A common trait in most of these banks is using quality engineering (QE) processes and approaches to drive their methods to provide better offerings than banking incumbents.

1. The Role Of Quality Engineering (QE) In
Challenger And Digital Banks

2. Challenger and digital
banks are disrupting the
banking sector, showing
us the future of banking,
just like other sectors, is
technology. Retail banking
consumers have adopted
these challenger banks on
a massive scale leading to
several banks getting
recognition and gaining
grounds worldwide.
Even though many of these traditional banks now have their digital
footprint with apps and other web services that make transactions
more straightforward, there is still a meteoric rise in the adoption of
these challenger and digital banks. A common trait in most of these
banks is using quality engineering (QE) processes and approaches to
drive their methods to provide better offerings than banking
incumbents. These banks accelerate development to delivery of
defect-free software with the best of continuous quality engineering.

3. The Growth In Challenger And Digital Banks
This explosion of challenger banks took off in 2020, where
Mastercard reports that 42% of Europeans manage their finances
digitally more often than before the banking, and 62% are thinking
of moving from physical to digital platforms permanently. Just in
January of 2020, UK company Revolut could boast of over 8 million
subscribers worldwide, and Monzo was adding 55,000 new users
weekly.
There has been a rapid growth
in these challenger banks
globally, and there are at least
102 in just the UK. From
history, there has been a
gradual adoption of FinTech in
the UK, which was at a high
point of 71% in 2019, a 5X
increase from 2015.
Revolut, Monzo, and Starling are the market leaders of UK
challenger banks, with all of them becoming unicorns meaning
they have a value of over $1 billion. Of all the equity deals
announced in 2020, 77% of the investments went to these three
top banks in five funding rounds. Monzo raised £60m, Starling
raised £100m, and Revolut raised a whooping £445.4m.

4. What Is Shaping Their Growth?
This is peculiar to the UK as
new banking regulations
have made it easier for
startups to obtain a banking
license in the UK. A direct
result of the banking license
application process
introduced in 2014 allowed
banks to pre-run a private,
staff-only test mode before
opening their services to
new customers.
A lot of factors are propelling these banks and increasing their
adoption, some of these are:
Better Banking legislation in the UK
The Prudential Regulation Authority (PRA) developed this process to
foster competition in the banking sector, and it has since opened up
several opportunities that challenger banks are taking.

5. There have been rapid
improvements and
developments in
technology, especially in the
cloud computing space, that
have allowed these
challenger banks to offer
scalable services. AWS and
other cloud providers now
support scalable IT
infrastructure that allows
for iterative development.
The alternative would have been on-premise physical hardware
changes in their data center every time they need to change
infrastructure, which would have reduced growth and increased
costs.
New Improvements In Technology

6. Impact Of COVID-19
The world is just moving
on from the heels of a
pandemic that confined us
to our homes, which
meant no opportunities to
visit traditional banks. This
has led to the shift of
customers to digital
services for their finances,
with more investors
putting large sums of
money into these
businesses.
Many of these challenger banks already operate on the digital
platform, giving consumers a sense of control of their finances
by focusing on customer experience.

7. This is perhaps one of the
most significant forces
driving the growth of
challenger banks as they
position themselves to
offer an overall experience
to traditional banks. These
banks use mobile apps, and
history has shown people
are willing to change their
habits when it comes to
technology, just like they
did with how they buy
things or music and book
hotel rooms with apps.
The same has extended to the banking sector, with these banks
offering attractive features such as ease in setting up accounts,
attractive rates/fees, different products, etc.
Frictionless Experience

8. How Quality Engineering (QE) Is Playing An
Instrumental Role In Digital And Challenger Banks?
Digital and Challenger banks
move with digital
transformation and are always
the first to adopt new
technologies to their systems.
With their technologies, they
set new benchmarks to deliver
products to the markets faster
and cater to the customer’s
needs before they even
complain. Traditional quality
assurance (QA) methods are
no longer impactful for
supporting accelerated digital
transformation programs.
Digital and Challenger banks conduct software application testing in
parallel to their development efforts. This fundamental shift in
software testing is brought alive through quality engineering
principles. Most QE teams work closely with the product developers
and operations team to process quicker and consistent releases using
test automation methods. This is how QE succeeds over traditional
QA plots and plays a central role in helping them provide a consistent
and reliable service to their customers.

9. Everything in the banking sector needs stability and security as
mistakes could be very costly and irreparable at any juncture. QE
keeps challenger and digital banks a step ahead of all these
issues, so their teams do not stagnate at any point in the
development cycle. QE mimics how the end-users think and
interact with products to deliver an improved customer
experience. Embraced with shift-left testing approaches, quality
engineering teams bring superior agility and substantial cost
advantage for faster time-to-market. Ditching all of the old
methods and embracing quality engineering means these banks
can deliver quality and speed, which consumers value today.
In today’s world, because there are so many options for
consumers to use, mistakes are hardly forgotten and could mean
the end of a brand or company. Quality Engineering makes sure
the banks detect and correct any defects before they go out into
the market and shine a bad light on them. The fast-moving pace
of this industry puts challenger and digital banks on their toes to
keep innovating and setting new quality engineering standards to
beat the odds. Quality engineering is an industry discipline which
banks have to consider and induce in its culture to speed up
digital transformation.

10. How Does Testing Happen In Challenger
And Digital Banks?
Cloud implementation has
made it possible to build
on the DevOps teams and
make testing a continuous
process throughout the
product cycle. Once the
testbed is implemented
into the cloud, functional
and non-functional testing
can detect errors early
before releasing the
product.
Combining this testing method with quality engineering practices
will make it possible to release products earlier but still retain their
excellent quality. The team can make changes along the way and
implement them into the system instead of stopping the process
and making significant changes at the end of the product cycle,
which are usually more complicated to handle. DevOps and Agile
methods going mainstream have made test automation necessary
to reach the end objectives faster.

11. Wrapping Up
Digital and Challenger banks aren’t going anywhere soon, with
different companies popping up in the space trying to offer new
services to customers. The critical thing for digital-only banks to
remember is to make sure the channel through which customers
access their services is always available. The competition is heating
up in this space, and staying relevant is getting more difficult,
especially for smaller startups.
Quality engineering will play a significant role in the future of digital
and challenger banks, and companies that are willing to embrace
technology will be at the front of this change. In the banking
industry, there are many quality dimensions to conquer, and it is
important to make sure there is nothing hazardous for several
clients using the systems daily. This is why you should encourage
and foster digital transformation in your business, and the fastest
way to do that is through QE.
Ensuring they take full advantage of mobile apps and
smartphones is the only way to start gaining their footing in this
field along with innovation. There are still many challenges
consumers face with banking, and if you can provide an outstanding
experience while solving these problems, it builds trust and
reliability.

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quality-engineering-qe-in-challenger-and-digital-banks/
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