Another challenge is that, while offshoring reduces labour costs, there is a danger that high turnover of specialist staff can negate the benefits. There is usually a higher risk of this when offshore centres have simply extended their existing development teams to cover testing.
That is because they do not always have the techniques and career development in place to retain the testing experts. However, centres designed from the ground up with core banking testing in mind can be sure to embed training and clear career paths from the outset.
Outsourcing option
A third option for reducing costs is to outsource testing to a third party. While banks can never hand over the actual responsibility, they can hand over the bulk of time-intensive work.
Banks using this option will often go down the business process outsourcing route, where they shape their own processes to fit an off-the-shelf core banking platform. This means they can outsource to a third party that specialises in their platform and, therefore, has tried and tested processes already in place. The outsourced centre can pool test cases across multiple banks using the same platform – and the banks benefit from the resulting efficiencies.
Growing armoury
On their own, each approach can make a big difference, for example, a bank may simply introduce more automation. However, perhaps the real gains are made when banks start to combine the three options to suit their own set-up. Some will opt to offshore but not outsource, so they set up a testing centre with their own employees. Others will choose to outsource the whole process but keep it onshore and avoid potential data security issues.
Whichever they prefer, the end goal is the same: to reduce costs. What is clear is that competition will continue to increase and new regulations will inevitably arrive. Forward-thinking banks have chosen to confront the challenge head on and others will need to follow. With the arrival of more options for testing, banks of all sizes have a growing armoury at their disposal in the race to stay ahead.
