UBS centralises QA and raises expectations of vendors

UBS has created a single global platform for the quality assurance of its apps. Kevin Adams, global head of QA, talked to QA-Financial about the efficiencies he expects to see from the new structure and from test automation.

Kevin Adams UBS

Kevin Adams, UBS

The restructuring of the global technology group at UBS started last September and has now been completed. App development and quality assurance at UBS has been centralised, across the firm. Testing expertise and test data management has been pooled.

Around 1,900 staff globally report into Kevin Adams, the global head of quality assurance at UBS, based at the US headquarters of UBS, in Weehawken, New Jersey.

The  over-riding logic of creating one single standardised software development lifecycle at UBS to replace the 50 or so different processes that previously existed is that costs per app must come down. And one major issue that vendors of outsourced testing and quality assurance will have to grapple with, he said, is that they too will have to show that automation will lower their headcounts and the costs they pass on to UBS.

Cost and coverage

In the past, Adams told QA-FInancial, UBS’s providers of outsourced quality assurance and testing services have been used to striking deals based on qualitative rather than quantitative criteria. Automation, he said, means testing is becoming commoditised and cheaper, and that in turn means vendors should be able to pass on their lower costs. “We’re asking our partners for the measures,” said Adams. “Does test coverage increase with automation? Does the number of manual testers go down? It should go down. We haven’t necessarily seen that yet, although all our major partners have been coming to the table and I believe they will work together and with us to create some standardised frameworks.”

The staffing benchmarks will also be changing internally at UBS. Quality assurance staff currently represents approximately 20% of the total UBS headcount of staff employed in software engineering and it’s a proportion that Adams expects to fall, and the reason is simple. The automation of app testing and development means fewer human testers, in proportion to the development team as a whole.

“That proportion feels right me when I look at how the business has evolved historically and it looks right when I talk to our peers. However, over time that proportion will come down,” said Adams. Numerically, however, the headcount could remain stable, because UBS expects its app releases and upgrades to increase.

With the restructuring of its Application Delivery group only completed in Jan of 2016, UBS says it is too early to quantify the benefits. But data management has been identified as a key area where the bank is seeking efficiencies through sharing resources across business units. UBS says it is now able to better manage defect data it collects at the stage of user acceptance testing, for example, and  create metrics that spotlight above-average error counts in app development.

The management of client data used in app production is also an enormous challenge that is simplified with a single QA and data management team, explained Tom Peach, the Zurich-based head of QA for UBS’s investment banking division. Increasingly banks and other financial firms are using synthetic data for testing, which lessens the requirement for masking data to maintain client confidentiality. The single QA function makes it easier for UBS to create uniform test environments that utilise synthetic data, said Peach.

Compliance reporting

Another driver of the restructuring at UBS has been the growing volume of governance and regulatory compliance reporting requirements creating to IT. More regulators around the world are demanding detailed oversight of the development of what they believe are the trading and risk management apps that they believe are “critical” to the operations of firms that are active in their markets.

These regulators include not only the US Securities and Exchange Commission (SEC) and the European agencies, such as the UK’s FCA, but also the Monetary Authority of Singapore, which has taken the lead among Asian regulators in proactively supervising banking technology.

A key regulatory development in European markets, for example, is the requirement under the EU’s new rules for investment firms, MiFID II, that all firms should test and certify that any electronic trading algorithm they use will not provide a disorderly market.

This increased scrutiny by regulators of technology, and apps in particular, may well conflict with the growing opportunities that lie in the automation of software development, because supervisors will require interaction with human developers working on critical apps. But there is no room for compromise in compliance. “We are very clear that governance is the number one priority,” said Kevin Adams. “If we were running a music streaming business and our website went down, then we wouldn’t be in the same kind of trouble that a bank would be in if the same thing happened. In QA, we are the the last stop in the process of making sure that doesn’t happen.”

“The QA team does not deal directly with regulators, that is the function of the audit groups at UBS. But we are the subject matter experts,” explained Adams. “If there is anything that is required from the firm in terms of a response to a regional jurisdictional requirement in terms of quality assurance, then we are able to support that.”

Adams believes other major financial firms will follow UBS in establishing a group-wide QA function, in part because of growing scrutiny by regulatory agencies of the key apps used by banks and asset management companies to trade and to manage risk.

Benchmarking the cost benefits of the restructuring will take time, he said. But, he added: “The qualitative benefits have been clear and we’ve been able to report that back up [to the UBS executive board]. In particular, the restructuring has established that skills in test engineering are fungible across the major business lines of UBS, and that will accelerate our automation and performance engineering.”

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