Why low- and no-code development holds the key to payments transformation

$5 Trillion USD was transacted online in 2022, a figure only set to grow as eCommerce becomes more efficient and spreads across the globe. If even one percent of that figure was taken up by processing fees, there would be a fifty-billion-dollar opportunity for the world’s payment services companies, one that is being capitalized upon by a generation of innovative fintech companies.

Today, there is a surprising amount that can be created online without the need to write a single line of code. Services like Squarespace and Wix allow companies to deploy eCommerce solutions in days, if not hours. While these ‘drag and drop’ sites might be ideal for small businesses who lack the funds to hire developers for a bespoke site, they are increasingly used by major international companies – Nike, Coca Cola and Hilton all use Wix, for example.

In software development, these are referred to as ‘no-code’ solutions. They allow users to create sites without needing to use HTML, CSS, JavaScript, and the like. There are also ‘low-code’ solutions available for companies who are willing to do some, but not all, of the heavy lifting – WordPress could be considered the largest and most successful low-code platform, with a market share of 63.5% of websites whose content management system is known. The platform has developed from a blogging tool to a highly extensible ecosystem that can be adapted to virtually any purpose thanks to a vast range of third-party plugins and the option to write and rewrite custom code as needed. This is what makes it low code: the option to write custom code is there if you need it, but it can also be used without needing to understand the PHP language that provides its functionality.

Low-code and no-code in payments

Could something similar exist for payments? On the surface, it would seem that the answer would be no – while companies can easily create catalogues of their products through low and no-code platforms, payments are too intricate, and the regulatory challenges involved mean that it would be best to use off-the-shelf payments systems rather than developing your own, unless your company has significant resources on hand to devote to building a system from the ground up.

However, there are new ways to create bespoke payment systems that go beyond either fully self-coded or fully off the shelf. Systems like valantic FSA’s X-Gen have already pioneered this, offering a low-code/no-code platform that enables real-time process automation across multiple core systems, with solutions for Post-Trade Processing and Crypto settlement.

Who are these types of systems for? The immediate answer would seem to be smaller fintech startups: just as a retail startup might use low-code eCommerce platforms to establish a web presence, a smaller and more agile company can use low-code payments platforms to create bespoke payments systems far quicker and with less expenditure on teams of high-level developers.

However, while this technology would allow hundreds or even thousands of new fintechs to develop, each with unique financial services systems, there are equal benefits for existing, large financial institutions (FIs). Banks, trading platforms and other FIs all face similar challenges in an almost entirely digital world: the need to support Open APIs to connect with fintechs and customers, the need to support digitalization of B2B and A2A processes, the need to support constantly evolving business standards such as ISO 20022 and SWIFT and the need for real-time, cloud-native architecture.

Overcoming legacy systems and building something new

An over-reliance on legacy systems in major financial institutions has been a persistent problem and replacing them with modern alternatives requires a major outlay of time, manpower and capital. This problem is significantly reduced by using low-code systems instead of coding by hand: a significant part of the heavy lifting is done for you since much of the ‘work’ is done by connecting existing systems into workflows and graphical interfaces. This also simplifies compliance: the individual components have all been created to be compliant out of the box, with any further compliance needed (being able to operate in a new territory with its own rules for instance) being only a new component away.

Of course, large institutions will have their own developers able to code new functionality, and this is where the distinction between no-code and low-code comes in. Just as with WordPress, it is possible for a less ambitious company to use platforms like X-Gen to create very basic automated workflows, but it is also possible to dive into the raw code itself and create new functionality. This is where companies, start-up or established, can really start to create value for their customers by giving them options that they have never seen before. This is where we will start seeing fintech ‘killer apps’ that are as transformative to finance as platforms like Squarespace, Wix and WordPress have been to eCommerce.