As digital transformation accelerates across the banking and financial services sector, software testing and quality assurance have moved from technical afterthoughts to board-level priorities.
In a climate shaped by rapidly evolving consumer expectations, regulatory scrutiny, and continuous technological change, financial institutions can no longer afford the risks associated with poor software quality.
“The software testing market is undergoing a significant evolution,” stressed Daryl Elfield, Partner in Quality Engineering and Testing at KPMG.
“It is transforming from a traditional quality assurance function to a more strategic enabler of business outcomes,” he explained in KPMG’s latest Software Testing in Financial Services report.
That shift is being driven by the explosive growth of digital financial services and the demand for resilient, compliant, and seamless platforms.
According to Elfield, financial firms are rapidly “shifting from manual testing to automation and continuous testing approaches to enable faster and more reliable software delivery.”
The need to test faster, earlier, and more intelligently has redefined what QA means within banks, insurers, and fintechs.
The stakes are high. A single defect in a digital banking app or payment platform can lead to regulatory fines, reputational damage, and significant customer churn.
“Defects escaping into production can have significant consequences for financial institutions,” Elfield noted. “Including reputational damage, regulatory penalties, and financial losses.”
Mounting pressure
As organisations pursue agile and DevOps methodologies to accelerate release cycles, QA teams face mounting pressure to deliver assurance at speed.
This has given rise to “continuous testing”, an approach that integrates testing throughout the software development lifecycle. Elfield emphasised that “testing is no longer an activity that takes place at the end of the development cycle but is integrated throughout.”
Yet the transition is far from seamless. Many financial institutions remain saddled with legacy architectures and siloed teams that inhibit automation and collaboration.
Elfield acknowledged that “many organisations still face challenges in adopting test automation at scale.” Among the most significant barriers are “the complexity of legacy systems, lack of skilled resources, and inadequate test data management,” he added.
This complexity is especially acute in highly regulated environments like banking. Financial institutions must demonstrate that every system, from customer onboarding portals to credit risk engines, operates reliably and in compliance with regional and international regulations.
“The financial services industry is highly regulated, and any failure in software quality can have serious implications,” Elfield noted.
Those implications stretch beyond technical correctness. Regulators and internal audit teams now expect clear documentation, traceability, and reproducibility of test results, especially in environments involving artificial intelligence or third-party APIs. The modern QA function must therefore balance technical precision with governance and risk management.
It’s a tall order, and one that demands investment. Elfield pointed out that “leading financial institutions are investing in modern testing tools, upskilling their workforce, and adopting testing-as-a-service models to stay competitive.”
These investments reflect a growing understanding that testing is not a cost center but a driver of speed, trust, and differentiation.
“The software testing market is transforming from a traditional quality assurance function to a more strategic enabler of business outcomes.”
– Daryl Elfield
Among the most transformative developments is the adoption of AI and machine learning in QA practices themselves.
Elfield observed that “AI and machine learning are being increasingly used to optimize test case design, predict defects, and improve test coverage.” These technologies enable banks to test more intelligently by focusing effort where it’s needed most and responding quickly to emerging issues.
Still, there’s a cultural dimension to success. Elfield was clear that “creating a quality-first culture is essential for the success of modern testing approaches.”
This means embedding ownership for quality across development, product, operations, and compliance teams. Testing must be everyone’s responsibility, he said.
The KPMG report also notes that testing must keep pace with fast-changing customer expectations. Financial consumers today demand instant access, flawless performance, and secure interactions, whether applying for a mortgage or managing crypto assets.
This puts additional pressure on banks to move beyond legacy QA approaches and embrace “risk-based testing strategies that focus on the most critical business functions.”
According to Elfield, this is already happening in leading organisations. “Progressive firms are focusing on enhancing customer experience through improved software quality.” That shift is particularly visible in areas like mobile banking, where performance glitches or downtime can trigger social media backlash and customer attrition within hours.
At the same time, the testing workforce itself is changing. The rise of cloud platforms, API ecosystems, and continuous delivery pipelines demands new skills.
Elfield highlighted that “there is a growing demand for test engineers who understand coding, automation frameworks, and cloud technologies.”
This skill shift has led many organizations to partner with specialist providers or embrace new operating models.
Elfield noted that “testing-as-a-service is gaining traction as organizations look for scalable and cost-effective solutions.” Outsourcing, when done right, can bring not only capacity but also best-in-class tooling and domain expertise.
But QA must remain deeply embedded in the organisation’s core fabric, as he warned that “testing should not be an afterthought but a key component of the software development lifecycle.” Financial institutions that treat QA as merely a technical or compliance checkbox risk falling behind.
The urgency to modernise QA has only increased in the wake of high-profile outages and cyber breaches in the sector. These incidents have reinforced the idea that quality is inseparable from resilience and security. Elfield emphasised that “quality engineering plays a vital role in ensuring the resilience and security of financial systems.”
Looking ahead
Looking ahead, continuous innovation will be essential. The report highlighted a future where AI-driven test orchestration, real-time dashboards, and autonomous testing frameworks are the norm. But even in this future, the fundamentals of accountability, coverage, and collaboration remain unchanged.
As the financial services industry navigates an era of constant disruption, testing has emerged as one of the few disciplines capable of delivering both speed and control.
Elfield concluded that “financial institutions that invest in modern testing capabilities will be better positioned to innovate, manage risks, and deliver superior customer experiences.”
In other words, QA is not just about finding bugs, it’s about building trust in a digital-first world. For the banking sector, that makes software testing more than a technical function. It’s a strategic imperative.
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REGULATION & COMPLIANCE
Looking for more news on regulations and compliance requirements driving developments in software quality engineering at financial firms? Visit our dedicated Regulation & Compliance page here.
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