Financial Service Firms are Accelerating DX with Low Code: Survey

Mendix, a Siemens enterprise application development business, has announced the results of its financial services and insurance (FSI) global market survey which reveals how companies in these industries are using low-code to drive digitization, improved experiences, and modernize legacy systems.

While the responses of those working for banks and other financial services companies were consistent, the answers from insurance company representatives differed slightly. Among banks and other financial services companies, the biggest perceived low-code benefit is cost savings. In the insurance industry, business agility is the top priority.

"IT departments in highly regulated industries are so busy ensuring compliance that often new revenue-generating and client experience initiatives do not make the priority list," said Ron Wellman, head of Industry Clouds for Financial Services, Insurance, Retail and Public at Mendix.

"Low-code accelerates the rate at which applications, automations, and new digital experiences can be developed and delivered. Many organizations in the FSI space are using low-code to digitize, modernize legacy apps, and integrate client journeys across channels."
Nearly all (97%) of survey participants said that low-code meets or exceeds their expectations when it comes to ease of use, increased business agility and fast time to market. While the 97% number seems high, it is likely the result of the robustness and maturity of low-code offerings, and industry awareness of the best use cases for the capabilities.

In fact, 61% said low-code enables speed improvements of at least 30%. Those speed improvements reduce the number of resources required to develop and deliver applications and improve organizational collaboration between business and IT. 

The makeup of development teams is also shifting, from professional software developers exclusively to professional and citizen developers who collaboratively solve business problems. Mendix defines citizen developers as "business users with little to no coding experience who build applications with IT-approved technology and automated adherence to IT governance controls."

According to a recent Gartner report, 61% of organizations either already have or are thinking about implementing a citizen development program.

Respondents from banks and other financial services firms are turning to low-code to enable greater organizational agility, which translates to faster project launches and the ability to respond quickly to market shifts. Given the sheer number of legacy systems these organizations have, it has been difficult to improve customer experience or gain a 360-degree view of customers because data remains siloed in various systems.

This group intends to rewrite legacy applications with low-code, particularly Microsoft SharePoint, Java, and mainframe applications. They're also using low-code as a fast and cost-effective way to modernize legacy applications without rebuilding them from scratch.

For example, the Business Development Bank of Canada (BDC) invested millions of dollars and five years into traditional development in helping modernize their loan application and approval technology, only to show no deployable solutions. After turning to low-code, BDC built a prototype in four days and deployed a solution that automated their processes in under a year.

Despite its many benefits, half of these survey participants said their top low-code concern is on-premises legacy integration which many times is related to the integration readiness of legacy applications, competing priorities, legacy IT risk/security policies or internal alignment because major low-code application platform vendors have developed secure, comprehensive data integration and virtualization capabilities across on-premises, cloud, and hybrid applications.

Slightly fewer (47%) are concerned about matching top mobile or creative experiences but data indicates this is mainly seen with the CRM, and BPM heritage low-code players.

Insurance industry respondents consider the top three low-code use cases to be IT (42%), sales and distribution (23%), and claims (17%). Government regulations are the major concern (44%), though the leading low-code platforms can capture compliance requirements and track how applications meet those requirements. These respondents also said they are most likely to rewrite aging Java applications using low-code, followed by mainframe and SharePoint applications.

The survey, conducted by Momentive in November 2021, included 1,442 individuals from Australia, Canada, France, Germany, the Netherlands, Singapore, UK and U.S. The respondents all identified as the sole decision makers, key stakeholders, or responsible party for making software-as-a-service (SaaS) purchasing decisions. Respondents work in a number of departments, including finance, HR, marketing, IT, operations, risk/compliance/audit, sales, and business or product line. The size of firms ranged from 500 (this was because Fintechs and Insuretechs were included vs Bank or Insurance companies which were restricted to larger firms) to more than 20,000 employees. All survey participants said they were at least familiar with low-code.