Top 3 software challenges for the banking industry

The banking industry is one that presents a unique challenge when developing and testing software. In recent years, cloud technologies and software-as-a-service (SaaS) have become critical components of the industry’s digital adoption and are crucial for banking brands to remain competitive. And in a multinational sector like banking, software must be incredibly secure and reliable, while also fast, integrated and open to enable real-time global communication.

In this article, we’ll dive into the top software development roadblocks the banking industry faces, and how industry professionals can overcome these challenges.

1. Data security

The financial industry is a particularly popular target when it comes to cyber security threats and protecting your customers’ sensitive data should be a top priority. However, banking brands should be less concerned about more “traditional” hacking methods like stealing account passwords and breaking into phone systems, and more focused on the security of the software supply chain itself.

When there is a data breach in a banking application or website, the costs can be astronomical. Nowadays, data hackers are finding ways to break into banking software through the “back door” by figuring out how to get their malware included directly into the source code itself. The software foundation behind many common mobile banking applications, for example, is often prebuilt and reused as a baseline by multiple institutions, making it that much easier to get into the wrong hands.

To ensure the security of your data, pay close attention to where your source code comes from and who is testing it. Additionally, when testing their software, financial institutions often make the mistake of using real data, which is a serious security risk. Rather than risking your customers’ valuable information, use high-quality test data to mitigate the risk of a security issue.

In addition, many software products use open-source reusable building blocks of software called “libraries” or “modules” to perform common tasks such as error handling, logging, data access and presenting data to users. If hackers can inject malicious code into one of these open-source core libraries, all commercial software that uses these libraries will be infected and affected.

One way around this is to make sure you have code-level traceability in your development process. Any change to your source code or any update of a common library should be tagged to the appropriate requirement and/or change request. In addition, consider including automated vulnerability scanning tools into your code integration pipelines so that any compromised libraries can be detected before the code update goes into production.

2. Privacy and data residency

Banking is “global but local” — you must be globally connected in order to move money around the world, while also keeping data centers gated and secure. In recent years, many countries are requiring customer information to reside within that country for legal and regulatory reasons. This is particularly an issue for multinational banking brands that share data centers to run credit checks or other day-to-day consumer activities. Not to mention, keeping up with ever-changing data regulations and infrastructures from country to country can be a slippery slope for giant financial institutions.

Using a test management tool can help banking executives understand the legal requirements for each country when building out and updating applications. As the app is being developed, banks can build out a complete requirements list that includes not just product features, but also legal statutes and regulatory rules. Once those requirements have been codified, you can then build a comprehensive test plan to ensure test coverage and evaluate traceability. This helps IT managers ensure that the finished software product complies with the appropriate laws and statutes as well as meets the functional needs.

3. Cloud technologies

The banking industry is one of many that underwent a significant digital transformation in the heat of the pandemic. This includes banks favoring more modern, streamlined solutions like cloud computing infrastructure. A cloud-based server means a third-party provider is hosting a company’s information offsite. The cloud also allows banking brands to connect with the necessary customers, partners and businesses anywhere in the world. However, this virtual technology comes with some risks.

For companies that host sensitive data like banking, there are some implications about the security of cloud computing. From valuable customer financial data to employee login information, cloud breaches are a real cause for concern. This is why utilizing a hybrid solution that features both on-premise technologies and a cloud infrastructure is often the best solution.

Cloud computing offers the benefits of leveraging robust computing platforms from large IT companies that have some of the most experienced resources in the world. However, many organizations using cloud platforms don’t have the skills or expertise to correctly configure them, leaving customer data exposed in publicly available data buckets or incorrectly configuring firewalls to block unauthorized access.

Conversely, traditional on-premise IT infrastructure is more costly and expensive, but because it is less accessible to the internet, routine configuration mistakes have potentially less catastrophic outcomes. By using an appropriate mixture of cloud and on-premise IT infrastructure, organizations can get the best of both worlds.

While the financial sector has experienced tremendous digital growth, banking software must constantly meet varying regulations and financial industry laws to remain compliant. A test management and requirements tool offers the opportunity to stay on top of and track these changes in a single view. As banking technology continues to evolve and flourish, putting the right software development tools in place is vital to succeed in a rapidly changing space.

Adam Sandman, who founded Inflectra in 2006, has been a programmer since the age of 10. Today, Adam serves as the company’s CEO. He is responsible for product strategy, technology innovation, and business development.