This article was written by Martin Koderisch. The original article was published by Edgar Dunn. You can find the article here.
Low code platforms have proliferated in recent years. Gartner suggests that “By 2025, 70% of new applications developed by organizations will use low-code or no-code technologies”. Low-code technology development involves using visual interfaces and pre-built components rather than handwriting code. In a series of upcoming posts, we explore the potential of low code technology in the payments and fintech industry, with particular focus on how it can accelerate digital transformation of back-office payment operations processes and workflows.
When considering their enterprise software needs, businesses have traditionally had two basic choices: Either ‘buy’ (that is purchase or license) packaged software whether Commercial Off-The-Shelf (COTS) software that’s deployed internally or a SaaS product delivered from the cloud, or ‘build’ their own proprietary custom software.
Often neither option is ideal. Relative to the custom build option, COTS may typically be quicker to deploy, and require less upfront investment, but they lack flexibility and the customization needed to accommodate unique requirements. And there is the issue of vendor dependency. Businesses rely on the vendor for updates, leaving them vulnerable if the vendor discontinues support or doesn’t provide timely updates.
On the other hand, whilst custom software development offers the opportunity to develop a highly tailored solution that precisely matches a business’s unique requirements, execution risk, time and overall cost can be major turn offs. Moreover, custom software development is a resource intensive process which relies on the availability of highly skilled development teams which might be a challenge for some businesses.
Low code is emerging as an attractive middle ground or third option. The potential upside of low code platforms is that they offer the benefits of internal custom software development, yet IT projects, be they app development, system integrations or process automations, can be completed in a fraction of the time and cost of traditional methods. Gartner research suggests that “By 2025, 70% of new applications developed by organizations will use low-code or no-code technologies”.
Low code as a concept is not new. Over the years, the software industry has progressed by abstracting away complex lower-level coding to develop progressively easier to use high level programming languages and frameworks. So you might say that low-code is a continuation of this trend.
But recently, low code technology has made a more substantial leap forward, with a proliferation of platforms that blend reusable functional components pretested for performance and security, with a low code development platform to accelerate the delivery of highly customised solutions both in terms of application software and process automation.
This development has opened up software application development to a much wider audience of so called ‘citizen developers’ or ‘business technologists’ which are those among us that are sufficiently technically capable and confident to begin collaborating on, co-developing and building IT projects from mobile and web applications to workflow and process automation and even integration of back-end data bases with U/I’s.
A recent Gartner survey suggests 41% of employees classify themselves as business technologists that create technology but report outside of IT departments.
The rise in citizen developers is partly down to COVID-19 during which IT departments struggled to keep up with the demand for digital services to support remote working. As a result, employees in business teams took matters into their own hands and signed up to SaaS platforms, built additional internal tools and found other tech work around without the IT department’s knowledge or engagement.
The increase of such uncontrolled ‘shadow IT’, developed outside of normal procurement, implementation, and governance processes, risks increasing IT and data security risks, and has served to further strengthen the relevance of professional low code platforms as businesses seek to embrace ‘shadow IT’ and more formally collaborate with business teams to develop technology with low code platforms.
Low code platforms do vary. True ‘no code’ platforms literally require no handwritten coding and are entirely drag and drop. The functionality they support is basic, but they offer business technologists a starting point.
As you move up into ‘low code’ platforms some coding is required. This category of platforms support more complex use cases and is arguably where business and IT teams can collaborate most effectively together.
At the far end of low code spectrum are extremely ‘sophisticated low code’ platforms that target professional developers rather than ‘citizen developers’. These are designed to enable more rapid and agile extension of mission critical core IT systems.
But whether ‘no code’ or ‘low code’, these platforms all share a similar goal to replace writing actual code with developing IT solutions through configuration and composable components. They are playing an increasingly important role in promoting a component-based architecture where technology building blocks are reused, assembled and combined.
Low code makes a lot of strategic sense for banking, financial services and insurance (BFSI) sectors. These are some of the most data-intensive of all industries yet often characterised by large organisations managing a data sprawl across legacy systems that form disconnected data silos. Whilst in operation, which in most cases is 24/7/365, these systems are very difficult to change or upgrade to achieve meaningful digital transformation results.
So first and foremost, low-code technology can be particularly valuable in these complex scenarios where the existing core technology is complex, costly and time consuming to update, and when layering on technology to existing architecture to connect systems makes sense. Platforms operating in the space include Mendix, Outsystems, UIPath, Appian, Quickbase, Microsoft Power Apps, Zoho Creator, and more.
Looking at the payments and fintech domain, another area where we see low code gaining traction is amongst Fintech startups that are actively deploying low code into their product and platform offerings including FintechOS, Finbox, Orenda Finance, Tell.money, Hydrogen and Toqio to name a few.
Zooming in still further, a third area of opportunity and potential for low code in the payments domain, is in accelerating digital transformation of back office payment operations at SMEs and enterprise businesses alike.
We use the term payment operations liberally to refer to all internal functions and teams that help to move money around within an organisation with finance, accounting, treasury, accounts receivable and payable teams at the centre but also touching and relying on data generated by other teams such as product, operations, customer success and others.
When you look at payment op processes and workflows relative to other departments, there is often an above average reliance on manual steps and teams remaining dependent on tools such as Excel to handle and manage data between systems.
Many of these manual workflows involve tedious tasks such as data entry, validating and cross-referencing data, seeking approvals, collecting and managing documentation, monitoring and investigating transactions, processing refunds, case managing chargebacks.
A rapidly emerging subcategory of low code platforms that focus on internal tool development are perfectly suited to address these manual pain points. The increasingly busy category sits in the middle of the continuum in terms of platform complexity and includes names such as Appsmith, Retool, Tooljet, Budibase, Five, DronaHQ, UI Bakery.
One of the most significant benefits of low-code apps in payment operations is their ability to minimize manual effort. The alternative is relying on internal IT to build these digital solutions for payment ops which often presents a challenge.
The reality is that from an internal IT perspective, it means addressing a collection of non-core edge cases to bridge and fill gaps. These relatively small projects can rapidly accumulate into large developer backlogs.
If the responsibility falls on a backend developer with limited experience developing frontend and U/I’s, which is frequently the case, the backlog can take longer to address and with sub optimal results.
Moreover, the manual nature of Payment Operations presents a business scaling challenge, and when companies reach a certain size and say start transacting across borders, continued reliance on manual processes and error prone Excel workarounds increasingly become a major pain point and potential hindrance to business growth.
The potential of low-code technology is particularly profound in payment operations, and can offer a versatile solution, alleviating challenges by reducing manual effort, connecting legacy systems, and automating workflows.
The promise of low code in these scenarios is to accelerate digital transformation by acting as the glue or ‘gap apps’ that connects systems, keeps data un-siloed and automates prosesses and workflows. Moreover, the ‘business technologist’ trend allows for non-IT professionals to participate in the development of these solutions, reducing developer backlogs, and allowing them to focus on other projects, whilst at the same time allowing new projects to be created that otherwise wouldn’t be built.
The next post in the series, we will deep dive into specific use case examples in payments operations, provide an overview of the low code platform landscape, and discuss how organisations can get started with low code and the benefits of developing a low code centre of excellence.
The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).