Oracle has already announced the release note of v14.7, with several patchset releases in FLEXCUBE core banking solutions versions like 14.6, 14.5, 14.4 and more. Finacle CBS, on the other hand, has gone through a massive transformation from v10 to v11E. Infosys Finacle v11.E has many interesting features, including a product factory framework, multi-channel capabilities and more. Let’s take another instance: Temenos’ latest version R23 highlights several features in Core Banking, Digital Banking, Payment Hub, Risk and Compliance platform to increase agility and smart digital experience, accelerate growth and enhance customer engagement. The list of CBS versions goes on, and so do the challenges. Let’s have an in-depth overview of the current challenges and possible remedies to them.

The Current Scenario

In the last few years, the growth strategy for enterprise banks has changed. There are many changes released in the core banking solutions and there are too many regulations to comply with. Moreover, customer demands are changing rapidly, creating a constant tug-of-war for financial service providers to serve their customers on the channels they choose. The emergence of Fintechs, telecom partners & retailers, and other startups are challenging the business and their revenues. In order to keep up with the pace of change, banks must transform. But often complex technologies, regular updates and frequent patchset releases get in the way of the bank’s digital transformation strategies.

Banking software is one of the most critical and complex. Complex modules, submodules and intricate architecture of multiple menus are one of the reasons, but the complexity increases more because of frequent roll out in application versions by OEMs. The changes in the new versions and patch releases become a complicated task to tackle together.

Some banks are still running on legacy platforms simply because the migration of massive volumes of data will overeat their budget and take years to complete. But the transformation should not be so tough. The banks are breaking down their transformation journey into small segments to easily manage the project. It can reduce project complexities and simplify the banking business. The core banking solutions are tailored to fit customer preferences. It accelerates innovations and helps banks to stay ahead of their competition.

Why implementing the recent core banking versions can be complicated?

The core banking solutions support the banks in their transformation journey. But changes in technology, regulatory changes and customer demands make it essential to roll out new versions. However, updating the new versions over the existing ones can still be tedious and critical at the same time.

The reason banks transform is because their ultimate objective is to offer multiple services and ensure customer satisfaction. Since core banking solutions are an essential component of the banking business, it becomes necessary to remain updated with the changes in the CBS platforms. During the CBS transformation journey, banks may face multiple errors, which if remain unaddressed can multiply into severe issues, like security breaches and compliance infringements leading to further loss of money and reputation.

Here we list down some of the common complications that may occur during the core banking transformation.

• Migrating data from the old legacy system to the new version of the core banking application is challenging, as it may run into the risk of data fraud and manipulation.
• Integrating the new CBS version with the existing one can be complex, as updated versions have multiple features and functionalities that can disrupt banking operations.
• Finding the right people for the right job is a complex, time-consuming, and costly affair, as you do not always find skilled people aware of the new system’s updates and changes.
• Understanding the future needs of the banking business is complex, and so is adapting to the new CBS versions. As banks look for solutions that support the banks’ growth, the CBS versions must be scalable.
• Managing business as usual can be complex with the implementation of new CBS versions as it may disrupt normal banking operations.
• Complying with banking regulations that come with new CBS changes during implementation can be challenging.
• Maintaining service reliability with the vendor offering support and updates can be complex if they are not as per the industry standards.

As the banks embark on the transformation journey, on their way they confront many risk areas. Risk mitigation is necessary to ensure that the banks gain the most out of this endeavour. The data migration process from the legacy platform to the new versions may open the door to many threats. Hackers may manipulate the data and easily steal sensitive customer data and information. It is essential to ensure the security of the enterprise application during the transformation and data migration process and comply with all the necessary security standards.

Banks cannot afford to deny access to their customers during the transformation project. They cannot put their BAU transactions on hold. It adds up to more complications when banks have to grant accessibility to their customers, compromising the quality of applications. In the absence of core banking solutions, some transactions may be done manually making the transactions more vulnerable. Also, if the old version is not updated with the new one, then the organization may lose many opportunities like losing business to their competitors, data security issues, slow performance, device compatibility issues and more. Banks invest time and money in core banking transformation projects and look for adequate returns on investment.

But how to achieve the desired result and mitigate risk in the core banking transformation journey?

Banks require end-to-end validation of core banking platforms. Whether the bank is undertaking a complete digital transformation or small implementations as a part of business-as-usual projects, validating core banking applications becomes necessary for the banking business. The change in customer behaviour and regulatory changes influence the OEM to implement new changes in enterprise applications. Banks must adapt to the changes implemented in the newer versions of core enterprise applications to ensure they offer unparalleled customer services.

Banks are implementing technologies to mitigate risk through risk probability. During the transformation journey, banks must measure the risk contingencies to overcome/mitigate the risk and ensure that they continue high-value services to their customers as well as thrive on their reputation. Maintaining core application security is crucial as it ensures data protection against theft and manipulation.

The above points to the importance and necessity of maintaining the quality of banking software. The banking applications are evaluated based on stability, flexibility, security, functionality, and performance. Quality assurance helps banks achieve the desired outcome. Banks’ digital transformation is incomplete without end-to-end validation. Upgradation and validation are both essential components of banks’ transformation journeys. Software testing is an inseparable and incomparable component that confirms the quality of banking or financial applications.

How do new technologies in recent versions of CBS platforms inspire the testing industry?

The CBS platforms are evolving continuously. Each version released is an enhanced version of its preceding one and supports banks’ digital transformation journey. The new technologies and customer expectations inspire the OEM to release new versions of Core Banking Solutions.

The new changes in the application version must be verified at different levels to ensure that the project implementation does not go wrong. The banking software testing industry also has undergone a massive transformation. Test early and test often is a thing now. Banks require the most robust and scalable solutions to take care of all their QA needs. Application changes occur fast and frequently, so regression occupies a significant area in CBS testing. Undertaking each regression sprint will be expensive and time-consuming. Therefore, banks opt for automation testing, which can reduce the regression burden, also saving time and money.

Also, banks can replicate a testing environment through various API threads to avoid sharing the live environment. It ensures application security. But it is still essential to validate the quality and integration of APIs. Hence API testing has become a popular practice for banking operations. Banks select probable test cases/scenarios that can impact the banking operation.

This is a cost-effective option that highlights the impact areas without running through the entire application flow. It is commonly called sanity testing. Code quality is validated to ensure the application can move on to the step ahead into the other testing areas like functionality, performance, and security. Software testing is more agile now. It follows CI/CD methodology supported by continuous testing in the DevOps pipeline for easy adaptability to the agile environment.

Can testing ensure banks receive the desired outcome and a high return on investment?

Let’s explore what testing does to your banking operation and banking software. Core banking solutions are the backbone of the banking business. And what if we do not validate the quality of the CBS platforms? There were many such incidents in the past of performance and functionality errors. Organizations pay heavy penalties for functionality errors, monetary loss, reviving back the connections, and loss of reputation.

The core banking solutions are the most vulnerable software with multiple data layers. As there are many data layers, the applications may run into errors if remains unvalidated. This is where software testing comes into the picture. Core banking transformation for any enterprise is critical. Both functional and non-functional testing are essential and integral parts of transformation projects. Here are some of the testing essentials for the recent CBS versions to ensure you have the desired result and a high return on investment.

1. Regulatory compliance – Based on new trends and technologies, the regulatory authority implements new changes. It requires banks to remain compliant while implementing new CBS versions. Banks must check the system’s stability, accessibility, performance, and security while integrating the new changes with the old ones. System downtime, functionality and performance errors must be considered during project implementation.
2. Project and program objectives – The main element for core banking transformation is the stability of the system and responsiveness. To ensure the desirable outcome of the transformation project it is essential to validate the consistency and measurability of system behaviour, and response time under peak hours of operation.
3. QA or project scope – It is important to understand the QA scope of the core banking transformation. Based on the intensity and the project requirements like modules upgrade, version upgrades and more, banks undertake end-to-end testing projects, including functional, performance and security testing. For example, if banks are looking for new patchset implementations, they can undertake comprehensive functional testing, or if they are implementing frequent changes, they may automate the regression pack and more.
4. Budget and time calculation – Core banking transformation projects come with budget and time constraints. Banks cannot put off their transformation journey for long. The projects must go live without delay. The migration from the legacy platform to the new versions is a time-consuming and expensive practice. Hence, it is crucial to consider and calculate the project budget and time to ensure you gain the maximum return on investment.
5. Resource requirements – It is important to follow a proper strategy and not put all the eggs in the basket. Resources must be thoughtfully planned based on the QA scope or project scope. The deployed manpower can vary based on the above criteria. For example, the number can drastically come down in the case of an automation project and increase if it is non-functional (performance & security) testing under the project scope.

Why Yethi for your core banking transformation project?

Yethi has tested 25+ business areas offering services to commercial banks, central banks, small finance banks, cooperative banks, payment banks, fintech and more. We are focused on process & risk-based testing and tested channels, modules and platforms in more than 31 countries. We have tested 15 Channels & validated their impact analysis on CBS platforms. We have a ready-to-implement and ready-to-use repository of over 1 million test assets specific to banking and finance.

Our core banking transformation projects are based on three testing methodologies like agile, waterfalls, and DevOps. Yethi’s IP solution, Tenjin, is a robotic, intelligent, codeless test automation solution also comes with plug-and-play banking-specific adapters. It is easy to integrate with all major core banking platforms and fast to execute test automation, saving you 80% of testing time & 70% cost for testing, ensuring the organizations can maximize their return on investment.