Banks continue to face challenges on their way to cater to the audiences in the most sufficient and modern way. We met with Franco A. Parente, a Software Engineering Lead at one of the feature teams at Lloyds Banking Group based in London, to discuss the future of banking. Currently, his team is working on greenfield projects that are likely to transfer the ways banks lend money to businesses. He shares his insights on the ongoing transformation of the banking industry, including challenges and opportunities, preparation of banks, game-changing technologies, and attitudes to new models.
What do you mark as the most important challenges and opportunities in banking today and in the future?
I think that open banking will be essential in the future. It will benefit not only the banks but third parties as well. It will allow small companies to get into FinTech and provide services. Banks are really good at what they do, but ideas from the outside products benefit from being fulfilled by the bank and provided by another platform. I think this is a smart way of doing business for all participants. Banks are going that way, and their services are becoming smarter and more efficient.
Are banks prepared for the digital transformation? What is at the top of their minds when it comes to keeping up with the digital transformation?
Yes, I think they are prepared, or, at least, they should be. Any bank that is not ready should prepare to keep up with rivals. There are a lot of already transformed banks out there, which means strong competition. There are also many banks in the UK and continental Europe that have already been transformed, such as N26 in Europe, the successful mobile bank. These banks raise their influence every day and are grabbing the market away from the traditional banks because they are more innovative, have better ideas, and operate faster. To keep up, traditional banks should think about the processes through digital eyes and utilize the processes. It helps to go agile, redirect one’s thinking in the right direction, and forget all of the old habits while embracing new technologies, ways of working, and banking software development practices. Going into the 21st century with innovation is essential for the survival of traditional banks.
What are the key challenges you face at this point in the digital transformation at your bank?
The main ones are still doubts about compliance and risk-taking. It is easier for the new banks to perhaps leave compliance aside for a bit and embrace more risks. But, as a well-established bank, we want to keep our reputation, so compliance is still a sensitive issue. For example, we are moving towards using cloud technology more extensively, and negotiations on compliance took us a really long time. We needed to agree on many things, including location, geography, the place to host the staff. As a company, we needed to have a specific solution designed exclusively for us because of compliance.
Which emerging technologies do you see as game-changers, and which ones will have the greatest impact on banking?
I feel that open APIs are an essential game-changer. Technically speaking, micro-services also really help to tackle the problems in banking. Mpoints (mobile banking programs), and the services that provide for the outside are definitely on the horizon.
How open are banks to such new models like banking as a platform or banking marketplace?
I think banks are very much open to such models, especially in Europe and in Italy, where they have to do it because of the law. I think the banks that are not open are likely to meet some issues, even if they are outside of Europe in countries where banking as a platform is not required by law because they are missing out on the opportunity. New models like banking as a platform or banking marketplace are where the market is leading.
What is your attitude to CI/CD in the banking industry? Is it contrary to regulation?
The banking industry is making some progress towards CI/CD, but there are still some challenges. We are implementing the changes through a cycle that is faster than before but is still not optimal. For this process to become more optimal, we need to be aware of what changes to make. For example, we need to put a lot of effort into automation testing. The ultimate pack of CI/CD should be able to detect any potential problems. We are also making progress when it comes to compliance and CI/CD by working closely with the teams on all potential issues. However, there is still a long way to go.
Banking industry innovation is driven by the desire to maximize comfort for everyone involved. New technologies play a key role in this process. Banks that wish to secure their position on the market should keep up with all the latest advancements, though it can be difficult to balance new technologies and compliance. For users and banks that will make it, the future is as exciting as ever.