Democratization of technology has long been defined as the rapidly increasing access to technology. However, the barrier between access to and creation of technology has persisted. This has been amplified by low levels of technology literacy and more importantly the need to learn coding. The inability to code has increasingly become a limitation to career opportunities. Re-skilling a large workforce to either deviate from their core competency or to add to their core competency has become a significant overhead. This overhead has been most pronounced in the financial services sector, especially in banking. While a number of banks take pride in announcing that their technology teams outnumber their bankers two to one, the most significant overlooked fact is the cost of doing business in banking. Technology costs are now significantly out-weighing the regulatory costs of doing business. With every new investment in technology comes a near perpetual overhead of maintenance costs, costs of change management, licensing fees and people costs. Democratization of technology by banks may be helping technology proliferation among end-users but is creating long-term sustainability challenges as costs of service delivery rise but returns from banking services continue to decline.
The modern-day bank needs, not only technology democratization but freedom to build technology without being shackled by coding. No-code platforms re-define the concept of democratization of technology. From merely making technology accessible to more people, no-code platforms now allow a large number of people to create virtually unlimited technology-enabled use cases by leveraging on their experience, business knowledge and domain expertise. The barrier between access to and creation of technology can be truly eliminated with no-code platforms.
How do no-code platforms change the economics of enterprise software?
Enterprise software typically follows the ‘build or buy’ approach. The ‘buy’ approach should in theory help to mutualize cost over a larger number of players and therefore be most effective. It rarely happens that way as the focus of banks’ large army of business analysts and technologists on customization causes vendor software to get so heavily customized that it loses its original identity. This means that the sum total of change request costs, maintenance costs and the cost of people to manage each newly created monolith far outweighs the benefits of mutualization.
The cost of the ‘build’ approach doesn’t tend to be any lower. Long project management cycles, constant change in requirements, stacking up development teams with little P/L accountability and difficulty in translating user requirements into technology make the build option extremely costly and leads to a number of projects that never see completion.
No-code platforms eliminate long-project cycles, allow the end-user to directly incorporate their expertise and requirements in the software, dramatically reduce cost of change and ultimately return power to the banker. Banks that have technology teams outnumbering bankers two to one can at least bring this ratio down to an even number and reduce technology costs by at least 50%. Banks can return to doing what were intended and licensed to do: proliferate financial services delivery, focus on credit offtake and quality and allow bankers to focus on the customer instead of internal processes.
How much can no-code platforms reduce the cost of enterprise software?
Early analysis suggests that no-code platforms can reduce the cost of enterprise software by half. A large part of this saving comes from reducing the cost of change requests during and after implementation, reduction in project management overheads and a dramatic fall in the cost of failed projects. With a more concerted no-code strategy and efficiency gains by letting bankers focus on customers, the upside can potentially be amplified manyfold.
Why are investments in no-code technology still very slow?
The lack of complete understanding of how no-code platforms work and their benefits impacts budgetary allocation. With more than 80% of technology budgets in banks still allocated toward maintaining legacy technology, no-code platforms find it difficult to receive their fair share of allocation. The more pervasive problem, of course, is the number of solutions claiming to be no-code but being mere extensions of ‘build’ models. This inability to distinguish true no-code from mere build improvements leads to the potential benefits not being fully realized.
How should banks adapt to the impending no-code revolution?
The simple way to adapt is to first have a clear no-code strategy focused on eliminating the ‘build’ strategy. A concerted target of reducing the cost of build by half without reducing the number of projects or targeted outcomes would be a good start. Training the existing army of business analysts on using no-code platforms to build apps will help the bank achieve true democratization of technology. Cultural and process changes on how software development projects and processes are to be run are equally important to ensuring that the benefits are realized. Last but not the least, choosing the right set of no-code platforms based on the use cases in play is extremely critical. Distinguishing true no-code from mere claims of no-code can be the difference between the success and failure of the no-code strategy.
The economics, culture and process of implementing enterprise software in banks are in need of a rapid transformation. From a culture of taking pride in acting like technology companies, it is important for banks to restore the balance of returning to their core business. The lack of democratization in creating technology that pervaded banks in the last decade can now be a thing of the past. No-code platforms can truly re-define the concept of technology democratization.
Views expressed in this article are the personal opinion of Muzammil Patel Global Head Strategy & Corporate Finance, Acies.