Low-code/no-code (LC/NC) platforms have taken the financial sector by storm, promising rapid application development and reduced reliance on skilled developers. Their appeal lies in the promise of enabling “citizen developers” to quickly build applications with minimal coding knowledge, potentially accelerating digital transformation. However, while LC/NC platforms are growing in popularity – with revenue projected to hit $187 billion by 2030 – they present a set of significant limitations that can stifle innovation and long-term growth, particularly in the demanding world of banking and financial services.
As financial institutions evolve, they require more sophisticated solutions that balance flexibility, compliance, performance, and integration. And this is where customizable, adaptable platforms come into play, offering a blend of ready-to-market modules and the flexibility to meet unique business needs. With 30% of fintech startups struggling to differentiate their offerings, leveraging customizable platforms enables these institutions to create tailored solutions for distinct markets.
In this blog, we discuss why low-code or no-code platforms might not be the best choice for digital banking and fintech, and how customizable platforms provide a more strategic path forward.
Limited Customization – Generic Approach to Unique Needs
Low-code and no-code platforms are designed to cater to a broad market, which often results in features that are too generic to address the specific requirements of financial institutions. While these platforms may be effective for simple applications or internal tools, banks and FinTechs demand far more tailored solutions to manage complex workflows, enhance customer interactions, and comply with stringent regulatory requirements. However, LC/NC platforms frequently lack the ability to provide the deep level of customization necessary to create solutions that align with a bank’s unique brand, strategic objectives, and competitive advantage.
In contrast, customizable platforms offer pre-built, ready-to-market modules that can be extensively tailored to meet a bank’s specific needs. This approach combines the advantages of custom development with reduced time and cost burdens. Banks serve diverse customer bases, each with unique preferences and requirements, making it infeasible to achieve the necessary level of customization with one-size-fits-all solutions. In fact, 86% of financial institutions consider personalization a critical factor for the success of their digital strategies, highlighting the need for flexible platforms that can adapt to individual customer needs.
Scalability Issues – Built for Simplicity, Not Growth
While LC/NC platforms are great for building small-scale applications quickly, they often struggle to scale effectively as banks expand. What initially works well for limited, straightforward use cases can quickly become inadequate when the demands of the business evolve. The inherent simplicity that makes these platforms appealing can also become a significant drawback. As transaction volumes increase and workflows become more intricate, LC/NC platforms are often unable to handle the complexities of large-scale financial operations, resulting in performance bottlenecks, inefficiencies, and mounting operational costs.
Customizable platforms, on the other hand, are designed to handle high transaction volumes, complex user interactions, and a growing customer base. They offer the scalability that banks need to support their growth, ensuring smooth operations without the limitations that come with low-code/no-code platforms. With their robust architecture, they are able to not only support increased operational demands but also ensure long-term sustainability by adapting to evolving technologies, regulatory requirements, and market needs.
Integration Challenges – Beyond the API Limitations
Banks rely on an intricate web of legacy systems, third-party services, and proprietary software to operate efficiently. Seamlessly integrating new services into this ecosystem is vital for maintaining a unified and efficient operation. While LC/NC platforms offer some integration through APIs, they are often limited in scope and may not support deep, complex integrations with legacy systems.
Customizable platforms are typically built with robust API ecosystems, enabling effortless integration with existing infrastructure. Despite the strong digital transformation going on, statistics show that over 40% of banks still rely on legacy systems built using COBOL.
Customizable systems with robust integration platforms allow for smooth interoperability between modern applications and these legacy systems, ensuring that banks can continue leveraging their existing infrastructure while gradually modernizing their tech stack.
Regulatory Compliance – Not Just a Checkbox
Financial institutions face strict compliance requirements, encompassing everything from data privacy regulations to anti-money laundering (AML) and customer due diligence (CDD) mandates. In fact, research shows that compliance costs in financial institutions have increased by over 60% in corporate and retail banks since the 2008 financial crisis, and this trajectory is expected to rise as regulatory frameworks become more complex and stringent
Low-code/no-code platforms typically offer basic compliance features but often lack the granular control necessary to navigate the intricate regulatory landscape across different regions. This shortcoming poses significant risks for financial institutions. In contrast, customizable platforms are designed with compliance in mind, providing modular controls tailored to each bank’s specific regulatory requirements. This empowers banks to meet their obligations while maintaining the flexibility to adapt to evolving regulations – something that rigid LC/NC platforms struggle to accommodate.
Performance Concerns – More Than Just Getting the Job Done
LC/NC platforms are designed for ease of use and broad applicability, often at the expense of performance optimization. This trade-off may result in sluggish performance, particularly when handling high transaction volumes or complex banking operations.
In a world where customers expect instant, seamless digital interactions, performance issues can erode trust and drive users to competitors. Given that banks lag behind other sectors by at least 12% in fostering emotional connections with customers, such performance lapses further strain relationships and weaken customer loyalty.
Customizable platforms, on the other hand, are engineered to be robust and optimized for high performance. Banks are able to fine-tune system components and functionalities, ensuring smooth, reliable service even during peak usage times.
Vendor Lock-in Risks – The Hidden Costs of Proprietary Solutions
Most low-code/no-code platforms are proprietary, creating a dependency on a single vendor’s technology, support, and upgrade cycles. However, in the modern world of banking, strategic partnerships with other industry players and technology providers are such a huge factor of success in modern banking. Vendor lock-in limits a bank’s ability to form these valuable partnerships, limiting innovation, growth, and revenue opportunities while increasing operational cost.
2023 SaaS statistics show an 8.8% increase in unexpected costs associated with vendor lock-in, as banks face added expenses from proprietary systems that require ongoing upgrades, maintenance, and customizations. Customizable platforms, however, are built to be vendor-agnostic, leveraging open APIs and modular architecture. This design philosophy not only facilitates seamless integration with various services but also ensures that banks can adapt, scale, and innovate without being tied down to a single vendor’s roadmap.
Limited Advanced Features – Falling Short of Industry Requirements
Banks and FinTechs require sophisticated features like AI-driven analytics, dynamic fraud detection, and automated underwriting processes. LC or NC platforms may support basic functionalities but often lack the depth to accommodate these advanced requirements. This not only stifles innovation but also places banks at a competitive disadvantage in a rapidly evolving industry that demands advanced, real-time decision-making capabilities.
Customizable platforms come with pre-built, industry-specific modules that can be tailored and extended to meet complex needs. This allows banks to deploy cutting-edge features without sacrificing performance, compliance, or user experience. Incorporating these features enables institutions to better serve customers, manage risks more effectively, and adapt to future technological advancements seamlessly.
Dependency on Citizen Developers – Inconsistent Standards
The promise of empowering citizen developers is enticing, but it carries the risk of inconsistent standards and a lack of adherence to best practices in areas like security and data management. Banking applications demand precision, security, and robustness that are often difficult to achieve through ad hoc development by non-experts.
Typically, customizable platforms are built by professional development teams with a deep understanding of industry standards. These platforms are designed to incorporate rigorous security protocols, compliance frameworks, and optimized performance standards, ensuring that banks can confidently deploy robust and secure applications tailored to their specific operational needs. This approach enables rapid development while maintaining consistent standards across all applications, ensuring that even complex solutions adhere to best practices in security and governance.
Training and Adoption Challenges – More Than Meets the Eye
LC/NC platforms market themselves as easy to use, but the reality is that they still come with a learning curve. Employees need to learn the platform’s specific logic and workflows, which may not align with the bank’s existing processes. This misalignment often leads to poor adoption rates and reduced productivity. Studies show that institutions undergoing digital transformation often encounter failure, and 70% of those failures are attributed to a lack of user adoption and behavioral change.
Customizable platforms, however, are designed with the bank’s workflows in mind, allowing for smoother integration with existing systems and processes. While initial training is required, their alignment with the bank’s operations ensures higher adoption rates and greater long-term operational efficiency, helping to mitigate the risks of transformation failure.
Long-Term Viability and Support – Building for the Future
The LC/NC market is crowded, with many vendors vying for dominance. However, the long-term viability and support of these platforms vary widely. Investing in a platform that might not stand the test of time can lead to costly migrations and disruptions down the road.
Customizable platforms, often developed by established industry players, offer a more reliable alternative. Their focus on adaptability and compliance ensures that banks have a stable, supported foundation on which to build their digital strategies for the long term.
The Better Alternative – Customizable Platforms That Adapt to Your Needs
While low-code/no-code platforms have their merits, especially for simple applications and rapid prototyping, they are not a one-size-fits-all solution. In the fast-paced, highly regulated world of digital banking, institutions need platforms that offer the best of both worlds: pre-built modules and the flexibility to customize extensively.
Customizable platforms allow banks to quickly deploy ready-to-market modules for core functionalities such as payments, lending, and account management, while also offering the freedom to tailor and extend these modules to meet specific requirements. Leveraging APIs and modular architecture, these platforms eliminate vendor lock-in, enhance integration with legacy systems, and ensure compliance with regulatory standards.
Conclusion: Choose Flexibility and Innovation Over Quick Fixes
Low-code/no-code platforms may offer a quick path to digital transformation, but they come with limitations that can impede long-term innovation and growth. Customizable platforms, by contrast, provide banks with a robust, scalable, and flexible foundation for building a future-proof digital strategy.
Through blending ready-made solutions with the ability to adapt and scale, these platforms empower banks to innovate, optimize costs, and deliver exceptional customer experiences — all without the trade-offs and risks inherent in low-code/no-code platforms.
Therefore, the choice is clear: embrace platforms that prioritize flexibility, performance, and compliance to achieve long-term, sustainable success.
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- africa, apac, digibanc, digital banking, digital transformation, fintech, market insights, mena
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Raheel Iqbal, Managing Partner
Experienced Board Member with a demonstrated history of working in the financial services industry. Skilled in Business Planning, Management, Employee Training, Financial Accounting, and Product Development. Strong business development professional with a Bachelor of Science (BSc) focused in Management (Accounting & Finance) from University of Manchester - Manchester Business School.
