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    Everything You Need to Know About Enterprise Software Testing in Finance & Fintech

    Everything You Need to Know About Financial Software Testing

    Money makes the world go round. Thus, it's no surprise that the demand for financial products is always high, especially financial applications given today's rapid advancement of technology. In fact, mobile banking apps have now surpassed Internet banking to be the most popular platform.

    For many users, financial apps are the lifeline they rely on to manage their personal finances or gain valuable insights into their business. Some employ them to trade stocks and purchase ETFs while on a business trip; others handle retirement planning from the comfort of their poolside.

    Regardless of the user's purpose, financial apps always ensure security and compliance with the constantly evolving government regulations. 

    That said, enterprises should concentrate on financial software testing to ensure the app runs smoothly to keep users coming back. Then how can we perform adequate quality assurance on financial apps? Let us figure it out in this article.

    What sets financial software testing apart from general software testing?

    As a broad and diverse industry, financial services encompass various types of software. These entail app-based retail banking services to trading algorithms for brokerages that analyze market movements and trading patterns. Nevertheless, these financial apps share the critical need to process large amounts of data quickly while maintaining data integrity and accuracy. 

    Contrary to the "move fast and break things" approach prevalent in the early to mid-2010s, the ideal philosophy of financial software development would be "move fast and never break anything". This is because they are subject to multiple regulations and compliance requirements and are associated with high risks. Hence, it's vital for those apps to undergo a thorough testing process before deploying to a live environment, ensuring that the code is free of any bugs or defects. 

    Moreover, financial apps typically have complex business logic involving calculations, algorithms, and workflows to handle trading, lending, and risk management transactions. This calls for extensive testing, including different scenarios, edge cases and business rules. 

    However, the dynamic and fast-paced nature of the financial industry demands a heightened focus on rapid development. As a fiercely competitive market, with numerous companies vying for supremacy, constant innovation and prompt product delivery are crucial to staying ahead. This presents an exciting challenge for enterprise software testing in finance, where the need to balance speedy development and comprehensive testing becomes paramount.

    Key focus areas in financial software testing in an enterprise

    Effective financial software testing should validate the product from both regulatory and reliability requirements. Does the enterprise software testing conform to business specifications? Can it manage a high volume of transactions? Does it adhere to current regulatory standards? 

    Answering these questions in detail is the goal of finance-specific software testing, and a proficient testing team leaves no stone unturned until they're fully addressed.

    Here are some testing methods that enterprises might want to consider while testing finance software:

    1. User Acceptance Testing (UAT)

    User acceptance testing, as the name suggests, typically occurs in the later stages of the testing process. During UAT, the team conducts scenarios based on potential use cases and often invites a group of stakeholders or real users to the development facility for in-person testing to emulate real-life scenarios.

    To ensure effective testing, a new dedicated UAT environment is set up, replicating the real system. A database dump is deployed to generate valid and relevant customer data, replacing real user personal information. Testing is then performed by the product team and real customers in the UAT environment. Subsequently, the product team shares a build health report with key stakeholders, providing insights into the product quality.

    Types of UAT include: 

    • Alpha & Beta testing: Alpha testing is conducted in-house by the QA team in a controlled environment to uncover defects. Meanwhile, beta testing is performed in a real environment by end users to collect real-world feedback.
    • Contract acceptance testing: It is carried out to ensure that the enterprise software meets the requirements and conditions defined in a contract
    • Regulation acceptance testing: This testing validates that the enterprise software meets the regulatory requirements set forth by the government or legal entities.
    • Operational acceptance testing (OAT): It is performed to validate the operational readiness of a product before its release. It's also known as the pilot environment, where all the components and systems of the live version are tested in a controlled environment to ensure that they're functioning correctly and are ready for deployment.

    2. Compliance & Regulatory Testing

    This testing approach ensures that the developed system adheres to the standards set by the organization and relevant regulatory bodies. Certified compliance experts, authorized by the regulatory body, perform this testing by visiting the development facility and auditing the application against industry-specific standards.

    Additional regulatory and compliance clearance from local legal authorities may be necessary if the financial application is used in multiple regions or countries. The specific criteria for regulatory and compliance requirements vary based on the types of finance app and the country where it is used.

    Some of the popular regulatory and compliance comprise:

    • Australia: Reserve Bank of Australia (RBA), Australian Securities and Investments Commission (ASIC), and Australian Prudential Regulation Authority (APRA)
    • USA: Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC)
    • New Zealand: Reserve Bank of New Zealand (RBNZ), Financial Markets Authority (FMA), Privacy Commissioner
    • Vietnam: State Bank of Vietnam (SBV), State Securities Commission of Vietnam (SSC)

    3. Integration Testing

    Integration testing is a crucial aspect of testing for finance apps that often involve integration with various third-party systems. For instance, an online loan provider app may integrate with credit bureaus, address verification services, loan processing software, and customer relationship management (CRM).
    Integration testing typically evaluates the following:

    • Data synchronization among all the third-party tools: This involves verifying that communication between the app and the third-party systems is smooth and that updates made to customer data from either side are synchronized accurately.
    • Error handling: In case the third-party app is unavailable at any point in time, the QA team should proactively incorporate and rigorously test for these scenarios while designing test cases
    • Performance examination: It's imperative that third-party apps demonstrate efficient response time even under heavy loads. Hence, the testing team should thoroughly analyze the third-party app's performance.
    • Data security: Data confidentiality is of paramount importance across all industries. Therefore, when sharing data with a third-party app's QA team, it must be transmitted in encrypted form. Personally Identifiable Information (PII), including sensitive details like name, address, SSN, DOB, credit card numbers, etc., should always be encrypted end-to-end to safeguard against unauthorized access or data breaches. 

    4. Security testing

    Security testing is essential for financial apps due to the sensitive nature of the data they handle, making them prime targets for hackers and fraudulent activities. It ensures the app is not vulnerable to cyber-attacks and complies with standards.

    There are various types of security testing:

    • Vulnerability testing: Involves employing automated programs to check for vulnerabilities
    • Security scanning: Investigates network and system vulnerabilities and provides solutions to reduce risks
    • Penetration testing: Simulates a hacking attempt to identify vulnerabilities that could potentially gain access to the database
    • Security audit: Auditing the app and associated networks for any security lapses
    • Risk assessment: Analyze the level of risk in case of exploitation of vulnerabilities and provide recommendations to mitigate risks.
    • Ethical hacking: It is performed by the organization to identify loopholes in the app or network without causing damage.
    • SQL injection testing: Specifically focuses on identifying and mitigating vulnerabilities in an app's handling of SQL queries. The testing entails testing the app's ability to handle various types of input data, such as brackets, apostrophes, commas, quotation marks, and other special characters commonly used in SQL queries.

    Final thoughts

    When it comes to enterprise software testing in finance and fintech, having domain expertise is crucial, and that's where KMS Solutions excels. We have a proven track record of 12 years of delivering successful software testing projects for enterprises within the BFSI industry. Let us help you eliminate bugs and ensure the highest quality standards for your software, giving you the confidence to launch it into the market.

    All You Need to Know about Enterprise Software Testing