Along with digitalization, the banking industry has faced numerous challenges. These are mainly connected to security, regulatory compliance, fintech disruption, to name a few. All these issues contribute to difficulties in the banking software development process.
Let’s figure out how to reasonably establish the right SDLC to successfully create a banking app or system. Referring to our experience, our experts are able to determine your key problems and to properly set up the process of development.
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Top 5 challenges of banking software development
The digital transformation of the global banking sector has solved some long-standing problems like data storage or online services. However, it also brought some new challenges that banks are currently trying to resolve by developing new software solutions. Below are the most pressing problems.
Since mobile banking has become available, the threat imposed by cybercrime increased. According to Forbes, over 25 percent of all malware attacks impacted banks, credit card compromise increased up to 200 percent. Banks started to search for more comprehensive security solutions, taking into account the need for safer storage of data to protect their customers.
2. Regulatory compliance
Recent regulations such as PSD2 and GDPR have already changed the way how banks processed personal data. For example, according to PSD2, banks should open their APIs to payment providers. GDPR obliged financial organizations to enforce an effective data management strategy and protect the data privacy of EU citizens.
3. Fintech disruption
Fintech companies that appeared recently to improve financial services have matured into real competitors of banks. Providing better technology opportunities for the public, these companies have the powerful potential to even replace traditional banking. That is the reason why banks would better partner with fintech startups and organizations to retain customers.
4. Customer and employee retention
In the search for better services, personalized approach, and new possibilities, consumers turn to fintech companies more and more frequently. In this competition, banks realize that they should focus more on providing the services people require rather than improving their brand awareness.
The same situation is with employees. To retain valuable human resources and find new experts, banks have to establish a culture addressing the values and expectations of employees.
5. Digital innovation
Banks facing shared challenges to provide higher security, more personalized services, better products are now on their way to digital transformation. To properly reshape their vision and find the right technology solutions, they often prefer contacting software development companies rather than creating solutions in house. People specializing in value chain analysis can find gaps in banking technology and offer the right solutions to bridge those gaps. Among the most popular technologies that banks implement today are predictive analytics tools, blockchain, RPA, and open APIs.
Our team knows from experience that sometimes facing all these challenges seems overwhelming for bank CIOs. Thus, we would like to provide a step-by-step instruction of how we see the process of creating the right SDLC for banking software development.
Find our latest case for the banking industry here.
Creating banking apps and systems: Software development process from A to Z
A clear outline of SDLC and deployments helps manage the process effectively and timely address all the possible issues. The stages we provide below can be applied to software development, system development, and app development.
The initiation phase starts with a formal request to develop and implement new software or system and to integrate it with existing applications. Typically, it begins when banks understand that they need or have the opportunity to develop a new system or to modernize the existing one.
What is defined during this stage? The scope of the initiation phase encompasses project goals and objectives, the number of users, timeframe, budget, project’s concept.
What is important? Within this stage, the project’s concept should be properly evaluated to check that it is achievable. To ensure that the project can be completely realized, you can use a POC model.
One more important aspect of this stage is to ensure that all the challenges are properly addressed. The development team must consider all the requirements, integrity, security, and availability. Besides, specialists have to categorize all the information that is supposed to be processed on the future product.
To categorize the information, use this technique – Privacy Impact Assessment (PIA). It helps assess if sensitive information is properly protected. The information may include the date of birth, race, gender, social security numbers, financial status, etc. Altogether, they are defined as personally identifiable information (PII).
What are the deliverables? Typically, they include the project cost, value chain mapping, a list of information to be processed by the system, and feature requirements. Finally, when you have all these things in one place, the project must be approved by all the stakeholders.
The analysis phase may encompass multiple analyses depending on what you need to determine or verify. However, the development team will, first and foremost, gather all the requirements for the project. Often end-users are frustrated with the product they get because of the wrong requirements only. Thus, it’s very important that the final product meets the expectations of end-users.
Collecting requirements is all about asking the end-users what they want, need and expect of the future product. This process consists of several phases like elicitation, validation, specification, and verification. It is aimed at capturing, documenting, communicating, and managing the initial requirements.
During this phase, the team creates a plan to manage requirements. The plan has to contain all the scenarios needed to document, communicate, track and change the requirements within the project. Most of the work done during this stage is the responsibility of analysts.
Another technique that is used to gather the requirements is a structured analysis. It involves the use of graphical diagrams to create specifications for functions and logic.
What are the main objectives of this phase? Below are three goals of the design phase:
- To incorporate the requirements collected during the previous phase with the system’s architecture.
- To assess and plan for security risks.
- To get approve for processing to coding.
The design phase involves the design of IT infrastructure and the design of the system model. Among the main deliverables of this phase, there’s a system design document (SDD) that describes each component of the system, their interaction with each other and external systems, as well. Other documents provided during this stage include the following papers:
- System Security Consensus Document (SSCD)
- Security Plan
- Data Retention Plan
- Disaster Recovery Plan
- Unit and Integration Test Plans
- Conversion Plan
- Implementation Plan
- Operations or System Administration Manual
- Maintenance Manual
- Training Plan
- User Manual
- Requirements Traceability Matrix
Development and implementation
The objectives of the development stage include building, testing and integrating the system. Also, developers prepare the technical environment for implementation and get approvals to proceed to test the system.
What’s important? Based on the methodology you choose, your SDLC will slightly differ. Let’s review the basic methodologies.
The agile software development process is characterized by iterative sprints lasting from two to four weeks (Scrum model). Each system release differs from the previous one by small changes. At each sprint, the system is tested. This model works best if you want to detect issues before they appear or mature into more significant challenges. Throughout the process, developers ask all the stakeholders for feedback.
The Lean methodology is not about multitasking. It’s all about working on what you must work on right now. The development team should also think about how to eliminate clutter like redundant activities, unnecessary meetings, and odd documents.
What’s different between Agile and Lean? These are much similar, however, they differ by how they treat customers. In Agile methodology, feedback from stakeholders is taken into account whereas, in Lean, teams tend to eliminate frequent change requests and to create the overall value to end-users.
In accordance with the Waterfall model, developers proceed to the next phase only once the previous one is completed. Each phase has its plan and takes into account the information from the previous phase. The issues can’t be fixed until developers proceed to maintenance.
The maintenance phase occurs actually when the system is launched. Traditionally, it includes repairs, fixes, and upgrades. In a rapidly changing IT world, banking software should be updated regularly to meet the expectations of consumers. Maintenance also includes regular monitoring of the system’s performance and testing.
In order to successfully meet the challenges of implementing SDLC for the banking sector, our company offers a set of following services that can be used both separately and jointly:
- Solution architecture
- Consulting on cybersecurity
- IT infrastructure
- All types of analyses for SDLC
- Banking software development
- POC and MVP development
Should you have any questions about the right SDLC for the banking sector, feel free to ask us.