Fintech OS take: Not everyone can buy innovation
Fintech has a “squeezed middle” problem. The prevailing narrative is that fintech providers and challenger banks have the big incumbents on the run—they cannot hope to keep up with their fast innovation, superior user experience, and nimbleness that can make change happen. And while the big providers may not be able to do the same, it doesn’t matter: they have deep pockets, explains Teodor Blidăruș, CEO and Co-Founder of FintechOS and contributor to our Finetch 5X5 Report
A big bank with a multi-million dollar budget to spend on digital transformation is never going to be left behind for long. It can simply buy its way out of trouble. We’ve seen acquisitions happen, such as Orange Bank buying Anytime, but the simpler way to innovate is to follow the herd—let others experiment and when success strikes, copy it.
Meanwhile challengers have enjoyed around five years of burning through investor cash. Recently, we have seen these challengers make more noise about increased revenue and moves towards profitability, but there was still half a decade where money wasn’t an issue, making innovation far easier.
But not every financial services provider is a big incumbent or hotshot challenger. A great deal of “tier two” providers find themselves with the need to innovate to survive, but without the investors or reserves to just throw money at the problem. They risk being left behind—but they are also the canary in the coal mine. The problems they face right now—the need to innovate but without the reserves of cash to make this easy—are the same challenges that most financial service providers will soon face, no matter their size or position in the market
‘Innovation and digital transformation are both necessary and expensive, but all providers will need to justify if where they are investing is going to provide the right return’
Innovation and digital transformation are both necessary and expensive, but all providers will need to justify if where they are investing is going to provide the right return. With the human resources required becoming ever scarcer and therefore more expensive— developers are in demand by every industry, not just fintech—ensuring return on investment is not easy.
How low code can change the game
Financial services finds itself in a bind. It needs developers to fix its problems, and a financial squeeze is either here or heading its way soon. The solution is to make some development possible without taking up valuable developer time, using low code, and to collaborate across disciplines.
There are people within organisations who know what problems need to be solved, and can articulate what the solution should look like. There are others with the experience and knowledge to turn this into reality. But they are rarely the same people. The closer these groups can collaborate, the better the solution will be.
Low-code is the best way to foster this collaboration. It requires little coding knowledge or expertise, meaning software development or the creation of business applications can include staff with non-technical backgrounds. Instead of having a back and forth between tech teams and other departments—making miscommunication a risk—the development of apps can be inclusive involving a variety of teams, bringing together those that understand the business problems with those that understand the IT landscape, core systems and services to contribute to the vision of a product. IT stays in control with governance and guardrails built in to ensure compliance to the various standards required.
‘It requires little coding knowledge or expertise, meaning software development or the creation of business applications can include staff with non-technical backgrounds.’
For example, a small business loan might mean very different things to a sole trader than to a small business with a handful of offices and staff approaching three digits. The information required to process such an application may be different, as would the approach needed to guide the customer through. By using lowcode business experts can create this using a graphical interface, just as they would draft a proposal using Word or create a spreadsheet using Excel. It means that people with “big ideas” can have a far better impact on what is achievable.
Low-code is glue, not a strategy This low code approach can change how a financial service provider innovates, but it’s important to remember that it’s not, on its own, a strategy. Rather it enables a strategy and makes faster innovation possible.
Low code is glue that makes different parts of the business work together, overcoming silos without taking developer time to achieve every step. There needs to be APIs created, data shared, and a culture of openness. Low code is the glue that will bring this together, a vital part of a greater strategy to foster innovation.
Ultimately, we see low code being adopted across financial services and beyond. Developers are irreplaceable, and low-code means they can tackle the challenges only they can solve. Low-code is undoubtedly the future of development within businesses, enabling them to keep pace with the market by making the most of all of the expertise that sparks innovation.