At the Digital Transformation Week conference in Amsterdam this September, Lakshmi Ramasubramanian, senior business analyst at HSBC, presented the advantages and disadvantages of using low-code software tools to develop applications in financial services.
As part of the global transformation team within the real asset and structured finance business, Ramasubramanian is tasked with investigating digital tools that might be needed by the company, and the use of low-code tools to develop management applications is one of her areas of focus.
Low-code software development promises a fast way to develop applications by someone with very few technical skills. Applications can be written with very little code, and the aim is to keep coding effort minimal, making the end-to-end software development lifecycle simpler and quicker.
No-code takes the idea even further, enabling people to build applications without having to write any code at all. The aim is to build applications using drag-and-drop in a feature-rich developer interface.
The ideas of low-code and no-code are not new – but they have taken on different forms over the years. In the 1980s, for example, software tool suppliers allowed less technical people to draw the design of an application using boxes for different modules and directed lines to show the exchange of data between modules. The software tool would then take the graphic design and generate a skeleton application.
Also in the 1980s, a new breed of programming languages, called 4G languages, were developed to help non-coders develop applications to access relational databases using a language that was easier for humans to understand than traditional development languages, such as C or Pascal.
In both cases – using box diagrams to generate a skeleton program and using higher-level languages for business users – the tools solved some problems. Programmers are expensive, and in cases where businesses didn’t need highly tailored software, there was a place for platforms that allowed less technical people to generate rudimentary applications.
More recently, low-code has been applied to robotic process automation (RPA) to spot repeatable business processes and replicate them for future use. Low-code methodologies are also used to build data-intensive workflows and industry-specific business processes.
No-code tools are now used to create simple web apps, user interfaces and business process management apps. Some popular tools allow users to develop prototype mobile apps and voice apps.
No-code tools come with built-in logic that can be reused across certain types of application. The applications are very simple and include very little company-specific functionality. While no-code is almost always too limited for a big undertaking such as digital transformation, low-code software development is sometimes appropriate.
Low-code as part of digital transformation
“In the past few years, we have seen exponential growth in the number of digital applications being built by businesses across industries,” said Ramasubramanian. “Digital transformation is redefining the way businesses are run, with technology as the backbone. We now have an app for every process or a function within the business, delivered via web or mobile or both.
“A recent survey by IDC predicted that in the next few years, about 500 million apps will be built, equivalent to the total number of apps that have been built over the past 40 years. IDC predicts that by 2025, 60% of European enterprises will be deploying new software daily.”
According to Ramasubramanian, the Covid pandemic has further accelerated this need to digitise existing applications. Businesses are investing in their ability to connect with customers from anywhere, to improve their digital experience and at the same time enable their employees to work from anywhere – from the office, home or even a different country.
The need to build more digital applications directly correlates with the need for more developers. A good IT developer would have both the domain knowledge to deliver the required functionality and the coding skills to build robust applications. But there is a shortage of such developers across industries and geographies, and in such a scenario, low-code becomes an attractive option.
“Data management tools enable companies to clean, manipulate, process and enrich the huge amount of data that can be collected on the back of various digital applications across their business,” said Ramasubramanian. “Data thus collected and processed has many uses, including informing strategic and tactical business decisions, improving operational efficiency and improving customer experience. In some cases, such data can be monetised as well. Data management tools traditionally fall under the scope of IT teams, which own and develop these data management tools in order to deliver data requirements set out by the business.
“Low-code data management tools, on the other hand, are an alternative, where the ownership could be retained by the business and development done using a combination of reusable code components and pre-built libraries to manage data. Delivering data products using low-code tools becomes attractive where there are long lead times for the IT teams to deliver new data products for the business.
“While the IT team focuses on building underlying data infrastructure and building data models, business analysts or subject matter experts can have a go at building data products by combining their business knowledge and the low-code tools.”
Low-code tools can be used in financial services – but sparingly
According to Ramasubramanian, there are low-code tools that cater to different needs of financial services, such as core processes, internal apps or tactical solutions targeting retail, capital markets and asset management. Financial services firms hold huge amounts of data pertaining to customer interactions, but transaction histories are often stored in disparate systems. Building aggregated views on data silos, automating business processes on a small scale, building tactical data pipelines and customising a dashboard are some of the common use cases.
“But low-code tools are not a replacement for your digitally native software,” said Ramasubramanian. “They are a supplement to your firm’s IT set-up.”
Much like the idea of generating applications from block diagrams or using higher level languages to enable business users to query databases, low-code development does have a place in financial services. Perhaps the best way to spot those opportunities is by having “fusion teams”, comprising technologists and business users, look for them.