Quality Engineering is transforming digital banking, enabling seamless innovation, operational continuity, and future-proofing in a rapidly evolving landscape.
The global banking industry is currently undergoing widespread change from a regulatory and technology perspective. Digital transformation has become necessary for banks and financial institutions as they seek to modernise their systems, improve customer experiences, and maintain competitiveness in a rapidly evolving market. However, the complexity of such transformation projects can often lead to failure—70% of digital transformation initiatives fail, according to McKinsey. This high failure rate presents both a challenge and an opportunity: how can banks manage successful digital transformations while ensuring business-as-usual (BAU) continuity, resilience, and innovation?
One key enabler of success in this landscape is quality engineering (QE). Unlike traditional software testing, which occurs post-development, QE embeds quality at every stage of the software development lifecycle (SDLC), from planning to development and deployment. By taking a proactive, holistic approach to quality, QE helps banks modernise legacy systems, improve customer outcomes, and future-proof their digital infrastructure, all while mitigating risk and ensuring operational continuity.
The scope of a digital transformation in banking often spans multiple years and touches every part of the organisation, from core banking platforms to customer-facing applications. These large-scale projects are inherently risky. According to a McKinsey study, 70% of such initiatives fail to meet their objectives, often due to insufficient planning, lack of organisational buy-in, and underestimating complexity and scope.
This failure rate is particularly alarming when we consider the scale of change required. Banks are not just digitising; they are overhauling complex legacy systems, integrating new technologies like artificial intelligence and new payment languages, and navigating stringent regulatory environments. In this context, QE is crucial. QE ensures that quality is built into every stage of the transformation, from defining project goals to implementing and testing new systems.
A robust QE framework allows for continuous testing and validation throughout the project, ensuring that each phase meets the desired outcomes before moving to the next stage. This reduces the risk of discovering critical issues late in the process when they are much more costly, long-winded and difficult to fix. By adopting a QE-led approach, banks can significantly improve the success rate of their digital transformation initiatives, keeping projects on time, within budget, and aligned with long-term business objectives.
One of the greatest challenges banks face in digital transformation is modernising legacy systems without disrupting BAU (the business-as-usual operations required to run a bank). Legacy systems, often decades old, are the backbone of most financial institutions, managing everything from core banking services to payments and compliance. While these systems are reliable, they are also inflexible and costly to maintain and hinder innovation, making it difficult for banks to meet the demands of today’s digital-first market.
However, the risk of disruption during a system overhaul is significant. A failed migration or system outage could result in financial losses, regulatory penalties, and long-lasting damage to the bank’s reputation. Banks do not want to repeat some of the outages seen this year, during which customers were unable to access their online banking or send and receive payments. This is where QE plays a pivotal role…
QE ensures that modernisation efforts are handled incrementally, allowing banks to test new systems in a controlled environment before full deployment. QE practices like test automation, continuous integration, and non-functional testing simulate real-world conditions to ensure new systems can handle the bank’s operational loads without disruption. This approach not only helps banks modernise their IT infrastructure but also ensures that day-to-day operations, and their customers, are not adversely affected.
A recent project by Roq with a UK street bank highlights how effective QE can be in balancing innovation with BAU continuity. The bank needed a large-scale digital transformation to re-platform its infrastructure for improved efficiency and a modernised customer experience. Roq developed a bespoke Test Automation Framework, seamlessly integrating with the bank’s legacy systems which enabled controlled testing without disrupting daily operations. By maintaining a proactive, agile approach, Roq delivered a future-proof platform at a fraction of competitor costs, with no unexpected disruptions, unexpected costs or unmet expectations.
While cost reduction is often the initial driver behind digital transformation efforts, the benefits of a successful transformation go far beyond simple financial savings. A well-executed transformation can lead to higher productivity, better staff retention, and improved customer outcomes.
QE helps banks unlock these benefits by optimising new systems and processes for performance, efficiency, and ease of use. By reducing manual intervention and automating repetitive tasks, QE allows bank employees to focus on more value-adding activities, such as customer service and strategic decision-making. This, in turn, leads to higher job satisfaction and staff retention, as outdated, inefficient systems no longer bog down employees.
Regarding customer outcomes, QE ensures that digital banking solutions are reliable, fast, and user-friendly. Performance testing ensures that applications can handle high transaction volumes during peak periods, while user experience (UX) testing ensures that digital interfaces are intuitive and meet customer and user needs. In a competitive landscape where customer experience is a key differentiator, banks that invest in QE are better positioned to attract and retain customers, ultimately driving growth and profitability.
DBS Bank, headquartered in Singapore, underwent a comprehensive digital transformation to enhance customer experience and operational efficiency. By embedding quality at every stage of development, DBS implemented agile methodologies and continuous integration, leading to a 50% reduction in the cost-to-income ratio for serving digital customers compared to traditional ones. This transformation positioned DBS as a leader in digital banking, demonstrating the effectiveness of a QE-driven approach.
Today’s banking customers expect personalised, seamless experiences across all digital channels. Whether mobile banking, online payments, or wealth management services, customers want access to fast, secure, and intuitive digital services. However, many banks are struggling to keep up with these demands; according to research by 10x Banking, global banks are losing one in five (20%) of their customers due to poor customer experience, with two-thirds (64%) of senior decision-makers recognising that slow digital transformation is driving this customer loss. This gap creates opportunities for agile competitors like digital-native neobanks such as Starling and Monzo, quickly capturing market share by delivering superior digital experiences.
To meet customer expectations, deliver personalised experiences, and retain clients, banks must leverage data to gain insights into customer behaviour and preferences. This requires sophisticated analytics and the ability to integrate various data sources into a single, coherent platform. QE plays a key role in enabling this kind of customer-centric innovation.
QE frameworks ensure that data flows seamlessly across all digital touchpoints, allowing banks to deliver personalised services in real-time. Automated testing can simulate various customer journeys, ensuring that digital services meet customer expectations for speed, security, and ease of use. Moreover, by embedding security testing into the SDLC, QE helps banks protect customer data from fraud and cyberattacks, maintaining customer trust.
For example, test automation and performance monitoring allow banks to continuously improve their digital offerings based on real-time feedback. This iterative approach ensures digital services align with changing customer needs, helping banks stay competitive in an increasingly crowded marketplace.
As technology continues to evolve, banks must ensure that their digital infrastructure is scalable and flexible enough to accommodate future growth. The rapid pace of innovation means that systems deployed today may need to be upgraded or replaced within a few years. This constant change presents a significant challenge for banks that rely on inflexible legacy systems.
QE offers a solution by ensuring that digital infrastructure is built with scalability and flexibility in mind. QE methodologies such as continuous testing and non-functional testing allow banks to assess the scalability of their systems under different conditions, ensuring that they can handle increased transaction volumes and integrate new technologies as needed.
In addition to scalability, flexibility is crucial for future-proofing digital infrastructure. Quickly pivoting and adapting to new market conditions or regulatory changes can be a significant competitive advantage. QE helps banks build flexible systems that can be easily modified or extended without requiring a complete overhaul. This is particularly important in the payments landscape, where new technologies like ISO 20022 and real-time payments are driving significant changes in transaction processing.
Banks can ensure that their digital infrastructure remains agile and responsive to future demands by taking a proactive approach to quality. This enables them to maintain a competitive edge and safeguard their market share.
Digital transformation has become critical for banks to stay competitive. Yet, the challenges of modernising legacy systems, complying with regulatory standards, and delivering innovative customer experiences come with a high risk of failure. To overcome these hurdles, banks must take a proactive approach to quality, embedding it at every stage of the transformation journey.
QE offers a powerful framework for managing digital transformation in banking. By integrating quality into every phase of the SDLC, QE helps banks modernise their systems without disrupting BAU, deliver better customer outcomes, and future-proof their digital infrastructure. From managing multi-year transformational projects to ensuring scalability and resilience, QE is the key to driving successful digital transformation in the banking sector.
By embracing QE, banks can reduce the risk of project failure and unlock significant benefits beyond cost savings, including improved productivity, staff retention, and customer satisfaction. In an industry that demands constant evolution and operational excellence, QE equips banks with the stability and adaptability needed to thrive in the long term.
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