Transaction Banking Evolution and Testing

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

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

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

Technology and Innovation in Transaction Banking

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

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

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

Evolution in Transaction Banking

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

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

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

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

Liquidity Risk & Counterparty Risk

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

The Scope of Testing Transaction Banking

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

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

Yethi’s Testing Approach and Methodologies

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

We have tested the following modules,

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

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

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

How does test automation vary between development and acceptance in BFSI industry?

Test automation has transformed the core software system of organizations with a better and smarter workflow approach. The improved test automation helps to optimize the entire process, thereby, eliminating any operational gaps and offering a greater level of customer satisfaction. Test automation plays an integral part in the highly complex banking and financial sector where the process involves extremely sensitive financial data, which offers NO scope for compromise. Being popularly used in banks and financial institutions, test automation helps to reduce time and effort on repetitive jobs and increases the speed of delivery multiple folds when compared to manual testing.

Though test automation has eased the tedious and time-consuming manual software testing, its success depends only on the efficiency of automation tools being used. Adding to the sensitive data-driven and multi-layer workflow of the banking and financial sector, a perfect automation tool is required that will align with the organization’s core software system and deliver favorable outcomes. The test automation requirement varies between the development and acceptance phase in the BFSI industry, let’s discuss it in detail.

Test automation in the software development cycle

Testing in the development phase involves a series of to-and-fro cycles to ensure that the newly developed software is working without any defect. The entire cycle of software development or sub-development phase requires a specifically designed test automation tool to get the software immaculately working. Further, with the introduction of more agile DevOps processes, testing is carried out earlier in the development cycle to ensure the developed software is of higher quality. Additionally, continuous testing process is also introduced to execute the automated tests as a part of the software development pipeline to increase quality and reduce business risks.

Software development cycles in the banking processes involve critical data such as an individual’s financial information, transaction history, and personal details. To safeguard the crucial client data and have a fully functional yet completely secured banking software, it is important to have a strong testing procedure in place.

A performance failure, security breach, or a poorly functioning system will lead to loss of potential and prospective clients, eventually incurring a huge financial loss. Organizations need to understand that it’s equally important to invest in high-quality, fully functional test automation tools to give the best service to their clients.

In this era of growing dependency on digital platforms, only a good testing system has the power to make or break your business. Poorly performing testing systems can compromise on the performance and security, leading to highly dissatisfied customers, which can eventually shatter the brand within no time. That’s why, we at Yethi, have introduced an efficient test automation platform for banking and financial businesses to work at their best while offering complete peace of mind to the entire client base. Tenjin, Yethi’s codeless automation tool, has revolutionized test automation in the banking and financial sectors, offering an impeccable system that offers no scope for errors.

Yethi has established itself as a market leader in QA services to the BFSI industry by offering testing solutions to popular banking software including Oracle FLEXCUBE, Infosys Finacle, and TCS BaNCS. Tenjin has created a deep impression in the market for its quick deployment test automation solution that conducts the testing without the need for scripts or codes while offering nearly 100% accuracy.

Test automation for software acceptance

Banking and financial systems are constantly modifying their core software to add new features or upgrade the existing ones to meet the ever-changing demand of the customers. Testing associated with the adding of a new feature to cater to the company/institution’s requirement is defined as acceptance testing.

User acceptance testing forms a vital part of the software development life cycle as it is tested for real-world usage for the intended audience. Otherwise known as UAT (user acceptance testing), it is done when the software has undergone integration testing, unit testing, system testing, and other functional testing aspects. This testing is the final stage of functional testing to check if the final results are accepted by the end-users.

To ease the acceptance testing from a manual approach, test automation tools for acceptance are being used popularly by banks and other financial companies/ institutions. Manual test execution takes time as the test codes are manually written and reviewed by the testers. Such an approach is not suitable for a highly agile working system that is followed by companies today. To keep up with the trend and offer modern solutions to new-age problems, Yethi offers automation for acceptance testing.

At Yethi, we understand how essential it is to decide and use the right automation tool for testing user acceptance of the banking/ financial software. Yethi’s test automation tool, Tenjin, is a codeless platform that is designed to rapidly scan through the software and detect any defects. It improves the application quality by fully investigating the formal expression of your business needs and addressing any operational and infrastructural gaps. Tenjin is one of its kind of tools that can offer testing of banking/financial software with minimal human interference and nearly 100% accuracy.

The future of test automation in banking/ financial software

The next wave of artificial intelligence (AI) and machine learning is already taking over all the technological processes across various industries. The incorporation of these technologies has been a crucial part of the banks and financial companies/ institutions, as the number of account holders is constantly increasing. It becomes important for the banks to consider the need of the current tech-savvy millennials while keeping things simple for the previous generation.

Banks and other financial companies are creating and updating software for online, mobile, and other digital platforms. This increasing number of online users has created a need for an immensely effective software testing solution that will leave no scope for compromise in any aspects of functional usage, performance, or security.

The future of test automation in the BFSI industry looks quite promising with the growing usage of digital platforms. The sector has already seen the integration of AI, machine learning, and robotics; however, the future looks different with advanced robotics, augmented reality, and smart machines being used in a common, real-life scenario. The evolving banking/ financial process will further require an advanced testing solution. The future might see robots take over the testing process or a more agile process might come into the picture that might offer impeccable execution. Technology is evolving at a faster rate than we can imagine, so the future will see advancements much beyond our current understanding.

Resolving Quality Issues Across DevOps Pipeline

DevOps has transformed the process of software development and testing. It is a multidisciplinary approach that brings together the development and operation departments together. This strategy leads to a cultural shift where professionals from both groups work together, thus, leading to better synergy, usage of automation across the board, and more flexibility. DevOps strategies lead to streamlining multiple processes, reducing errors, and building a faster and more successful deployment process.

The smooth collaboration between the development and the operations team offered by DevOps promotes quicker product delivery. Here, testing is performed alongside the development giving scope to identify bugs earlier in the product development cycle. This approach expands the scope of software testing and reduces the occurrence of bugs significantly.

6 Quality issues with DevOps and how to solve them

Performance Issues

Practicing continuous integration and deployment tends to make processes in any industry faster. However, sometimes a team’s performance could be slower with continuous deployment than with manual work.

Solution: DevOps team should analyze if their processes are efficient enough. Although automated processes are faster than manual ones, they still need to be analyzed to choose the right tool that will help them to meet their business goals.

Users should check if all the steps in their DevOps processes are necessary. Removing unnecessary steps is an excellent way to reduce complications and get consistent results. User metrics also helps to analyze the stages of the process, such as how much time each task takes. When analyzing metrics, it is recommended that the team figures out the maximum capacity. Some tools may not work fast enough, so they need to be replaced with upgraded technology.

Security Issues

Sometimes development teams could take shortcuts due to a production rush, either due to an extended holiday period or a huge deal. This could lead to a compromise of the system’s security. Huge incidents could lead to loss of billions of dollars and potential bankruptcy, and also affect the brand reputation adversely.

Solution: The team should maintain consistent security hygiene. This includes keeping access to vital tools for CI (Continuous Integration) and CD (Continuous Deployment) secure. Highly secure passwords are still the safest bet.

Contrary to popular belief, CI/CD jobs should be executed with the fewest number of privileges, not the most. If a hacker reconfigures a system that has more permissions than necessary, it could break the production cycle. When the system has been reset to safety, plenty of data could be hacked and stolen, leading to losses to intellectual and monetary property.

Separate Tools Set for Development and Operations Teams

One of the biggest challenges is the implementation of different sets of tools for both the development and operations teams. Identifying and synchronizing the differences between the two teams is vital for running a business smoothly.

Solution: Better collaboration would lead to increased productivity for the DevOps teams. Teams should strive to work towards a unified goal and be trained to understand how to achieve them.

A complete set of instructions and better communication would guarantee the best results. Data could be tested to see if the team has successfully deployed understanding the business problems, training tests, and work schedule maintenance.

Version Control Management Issues

The CI & CD processes are created specifically, keeping the company’s goal in mind. But sometimes, the software undergoes a major update, especially at the time of deployment, and everything could crash, or an urgent task could completely stall. 

Solution: One solution could be to disable auto-updates so that any impediments do not arise in the work schedule. The team must prioritize stability over the newest release date. During deployment, it is a better option to use the stable version of the software rather than the latest one.

In addition, we believe there should be a DevOps team that can be responsible for version control. They could maintain a record of newer versions and features and check to see if they can still support previous systems.

However, not updating the software for a long time can leave the DevOps team vulnerable to viruses in the system as well as outdated technology. While newer updates need to be analyzed, they should not be avoided and put to good use when necessary.

Regular Testing

If testing software is not well-strategized, or a wrong approach is taken to it, it can lead to problems in production and distribution.

Solution: Developers must take test results as seriously as possible. Sometimes, assumptions are made that some minor glitches during testing would not appear in real-time, but the company would have to pay a heavy price if something goes wrong.

Developers should deploy approval procedures for new features to prevent software with bugs from being deployed. They should also focus on writing automation and unit tests. Experts have suggested that as a bare minimum, DevOps should ensure that there are UI and API automated tests.

Finally, developers should test their optimizations regularly. Initial iterations could be lighter and faster to deploy. However, as one keeps adding more code, each optimization could become more complex and bring lesser value. Developers should approach it carefully, as the gains derived from optimization may not match up to the constant investments made to upgrade it.

Resistance to Change

Sometimes the organization may feel resistant to the idea of shifting to a DevOps setup. Proposing that the change is necessary may not go well with certain team members, who think that it reflects poorly on their current efforts.

Solution: Like any significant change, DevOps’ change would be gradual and not happen overnight. When employees are shown the importance of DevOps and given different essential roles that contribute to the development process, the DevOps culture becomes more ingrained.

Teams must find a product or existing application and replicate its performance in a DevOps setup. If employees can see the benefits, they are more likely to adopt the changes to employ the DevOps strategies.

Conclusion

In conclusion, we would say that while the DevOps pipeline can bring certain limitations, those changes are manageable and can help an organization soar to amazing heights post its implementation.

The Role of Tester in Security Testing

As the software industry is witnessing a major technological transformation, the development and testing processes have also seen major advancements. Not just the functional and performance aspects, but the security testing is also getting critical to ensure data safety and privacy. Security testing focuses on finding all possible attack points and vulnerabilities and prevent any negative impact on the application. It ensures a completely safe and secured product is delivered to the users, buyers, and stakeholders.

With security being an integral part of software testing, an evolving role of security testers is on the rise. Security testers also known as penetration testers, pen testers, assurance validators, or commonly referred to as ethical hackers, are recently gaining immense importance. Software security testers check the software for any potential vulnerabilities that might give way for the hackers to exploit the data. The security tester’s key role is to ensure complete security of the application and prevent any kind of data breach or security threats to the system.

Why is security testing important? What do security testers do?

Security Testing is a software testing process that allows to find out vulnerabilities in software applications and identifies risks involving loss of information, revenue, or the organization’s reputation. This type of testing focuses on identifying all possible loopholes and weaknesses that might result in attacks from intruders who attempt to breach the security system with mal intentions.

Consider a scenario where a user’s private information is stolen and exploited for inappropriate reasons. Such situations can be easily avoided by reinforcing elaborate security testing in place. Hence, software security testers’ core responsibility is to ensure the software is completely secured upon release and allows a great user experience without having to fret over the security aspects.

Software security testers form an integral part of the testing team as well as the overall software development and deployment team. They work alongside developers and QA managers and are responsible for performing vulnerability checks, penetration checks, and the overall security of the developed software. This boils down to creating test plans for every step added into a product release regardless of how big or small it is, executing those tests on specific date ranges so as not to affect other departments too much, reporting equally, and simply getting the job done right.

Key roles of the security tester:

  • Strategize, execute, and analyze the security tests to understand them from all possible perspectives
  • Evaluate the existing/new security policies and techniques to understand their effectiveness
  • Look for the existing security testing suite and thoroughly analyze it for efficiency and incorporate any changes or add new security tests if required
  • Ensure security testing is in alignment with the project lifecycle
  • Evaluate the security test report for accuracy, readability, consistency, and other related aspects
  • Set the objectives for functionality and technology and the associated vulnerabilities to evaluate the situation and come up with the best security testing approach for the best outcome
  • Able to think from the attacker/hacker’s perspective and try to secure the software from all possible malicious acts
  • Perform thorough risk assessment and come up with a new strategy to secure the system from future security threats
  • Analyze the systems for security loopholes and incorporate additional security systems for a completely secured system
  • Evaluate the existing security testing tools and choose the one that best suits the process requirement
  • Train the team and create awareness on information security

Types of Security Testing performed by software testers

Vulnerability Scanning: Vulnerability scanning is an ideal solution to prevent cyber threats and potential security breaches. With vulnerability scanning, software testers focus on identifying the presence of potential security vulnerabilities before disaster strikes.

Security Scanning: An information security expert performs security scanning by assessing available data, looking for any discrepancies or weaknesses. Such a scan can be carried out manually or using automation tools.

Penetration Testing: Penetration testing is one component of web application security verification and validation. Ethical hackers execute penetration testing to craft and deploy attacks on the security infrastructure in a controlled, systematic way to hunt down vulnerabilities that need to be patched.

Risk Assessment: Software testers conduct thorough risk assessments to identify risks and classify them based on importance.

Security Auditing: Security auditing is the practice of checking over source code to identify and neutralize potential vulnerabilities. It can also be called a line-by-line code audit, which the testers carry out with utmost diligence.

Ethical Hacking: Ethical hacking is different from malicious hacking. The software testers locate security flaws in the organization’s system through ethical hacking. .

Posture Assessment: Posture Assessment is a strategic approach, which the software testers conduct with an intention to help clients and companies determine their security status.

Conclusion

Software testers assist the product development and deployment team to verify the security parameters of the application. Furthermore, helping to increase security and minimize any unpleasantness for customers arising due to security reasons. In short, it helps to gain customers’ trust and improve the brand credibility, in turn, improving the business ROI.

Software Testing Efforts – Both Manual and Automated

The technological trend is changing at a faster rate than we anticipated. With this changing technological landscape comes the need to constantly update new and old systems for security, regulations, and market risks. For example, many financial companies have recently started moving towards offering cryptocurrency services, which are highly unregulated and volatile. Thus, companies need to incorporate robust software testing methods to ensure that their updates and new product offerings meet the industry standards while offering a seamless customer experience.

The standard component of software service includes:

  • Application workflows
  • Datastore and validation
  • UX and performance
  • Security and fail-safes
  • Integrations and 3rd party dependencies

These services are offered to a large customer base, across multiple channels and devices, in real-time and at a 24/7 availability while also navigating compliances on privacy and data protection. It means shipping an application from start to finish requires efficient stakeholder management and robust component testing at every step.

To successfully test these complex software, companies have to rely on Test management or Quality Assurance software that offer both manual and automated testing solutions. Let’s discuss the goals and approaches for both the testing methodologies.

Manual Testing

Manual is all about testing the application using a manual approach. The testers use this process to identify issues, check core functions and find out areas that require deeper attention. The execution process has a high degree of flexibility and helps structure the next steps in the testing process. However, manual testing is a slow process that is hard to scale. It is important in the early development cycle as the test environment evolves quickly.

Manual tests were traditionally managed through spreadsheets and documents; however, using test management tools to keep a log of tests run and maintaining version control is the most efficient way to conduct manual testing.

Steps in Manual testing cycle:

  1. Defining requirements of test on a document or test management tool
  2. Create a list of test cases based on the requirements
  3. Modify test cases based on outcomes and record results with detailed notes
  4. Identifying issues that were not accounted for in the initial plan

Key aspects of manual testing

  • Manual testing works better to execute dynamic and moderate scenarios.
  • Manual testing’s primary goal is to explore avenues that require problem-solving and check essential functions.
  • Manual testing is sometimes the only way to identify issues with the software, especially in the early lifecycle.
  • Manual testing is slow and inefficient when tests are simplistic and need to be run in high volume.
  • The quality of tests relies a lot on testers’ skills and knowledge.
  • Manual testing can never be eliminated from the process, no matter how advanced the automation technology may become. Every testing procedure, whether manual or automation, will require manual testing for initial set-up.

Automated Testing

Over the years, as the complexity of software increased, test management through manual testing is not able to cover ground as fast as delivery requirements need it to. Automated testing helps ensure rigorous product testing quickly, at a low cost, and offering higher scalability. When code is updated frequently, test cases are required to be re-run even for the functions that were not updated. It is to ensure that the update did not affect existing functionalities ‘regression testing‘ should be run frequently. Automating such repeatable test scenarios ensures time-saving and better end-product quality with less time.

Steps in Automated testing cycle:

  1. Defining goals, timeline, and requirements of the test results
  2. Creating relevant test cases and checking the feasibility
  3. If feasible, identify the right automation tool based on budget and need
  4. Executing the test cases and analyzing reports of the outcome

Picking the right automation tool is an extremely important decision and must account for:

  • The core and edge networks of an application, as they have different testing needs
  • Industry, for example, BFSI applications will have different priorities over an e-comm or lifestyle application
  • Lifecycle, established products will require more regression cycles compared to those in the initial development
  • Reporting features, since they help reduced time spent in analytics
  • Convenience, different teams should be able to adapt to the tool quickly

Key aspects of automated testing

  • Automated testing reduces time, effort, and cost to perform tests required for regression testing.
  • Automated testing requires an initial investment in software purchase and setting up the process, such as building the test case library.
  • Automated testing improves product reliability by covering a larger set of test cases frequently.
  • Automated testing cannot adapt to undefined variances and relies on the prediction ability of the tester.
  • It is necessary to deploy automated testing tools across all kinds of applications, especially in the stages before the final release.
  • Automation is necessary to run stress tests or performance tests.

Despite the differences in the approach of manual and automated testing, it is important to understand that both methods complement each other in refining the application. Manual tests are well-thought-out exercises that look for fundamental problems, discoveries, and learnings, whereas automated tests are mindless rigor that lacks decision-making but saves immense time, cost, and effort while offering accurate results.

Choosing an incorrect testing suite can cause several problems that snowball into millions lost in opportunity. Duplication due to redundancy, huge test backlogs, poor analytics, and lack of team collaboration features can slow down the entire development process in a growing competitive market. Data from many surveys suggest that many banking players are unable to meet new age requirements due to legacy systems and management tools slowing the system down.

Yethi’s test management solution for the banking and financial sector Tenjin by Yethi is a powerful test automation platform that supports a wide range of testing activities for banking and financial applications. It is built with a keen understanding of the space and requires minimal programming experience. With a diverse set of analytical and team collaboration features, it delivers high-speed operations with greater consistency. It is a 6th generation, robotic test automation platform that allows you to build and maintain test automation while delivering accurate and efficient results every time.