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Best Practices to Solve Common Challenges in Banking MVP Development
As customers' expectations grow continuously, banks and financial institutions are embracing Minimum Viable Products (MVPs) as a nimble and innovative approach to test and validate new ideas quickly. While MVPs provide several advantages to businesses, the journey of MVP development in the BFSI sector comes with its own set of barriers and difficulties.
Through our experiences collaborating with various BFSI organisations, we’ve realized that companies with varying sizes and wildly disparate budgets have encountered similar challenges while building a product. Thus, in this article, we will figure out some common obstacles in the MVP development stage and explore the best practices and strategies to overcome them.
MVP Development Challenge #1: Lack of IT Talents Specialised in BFSI Domain
According to Commonwealth Bank, there has been a notable deficit in Australian IT talent, particularly in roles requiring specific banking knowledge and experience in innovative technologies. Since the BFSI industry has numerous intricacies, including regulatory requirements, stringent security standards, and financial operations, the scarcity of IT experts in banking can lead to:
- IT professionals unfamiliar with the BFSI domain may inadvertently overlook or misinterpret critical compliance requirements, potentially leading to legal and financial risks while creating the MVP. An example of this could involve a development team lacking a solid understanding of data security regulations, which may lead to creating a product that is susceptible to data breaches.
- Building an MVP in the BFSI sector without the right expertise can lead to costly errors and rework. These mistakes can significantly increase the development expenses and prolong the time required to launch the MVP, thus impacting the overall project's cost-effectiveness.
- Moreover, recruiting and retaining these specialized talents can be a substantial financial investment. IT professionals with expertise in banking are in high demand, and their skills command higher salaries.
To tackle this challenge, banks and financial institutions can opt for strategic collaboration with IT service providers possessing cutting-edge technology and deep domain knowledge within the BFSI sectors. Besides, by joining forces with a third party, you can have the chance to access a large development talent pool that is poised for seamless scaling when needed.
In particular, external software teams can help bridge the MVP development gaps without considering costs and lengthy timelines related to recruiting internally. KMS Solutions provides dedicated software development teams with a proven track record of effectively assisting clients in revolutionising their businesses.
MVP Development Challenge #2: Budget Reductions Impede Innovation in BFSI Businesses.
In times of economic uncertainty, one of the primary challenges that banks may face in MVP development is budget constraints. In an effort to reduce costs, organizations often consider reducing their investment in innovation. This is a critical misstep because budget cuts can severely limit a financial institution’s ability to develop and test new products or ideas.
In other cases, banks still continue their MVP development but with constraints on the product’s core features. This can expose the MVP to a poor reception from users or key stakeholders, ultimately resulting in the premature discontinuation of the product. While not all budget cuts spell doom for MVP development, project leaders must adapt to more stringent constraints, discerning the product's vital components for success.
Without adequate resources, innovative projects may be abandoned, leaving banks falling behind their competition.
The adverse effects of budget cuts on innovation can be curbed if the bank has defined a clear product vision initially. This will prevent project delays or budget overruns that could otherwise hinder its progress.
It’s worth noticing that MVP development aims to concentrate on the fundamental functionalities that are indispensable for your product. When budget constraints are applied, project leaders should carefully prioritise the features for development: key functionality, nice-to-haves, and features for future development.
Moreover, offshoring your digital banking project to a country with lower labour costs can result in significant cost savings for your corporations. Additionally, as indicated by the 2022 Global Software Outsourcing Trends and Rates Guide, the cost of offshore outsourcing services in Vietnam is 30-60% lower than that of Australian services, making this country a prominent destination for many global BFSI institutions to offshore.
MVP Development Challenge #3: Feature Overload in the MVP
A common mistake that product managers often encounter is adding an excessive number of features, functionalities, or requirements in the MVP, either because they believe those features are essential, or due to their desire to cater to diverse user needs.
In the context of MVP development, excessive features lead to:
- Delayed launch: The more features you aim to include, the longer it takes to develop and test them. As a result, the time to launch the MVP extends, which may put you at a disadvantage in the competitive market.
- Value assessment issues: Including numerous features can make it challenging to discern which ones truly provide value to users. Some functionalities may go unnoticed, while others may introduce complexities that are not needed at the initial stage.
- Budget drain: A bloated and complex MVP that runs out of budget faster and hinders the overall projects
It is essential to embrace the MVP philosophy of focusing on the core functionalities that allow the product to deliver value, the main problem you are solving, and the minimum set of features that can display value to your target customers.
Create a clear feature roadmap that outlines which functionalities will be part of the MVP and which will be reserved for future development phases. This helps manage user expectations and the product's evolution. Banks will also need to prioritise their assumptions and hypotheses and test the most critical and risky ones first.
MVP Development Challenge #4: Lack of Customer Involvement
According to a Bain and Company study, while 80% of CEOs believe they deliver a superior digital banking experience, only 8% of users agree. This highlights a common tendency among banks to rely on their assumptions and overlook or downplay customer feedback, thinking they already understand what their target customers require.
Skipping the market research phase may result in the bank’s MVP that doesn’t solve a real problem, doesn't align with the market's needs, or fails to impress your customers.
Fostering a user-centric philosophy is highly prioritised. To mitigate the challenge of insufficient customer engagement, it is imperative for a bank to commence by meticulously identifying and segmenting its customer base. Through this process, banks can gain a deep understanding of their customers' unique pain points, motivations, and behaviors. Based on this data, banks can choose the major challenge and solve it first before moving to the less significant ones.
You can seek opportunities for early user testing. If reaching the target audience is challenging, consider alternative methods such as surveys, interviews, or focus groups.
MVP Development Challenge #5: Inadequate Software Testing Process
The MVP development process often lasts for 3-4 months, and things need to be done in a hurry. This can pose challenges for banks that heavily depend on manual testing, as it is time-consuming to perform all the necessary testing tasks within this relatively short period.
Ensuring comprehensive test coverage for all aspects of the MVP can be a daunting task, leading to potential oversights or gaps in quality assurance. This rushed approach can leave banks vulnerable to deploying an MVP with unaddressed issues or vulnerabilities that may negatively impact the user experience, regulatory compliance, and overall success of the project
As security, precision, and reliability are paramount, banks and financial institutions need to pay attention to the testing process. Leveraging automated testing tools can help accelerate the testing process, improve its accuracy, and increase the test coverage. Automation allows for frequent and consistent testing, reducing the risk of human errors.
It’s worth collaborating with experienced software testing professionals that specialised in banking solutions since their domain knowledge can help identify specific testing requirements unique to the industry.
Solving the MVP Development Challenge in Banking and Finance with KMS Solutions
MVP development challenges can be a daunting task, and this holds true for banks and financial institutions of all sizes. However, by implementing the best practices and strategies outlined above, financial organizations can significantly enhance their chances of success in the MVP development journey.
KMS Solutions’ experts believe that one of the best ways to solve those highlighted obstacles is to look for the help of a development partner. KMS Solutions has experience in delivering the full line of MVP development services, helping BFSI enterprises overcome the challenges for successful business growth. Feel free to consult with our experts regarding your product development.