Why UK Banks are at High Risk of IT Failures

  • Sune Engsig, VP Product at Leapwork

  • 26.11.2022 03:30 am
  • #bank

In recent years, the UK banking industry has experienced a high level of IT failures and crashes. In 2020, millions of customers of Lloyds, Halifax and Bank of Scotland were locked out of their online and mobile banking accounts, as the banks experienced ‘an internal technical issue.’ Earlier this year, the same banks suffered an ‘IT glitch’ on payday with customers' faster payments and transfers delayed.

Yet, 70% of software testers in banking and financial services think it’s acceptable to release software that hasn’t been properly tested, so long as it’s patched later, and only 40% think software failures are a big risk to their company, according to Censuswide research. This comes despite consumers' increasing reliance on banking apps and the huge implications for software failure in such a highly regulated sector.

To reduce the risk of outages, banks need to ensure that sufficient testing occurs before they migrate their IT systems or release new software, but risks are still taken and corners are cut.

The consequences of an IT failure

In banking, outages are often blamed on the complex IT systems of high-street banks which have been built on incremental upgrades of legacy systems. However, less accountability is taken for sub-standard software testing, despite the huge consequences of impact to customers, reputational damage and hefty regulatory fines.

The most significant incident, in recent times, is undoubtedly TSB’s computer systems meltdown in 2018 which cost the bank £330m, pushing it to a large loss that year. The outage was caused by a catastrophic IT migration failure that left nearly two million customers locked out of their accounts. While it was considered to be one of the worst in UK banking history, it’s no surprise that nearly half of testers (47%) in banking and financial services think software failures have had an impact on their company’s reputation in the last five years.

Why software isn’t tested properly

The majority (82%) of software testers in banking and financial services say that up to 40% of software goes to market without sufficient testing. You may wonder how this is allowed to happen, but it often comes down to an inability to keep up with testing requirements. 

Despite the ever-growing use of software by enterprises, the overwhelming majority (85%) of software today continues to be tested manually. 

When asked why their software wasn’t tested properly before being released, 40% of CEOs across all sectors say ‘reliance on manual testing’ is the main reason. This is consistent with the fact that only 30% of banking and financial services testers say they’re using some element of automation (i.e., an automation tool or a combination of manual and automation) and 58% of testers citing ‘underinvestment in test automation’ as the main reason sufficient testing doesn’t occur.  

As the industry starts to focus more on automated testing, around one in five (21%) testers claim a lack of skilled developers is the main cause of poorly tested software. This indicates that the digital skills gap remains an issue, with banks needing to recruit scarce developer resources to manage test automation.

​​Transitioning to automation

While companies attempt to transition from manual to automated testing, the main hurdle they face is a reliance on code-heavy or even low-code solutions. Test automation platforms that require even a basic understanding of code place pressure on already-scarce developer resources, making it difficult for banks to successfully implement and scale automation. Combine that with the ongoing expectations of meeting digital transformation goals, and companies are cutting corners and taking unnecessary risks. 

One solution to this problem is no-code test automation, which enables everyone from manual testers to QA specialists to everyday business users to automate any kind of testing across any kind of technology, without needing to rely on code. By using a visual flow-chart language that is truly no-code, businesses can automate tests as well as time-consuming processes, enabling teams with varied skills to design, execute, maintain and scale automation with ease and speed.

Moving to an automated future

We’ve seen the implications of huge software failures in financial services too many times already. CEOs and testers are not singing from the same hymn sheet when it comes to testing, and a ‘fix it in post’ mentality is dangerously creeping into institutions that cannot afford to take risks – and neither can their clients. On the current trajectory, more and more banks will struggle with failures and outages which could cost them a significant amount in fines and reputational damage. 

Staying on the current path is reckless, but worse, easily avoided too. The banking sector needs to embrace no code test automation systems that doesn't require coding skills, in a long-overdue move to modernisation. Once they adopt this change and undertake thorough software testing before releasing any new software, banks can have their teams focused on higher-value tasks. For an industry centred on value, the decision to overhaul software testing should be automatic.  

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