Blogs > The biggest impacts of microservices for digital banking
29 July –

The biggest impacts of microservices for digital banking

We run down the major advantages of selecting an infrastructure built on microservices and deployed in the cloud

Alexander Hamilton
4 min

What is a microservices-based architecture?

Microservices is an approach to development which separates applications into a collection of components. These components are autonomous from each other and provide an independent way of offering services.

The microservice architecture enables the rapid, frequent and reliable delivery of large, complex applications. It also enables an organisation to evolve its technology stack. Microservices can be loosely defined as having the following characteristics:

  • Highly maintainable
  • Loosely coupled
  • Deployable independently
  • Operated by small teams
  • Running separate business capabilities in a connected network

What are the advantages of microservices-based architecture?

1. Scalability is solved

Banks must serve thousands of customers. On top of that, they must deal with increasing numbers of requests and users. A system struggling to meet that demand results in performance issues, downtime, and errors.

Trying to develop and deploy new products and services in such a state is detrimental. Hamstrung by monolithic architecture, they are difficult to expand and execute efficiently. A microservices-based ecosystem breaks down that monolith into several services. 

When deployed on cloud services like Amazon Web Services (AWS), these interact together in an environment that enables auto-scaling depending on load. With functions separated, each can scale according to demand without affecting the other. Each team responsible can work at its own pace.

2. Security and compliance are revamped

Regularity reporting and maintaining data privacy is crucial for financial institutions. Meeting new regulation as it arrives and retooling to ensure reports are accurate and effective is an ongoing critical task. It is often thought of as onerous and slow. Trying to identify errors, breaches, or flagged accounts in a single database is an arduous task.

Splitting the architecture into microservices allows for flexible and rapid identification of problems as they occur. For example, if issues arise in the payments module, teams can focus on it without having to interact with the lending or ledger modules. This reduces the risk of multiple errors as engineers work through a coil of systems to get to a problem.

Containerisation technologies like Docker and Kubernetes enable secure communication, management, and security monitoring across several component services. An IBM survey from 2021 found that 55% of respondents reported better application security.

3. Streamlined updates

System updates are the bane of many a chief technical officer, and monolithic systems can affect every aspect of the bank. Microservices-based systems are split, so teams can update their service in incremental steps. The impact on other services is minimal. Even if there is a change in the API interaction between two modules it is a simple fix.

The tedious and dangerous method of big bang updates is a major contributor to industry innovation stagnation. Engineers navigating through thousands of code changes to change minor features risk shutting down or introducing errors across the institution. This risk creates a change-averse culture that can leave banks behind in the race to provide the best service for their users.

Deploying a microservices-based system allows teams to work at their own pace. It enables smooth upgrade schedules. What’s more, microservices can be upgraded with no downtime. Simultaneous deployment allows new versions to run parallel to older ones. Should the new deployment strike issues, teams can roll back to the previous version without a delay.

4. High availability

Due to the aforementioned factors, microservices architectures can deliver their requirements without delays and significant downtime. Loose coupling and modularity mean users can still interact with a product even during failure in other segments.

Combined with a powerful public cloud system like AWS, this also allows fault tolerance. A system can continue operating under heavy load. This could be a sudden influx of requests – numbering in the millions on days like Black Friday. In such circumstances, regular users are still able to use their essential services without noticing a change.

Want to find out more about microservices architecture and what a next-generation banking platform can do for you? Pismo has a whitepaper just for you. Download it today.

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