Banks urged to automate testing

Date: September 4th, 2017 | Author:

This year, the world will spend the equivalent of the GDP of Germany on IT. According to the latest forecast by Gartner, IT spending is forecast to reach $3.5 trillion in 2017, up 2.9 percent from 2016.

These colossal sums show that the digital revolution has only just started and many more high-water marks are set to make the headlines.

Nowhere is this more apparent than in the financial services sector where IT spending has outstripped all other sectors, fuelled by the renovation of legacy systems, the move to digital and the emergence of a new wave of tech-thirsty competition.

As a result of this deluge of exciting new technology and opportunity, the need for software testing has increased to such an extent that it now accounts for around 30% of all IT spend.

Capgemini forecast this figure to grow to 40% by 2019. In its study, World Quality Report 2016-17, the consulting firm recognises the increasing importance of testing, but urges business to get a grip on its testing budgets and testing strategies.

Its authors say: “At well above a reasonable 25% of the IT budget, even this year’s average is still too high and an indication that QA and Testing is not as efficient as it should be.”

Of course, those involved in testing will point to the sheer volume of releases and the fresh demands of Agile and DevOps, but many think the root cause lies with the failure to embrace test automation in the new world of continuous software development.

At the front end of banking, automation is driving large parts of the development of the industry where it is heralded as a way of restoring margins and improving services at a single stroke.

According to Sean Park, the founder, chairman, and CIO at venture-capital firm Anthemis Group: “We are heading toward a world where ubiquitous mobile computing, an exponential growth in data, and continuous advances in machine learning and artificial intelligence will transform finance into an always-on, algorithmically driven industry.”

A study by Temenos and The Economist Intelligence Unit found 64% of financial services personnel think retail banking will be fully automated by 2020, cutting out the need for branches.

Monica Woodley of The Economist Intelligence Unit said: “The true winners will have the technology to cope with co-operation. Security and integrity will be as important as cost, efficiency and speed. But even the winning banks could be reduced to a mere screen icon for many customers, becoming the trusted platform via which consumers access a range of services from third-parties like Fintechs.”

Behind the scenes, the quest to automate many of the repetitive, time-consuming test functions appears to be faltering. Only 29 % of respondents in the Capgemini study claimed to automate their testing -with half of those citing the lack of automation tools as the prime reason for sticking with manual testing.

But the sheer volume of new software releases in concert with regulatory change, is placing unprecedented pressure on IT departments to keep pace with the evolving requirement for greater testing. Gone are the days when the sole mission was to test to see if it worked. Today, it’s more about trying to break it – to identify weaknesses in the system – to establish if the system will fall over during spikes in operation?

Those who do automate claim to see dramatic reductions in up-front defect detection – an advantage rated as the prime benefit of test automation by 42% of the Capgemini study respondents. They can also achieve significant savings in time and effort, and of course, a corresponding reduction in costs.

Geert Goossenaerts – Program Manager for the core banking transformation at our client KBC Bank – a Belgium bank with operations spanning six major markets – reported a reduction in person day effort as high as 90% and the ability to complete test cycles up to five times faster.

At another of our clients, Atkia, a Finnish bank, CIO Juha Volotinen has observed that a process which previously took up to 20 people around two weeks to execute manually, can now be run “same day” at the press of the button with their automated regression testing.

The banking sector is haunted by high profile IT failures. Perhaps the most publicised system failure in recent years, affected millions of customers at Royal Bank of Scotland, Natwest and Ulster Bank.

The trouble reportedly started with a failed upgrade to the bank’s batch processing system. Due to the interlinked nature of the core banking systems, the outage reportedly brought chaos across the all divisions of the bank.

An investigation was launched into the failure, with the Bank of England’s Prudential Regulation Authority eventually fining the bank a record £56 million in 2014. Many experts in software testing argue that this failure was avoidable and that better testing would have spotted the defect.

The challenge remains to convince financial organisations already struggling to update their legacy systems that the investment in automated testing represents a drop in the ocean compared with the risk and cost of when things head off in the wrong direction.

However, the team at Atoma are encouraged by what we see happening within our clients’ projects, where the quest for full automation is riding high on their agenda. Within 12 months, many of whom are set to achieve 100% automation, reaping huge benefits in both time and cost reduction.