Interview: RegTech drives growth at QualiTest

Israel-based QualiTest acquired Test Direct in November, taking its staffing to 2,800 globally. The growing number of financial firms using automated software to keep up with regulatory reporting obligations are a key driver for growth, according to CEO Ayal Zylberman (pictured).

Ayal Zylberman started testing 25 years ago and has worked on every rung of the test ladder: from test analyst to test manager and head of quality assurance. His experience spans a number of industry verticals, including finance and the military.

He founded QualiTest in 1998. At that time, most testing firms were focusing their efforts on the impending “millennium bug”, but Zylberman decided to invest his resources into test automation and performance testing, technologies that were just being developed. The bet paid off and the company – which provides a range of services, including mobile testing, load testing and accessibility testing – now spans three different continents. In November, QualiTest acquired UK-based Test Direct, which numbers 130 testers.

Zylberman says he is still involved with the nuts and bolts of testing. “I find the time to test software everyday,” he said.

In the financial services sector, the key area of growing in recent years has been testing for regulatory reporting applications, says Zylberman. QA Financial spoke to Zylberman about the challenges and opportunities of RegTech, the drive to unifying delivery channels with APIs and crowdtesting. This is what he said:

Q: Ayal, would you say that the testing you do for financial firms is different from the services you provide in other industry verticals?

If you had asked me five years ago whether different industries placed different demands on our test service offering, I would have said “no” – that the aims of testing are always similar: improved app quality, a better user experience and operational support for the business.

I think that has changed. A major part of quality assurance in finance is making sure that organisations are meeting the exacting demands of regulators. For example, one area that we are doing a lot of work in is testing MiFID II reporting applications. And to give you some idea of the scale, regulatory testing accounted for 25% of all testing done at a bank that outsourced their testing to us.

That is why we have made a major investment in the past couple years in training regulatory experts. And let me be clear here; I do not mean legal experts, but experts that can test applications for regulatory reporting. This was a major challenge because these testers did have to understand the regulations to make sure that these applications were functioning correctly.

There were big challenges around getting them to understand the requirements – the legal wording of the regulations. So we had to train our testers to understand both the technologies that we were using, and the legal issues.

This requires a different mind-set than a traditional testing, where the tester is trying to put themselves in the shoes of a bank’s client. The end-user, in a sense, is the regulator or central bank, so the tester needs to understand what they want to see.

Another area we are seeing a lot of interest in is crowd-testing, which uses geographically distributed network of freelancers to test customer-facing applications and websites.

Q: Banks are notoriously secretive organisations. Are they wary of crowd-testing?

There are always constraints around security, but we have ways to handle them. We are trying to kill the old myth that testing should only be done in testing environments. Yes, it is better to find bugs in early, but if they have escaped to production, then the next best thing is to find it before a user does.

We get testers who are also clients of the bank. When a new version of an app is released, the bank does two weeks of testing with our crowd testers. The app is already publically available so there are no worries around security. Most of the bugs that we find are around user experience. We are definitely seeing interest from the part of our customers in banking.

API testing is another category that we are seeing a surge of demand in.

Q: Why are banks focusing on API testing?

Banks are unifying the channels through which they provide their services. Traditionally, banks would have a mobile application, a website, a self-service kiosk, an interface for a cashier and so on. Now they are moving to unifying these different services so that they all work with the same API.

The advantage is that the banks are not duplicating or triplicating their testing efforts. They test one API that is shared by all of these different channels. This has a led to a focus on API testing using open-source automation tools like SoapUI or Selenium.

Q: One benefit of automation is cost savings. As banks ramp up their automated testing they want to see some of that benefit. Has this affected the way you price your services?

We have developed a key performance indicator (KPI) that we we call ‘test-points’. A tester will have three key performance measures: how many tests he creates, how many tests he executes, and how many defects he finds. Our platform will measure those three metrics, and it will give different weights to simple test cases as opposed to complex ones, or minor defects versus critical defects.

This allows our customers to keep track of what kind of results we are delivering. If they spend $100,000 on testing in one month, and that produces 10,000 test points, they will know they spent $100 for every test point. It is not about how many bodies we are throwing at a project – we are measuring results.

Another way we have priced our services is by just guaranteeing that the service we are providing is cheaper than doing it in-house. A large bank engaged us to do all of their testing. They had conducted a survey of their spending, and discovered that for any one project, testing accounted for 18.5% of the cost of development.

We said that we would deliver a comparable level of testing for 15% of the cost of development, while taking full responsibility for the project. The bank was able to save almost 20% of the cost of testing.

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