Using Low Code to Accelerate Payments Innovation: Unlocking Greater Agility and Flexibility

Low code is becoming an increasingly important topic in the banking industry. Capacity limitations in the technology function can frequently mean that much-needed product improvements and enhancements are de-scoped, cancelled, or don’t even make the roadmap. Alongside this, buying off-the-shelf is not always attractive to large banks. In response to these challenges, interest is growing in low code tooling and techniques to deliver greater agility and cross-functional collaboration, while still retaining control of the process.

This is particularly topical in the case of non-card payment processing, and several banks are already making use of low code in some areas of their technology stack. Indeed, the number of proof points and use cases under consideration is building. Underpinning this is a broad agreement that the benefits of low code are both real and realizable. The potential to reduce the developer time needed to make relatively straightforward software changes is an obvious use case, with a clear return on investment from creating the necessary interface/s. Accordingly, low code is something that several banks are either using today or are planning to enable in the near future.

To explore this issue in more detail, Celent has conducted a significant program of primary research among Tier 1 banks in Europe and North America. Through June and July 2023, we surveyed 74 senior executives from banks across these regions to understand how each views the potential opportunities for low code, and to understand the pinch points and frictions in the development of their payment applications.

The key findings from this include:

• 61% of Tier 1 banks in Europe and North America report that margins on their payments business are becoming more challenging to maintain.
• 45% of banks see a lack of developer capacity as one of the biggest barriers to product innovation at their institution.
• On average, each bank has failed to deliver between three and four payment product enhancements in the past two years because of developer resource constraints.
• The consensus view is that the opportunity cost in terms of lost revenue growth is equal to 5.3% of annual payment revenues.
• 36% of banks are using low code tools and techniques to some degree to support their non-card payments business.

The path forward with respect to low code seems clear, at least at a high level. A large portion of the market is investigating the opportunities, while several large banks are already making active use of these tools and techniques. However, there is no single or ‘correct’ approach to follow and each institution will see different opportunities to bring value to their products, services, and operations through low code.

While the use of low code in payment processing is at a relatively early stage, there are signs of an adoption path emerging. Current use cases and thinking can be grouped into three three different categories, each having a growing business impact and also showing (or requiring) a different level of sophistication. Each of the three groups of approach can be adopted independent of the others, so this need not be seen as a step-by-step process. Indeed, some banks will put their efforts into firstly unlocking the gains in their technology group before making any low code tools or interfaces available to product or operations teams.