessment of client profiles. Without an adequate QA service validating the connectivity and performance of the digital touchpoints will be an impossible task for an organization, thus increasing the probability of risks. It will also hinder the organization from insightful decision-making. QA prepares your systems to perform without errors in identifying potential anomalous transactions.

An adequate QA service helps organizations regulate and formulate better standards for cybersecurity, privacy, customer servicing, dispute management, system availability and performance, and fraud. RBI frequently changes its guidelines, which requires organizations to incorporate the changes in the systems. A good QA practice will help organizations validate the changes in the systems without an error and remain compliant with frequently changing RBI guidelines.

Also, with these RBI guidelines changes, the organizations must assess the systems’ worthiness of the apps. Validating the systems against cyber threats is a critical exercise that lenders must follow. An adequate QA practice in lending ensures that the system is perfectly sustainable, accessible, and reliable even with these changes. QA practices also see that the apps can adapt to the contractual terms and conditions, customer rights and awareness, dispute resolution, manage fraud, and more.

How to manage QA risk for appropriate Digital experience?

To address the QA risks associated with testing of financial applications, the QA testers intensely scrutinize the following key aspects of the financial applications.

  • Security – Ensuring application security is a pivotal exercise for lending institutions. The Cyber-criminal makes financial applications and data (customer and organization) centre a soft target. Cybercriminals can gain control over customer accounts and misuse the data. The QA team tests the platform security to ensure that the applications and the data are protected and secured from all possible data manipulation.
  • Reliability – Financial applications have the extreme responsibility of assessing, processing, and storing sensitive customer data. This exercise ensures the application reliability of how accurate the applications can process and store data. A good QA practice ensures that the financial applications have a high level of data availability. It also confirms that even if the application performance fails, the applications can still protect the data.
  • Performance – It is critical to evaluate the performance of financial applications concerning the transaction time and transaction frequency. The banking, trading, and lending applications process many transactions in a short time. The apps cannot delay the response as each transaction request is critical. Any delay in application response can impact business operations. QA services validate the application performance during high traffic and heavy transaction volume. It identifies the performance bottleneck and prepares the systems to perform without disruption.
  • Regulatory Compliance – Every organization must comply with all regulations and government guidelines. The financial institution must prepare the operation to adapt to the frequent changes in system regulations so that the organizations meet the requirements of regional or national governments or various international regulatory bodies. A good QA practice prevents system failure by meeting the system’s compliance against civil, financial, or even criminal consequences.

Is India equipped to manage the QA risk for appropriate digital experience in lending market?

India has witnessed extreme growth in innovation and technologies in the past couple of decades. The country has been so proactive in embracing the digital transformation that even in a grave situation like the global pandemic, Indian financial institutions could pull it through. Today technologies drive Indian banks and fintech NBFCs. India’s digital lending consists of services like unsecured loans to secured loans, personal loans to business loans to vehicle loans, and loans for individuals and MSMEs in various age groups and segments.

Since the Indian banks are steadily adapting to innovative digital approaches across all channels, the fintech NBFCs could have been far behind. They are adopting digital lending like all other channels. Banks and NBFCs have collaborated with the e-commerce firms to finance the products to the buyers and encourage the suppliers and businesses to do business without any disruptions. Financial institutions also partner with marketplaces, aggregators, wallet companies, payment facilitators, etc., to cater to digital sourcing models. Financial institutions are now leveraging advanced technology and partnering with various fintech to offer products like Buy Now Pay Later, a point-of-sale credit, and others.

There are several technologies like data analytics, alternate data models, and data-based underwriting models that financial institutions use to create a digital database and reduce turnaround time and operational costs. Financial institutions have partnered with account aggregators to decide on the credit eligibility of the customers. Technology allows companies to undertake income assessment, loan monitoring, KYC data assessment, and create a single view of the customer across their liabilities and assets by leveraging data from other financial sources. The process will allow the lenders to onboard new customers with ease.

Financial institutions also utilize emerging technologies like open banking or video KYC, which requires them to coordinate with fintech for an array of financial services like lead acquisition, KYC verification, income verification, e-signing and e-stamping, and processing fee payments and collections. The Reserve Bank of India has formed a Working Group on digital lending, which addresses the risk posed by digital evolution in financial services. This group also ensures that organizations reap the benefits of digital innovation.

If organizations encourage the covert digital or neo banks, digital-only NBFCs or banks, they must ensure that their QA is top-notch. Organizations are testing their systems and platform. Organizations have adopted an agile testing methodology to include QA practice early at the development stage to highlight the errors so that the team can identify and resolve those issues. Testing has become an integral part of the development stage. QA practice gives the banks and financial institutions that level of confidence and liberty to innovate and introduce new technologies without any restrictions. 

Conclusion

The growth of digital lending had a tremendous impact on organizational setup, technology, compliance, and operational costs for digital lenders. The entire structure of the financial organization is changed. Organizations use AI/ML-based underwriting algorithms to offer better monitoring and governance in the segment. Digital lending is building customer trust by providing more transparency providing a comprehensive framework and a progressive regulatory environment for the fast-growing digital lending segment.

Banks and NBFCs successfully offer robust and seamless digital lending infrastructure to existing and potential borrowers. They effectively address and mitigate issues concerning cybersecurity, data privacy, operational risk, third-party risk, and fraud risk. The financial institutions and their partners are reaping the benefits of digital innovation while mitigating potential QA risks to offer an outstanding digital experience to the borrowers.

Challenges associated with transformation projects from Legacy System to Digital Platforms

One of the major challenges that lie ahead of digital transformation is the legacy systems that the businesses run on.  Legacy systems are the software programs that have remained in use with the organization since its establishment or for several years.

With the modern technological advancements, the legacy system fails to keep up with the pace and often becomes outdated and unfit for business uses. It can hinder the efficiency of the operation process if data sets and other information can be leveraged to the extent of modern systems.

Hence, it becomes necessary either to upgrade or replace the legacy system to keep up with the current trend. Failing to do so, the organizations may not survive in the highly competitive market and may lose their business value. Hence, regular update/ upgrade or replacing the legacy system is required to align with modern-day digitization and improve the ROI metric of the organization.

Though the upgrade of legacy systems is inevitable, it is often a daunting experience to update them. Organizations should address the associated challenges with the legacy systems and resolve them for a smooth transformation to digital platforms. Once they are upgraded, they will ensure to offer an efficient operational and infrastructural process being leveraged by modern technology.

Legacy Systems: Everything you should know

Do you remember your first smartphone? How would you rate it in comparison to the one you have today? Undoubtedly, the one that you own today is way more advanced in terms of features and functionalities compared to the one that you had a decade ago.

Likewise, companies install a certain system at the time of their establishment which, over time, gets outdated and underperform. It is important to upgrade the system periodically to yield the best business outcome, but there can be a few challenges to upgrading the legacy systems. One such challenge is that it can be cumbersome, unruly, and challenging to update. End users might also be complacent with their existing systems and may be reluctant to transform their legacy platform.

The Characteristics of Legacy Systems explained

  • The system still fulfils the purpose it was initially meant for
  • They are not well integrated with other modern business solutions in use
  • The old technology of these systems does not allow it to interact with newer, modern systems
  • They do not permit the growth of the business tools and solutions specific to a company
  • Their support and maintenance services are longer available from the service provider
  • They are incompatible with modern and advanced solutions
  • It requires frequent patch upgradation
  • It requires multiple interfaces or multiple standalone systems / in-house systems to run the business smoothly and efficiently
  • It requires heavy customizations
  • It runs on obsolete technology  

Due to these limitations of legacy systems, organizations are adopting modern technologies that can provide solutions with greater efficiency, scalability, and adaptability.

Risks & Issues with the Existing Legacy System

  • Maintenance

Legacy systems typically have a huge codebase and are monolithic in nature. A little modification or replacement of one system module or even a small update can create conflicts across the system. It requires more time and effort to implement any new changes.

Every system in an organization requires regular maintenance to calibrate the system, clean up the junk data of the existing database, and ensure its efficiency is not compromised. Outdated software is hard to maintain in recent times as it is difficult to find the people with the required expertise and skillset. The maintenance cost of legacy systems can also be expensive.

Further, these systems have been loaded with large amounts of corporate data for years, the struggle of migrating this data-intensive system to a new platform can be full of hassles. An inefficient maintenance process may give rise to unexpected defects, which further leads to operating issues. Workforces familiar with handling modern IT solutions might face issues in managing old systems that reduce the operational speed.

  • Talent pool

Developers who are just starting are learning programming languages like JavaScript and C#. As legacy technology moves further past the point of manufacturer support, there are fewer and fewer IT professionals with the knowledge of those technologies. Thus, the costs of the smaller pool of experts in that technology grow. 

  • Cyber Security:

Cyberattacks are rising, which increases the cost of running legacy systems. Systems with obsolete infrastructure are highly vulnerable to cyberattacks due to inadequate protection and cyber protocols. The bottlenecks in these legacy system solutions pave the way to cyber-attacks and malicious tasks.

Organizations cannot afford to remain non-compliant with the latest security standards. It does not safeguard their systems from potential threats. A single unpatched vulnerability can enable attackers to access all applications, middleware, and databases running on the server platform.

Thus, associations still holding on to legacy systems are prone to risks of unauthorized access and neglect of their safety. This burdens developers with the priority to protect their systems and prevent hackers from fetching essential information.

The number of attacks that lead to privacy breaches is escalating every year. It can cost millions of dollars penalty to an organization. Hence, the Cloud storage system is becoming a booming substitution for legacy systems with enhanced security features.

  • Integration:

The most significant disadvantage of any legacy system is its inefficiency in integrating modern advanced software. A typical result of this lack of integration is the emergence of data silos, whereby different departments across a company cannot freely access the data they need.

Many modern clouds and other SaaS solutions can be incompatible with older legacy systems. It requires incorporating new tools and programs, extensive custom code to make it functional. The incompatibility of these applications gives rise to tedious steps that need to be followed in data migration.

Companies looking for development in their work processes face tremendous hassle in opting for suitable techniques that will build a bridge between legacy systems and present-day IT solutions. One of the most preferred technologies of this era is the Cloud storage service that covers up most of the loopholes present in the old systems.

  • Organizational agility and efficiency

Timing is extremely crucial to seize business opportunities. How fast can you respond to the market challenges? Will it take weeks to adopt new technologies and solutions? Or rather several months? The truth is, in most cases, businesses bound to legacy systems lack organizational agility to adapt to the upcoming challenges.

One of the most damning implications of continuing to use a legacy system is the stifled ability to modernize and improve. The most significant goal in digital transformation strategy is improving efficiencies and capabilities to remain competitive. Legacy systems in business are extremely inflexible, which becomes an obstacle for most organizations operating in today’s digital environment.

Customers expect organizations to be digitized, and executives see the digital transformation to be competitive. By not investing in new technology and sticking with a legacy system, you’re hampering your ability to compete and giving ground to your competitors. Maintaining data on Cloud is cost-effective compared to maintaining on Premises. It is more convenient to get access to the data when it is on the cloud than fetching it from on Premises.

  • Performance & Productivity:  

Legacy systems become slower and slower over time, which means performance, efficiency and productivity can also decrease. The older your application gets, the slower it becomes. Legacy systems usually consume more resources causing more frequent failures, which leads to inefficiency and unproductivity. As performance speed depends on the optimal usage of technology capabilities

The technology sector is fast-paced, and evolutions in software are emerging every day. A poorly performing software has no chance to stand out in the market, eventually incurring a huge loss to the company. Legacy Systems lack performance, efficiency, and productivity as they are incompetent with the modern approach. Therefore, upgraded systems can undoubtedly provide better data accuracy and speedy processing.

7 reasons why digital transformation of Legacy Systems is necessary for Business

Some of the advantages of transforming your systems digitally are as follows,

  1. Competitive advantage: Modernizing a legacy system, whether it’s an ERP, CRM, or your data center, can bring a plethora of advantages to your business. This allows you to become more capable, agile, and give you an upper hand over your competitors.
  2. Maintenance and Operation Cost: With the support of In-house staff like engineers and developers, organizations will be able to maintain and reduce operational costs. Organizations can also use third-party tools to fill the missing features of the systems. It would be easy to streamline the task whether automated or manually for the employees.
  3. More content employees: User interfaces have evolved significantly over time, and most employees will be accustomed to the modern UIs that improve customer satisfaction and performance over an older-style system that’s not as user-friendly. 
  4. Growth opportunities: Modernizing your legacy system gives you much more room for growth in the future.  Keeping pace with the latest tech and software developments gives you a competitive edge. It also puts you in a great position to further expand the services you use.
  5. Make use of big data: A major issue posed by legacy systems that digital transformation attempts to remediate is the silos that emerge from disparate systems within an organization. Transforming the legacy systems digitally remove these barriers and allow users to make use of the vast amounts of data big data that the Bank possesses to help support business decisions.
  6. Security and Performance: Digital transformation is highly secured compared to the legacy system. From the performance point of view, digitalization will be able to meet the expectation of the NextGen group and tap the market with new additional business from the Next G population as well as cope with the fast-moving pace of the global market.

How can a thorough test automation solution help in moving from legacy systems to digital platforms

When an organization is planning to upgrade its legacy system or move to new digital platforms, it is essential to conduct thorough test automation to ensure the new system is working seamlessly.

Successful automation strategies leverage the convergence of digital technologies with evolving systems to enhance the benefits gained by any organization. Digital technologies involving codeless test automation, automated regression testing, artificial intelligence, machine learning, and natural language processing have boosted productivity and accelerated the end-to-end process transformation. As a result, the steps to centralize, standardize, optimize, and automate software processes have become a lot more straightforward.

To ensure that the data is efficiently moved from the legacy system to the modern platform, it should be made sure that it is moved with minimal disruption and minimum data loss, in the most secure and scalable manner. Further, it should be made sure all the functional and non-functional objectives are achieved. Testing helps to achieve all the above said with increased speed, accuracy, consistency, and ROI.

How can Yethi help you?

Yethi is a niche QA service provider to banks and financial institutions worldwide. We assist professionals from the BFSI industry looking for end-to-end software testing solutions like Manual Testing, Automation Testing, Performance Testing, Security Testing, and more to improve Banking / Financial software quality.

We understand the importance of testing while moving from legacy systems to modern platforms, hence, we carry out thorough test automation to ensure the high quality of the system. We have the right resources and tools to carry out testing in the most efficient manner and yield the expected outcome. Our test automation platform, Tenjin, will perform all kinds of testing activity with utmost accuracy, precision, and consistency with nearly 100% results. It is a 5th generation codeless test automation tool; Tenjin is built with intuitive features that work flawlessly across multiple applications and is a fast and scalable test automation platform.