The fundamental aspect of every banking advancement or innovation is the extent their implementations can cater to the needs of the customers. At the end of the day, a bank is as good as its relationship with its customers. Hence, bankers and tech giants are exploring different ways to elevate their customer experience and the major path is digitisation.

According to a report from Everest, to accelerate digital banking journeys, banks have to:

  • Reimagine their business model
  • Modernize technology and data infrastructure
  • Build data security and privacy by design
  • Future-proof their talent strategy
  • Develop a platform-first mindset for ecosystem orchestration

Financial organisations’ exploration for an innovation that can tick all the above boxes has landed them to Microservices-based architecture.

What is Microservices-based architecture?

The traditional and mostly out-dated monolithic architecture has hindered the growth of banks for a long time. Hence, bankers are now choosing a more matured and resilient model, which is the microservices-based architecture. In this architecture, the entire application is divided into independent services or modules. Each of these modules can be built and managed without altering or depending on other modules, which make the entire application easy to maintain.

Microservices Architecture Banking

Benefits of Microservices architecture in banking

The implementation of Microservices architecture in banking has several benefits as opposed to traditional Monolithic architecture. Here are a few of them:

1.  Independency

The modules in microservices architecture are designed to function without any inter-dependency. The functionality or changes in one module doesn’t affect the other. Hence, it facilitates the IT team to work on different modules without worrying about its effect on the other.

2. Increase in processing speed

The entire architecture is simplified using microservices, allowing easy and faster deployment. Also, the team can work on multiple components at the same time and all of them can be deployed at once leading to faster time-to-market.

3. Ease of frequent upgrades

As each component has independent control, one can easily debug issues, make changes in multiple iterations, and deploy only that component instead of the whole application.

4. Highly scalable

In microservices architecture, developers have the freedom to use different code concepts and languages without having to worry about compatibility across modules. Hence, they can use the best technology, try different experiments, and innovate continuously.

5. Advanced security

Volatile guidelines for enhanced security across the world are always a challenge for bankers and stakeholders. Hence, they are always in search of an enhanced security system. Hence, microservices in banking is extensively preferred as it ensures the best security practices making bankers job easy.

6. Improved performance

The breakdown of a single system into multiple components makes it easy to detect the root cause of the issue and debug it faster. Also, due to the simplified module structure, developers can work on multiple enhancements to reduce recurring issues. Such measures help improve overall efficiency and performance.

7. Customisable

Each component can be customized as per functional and non-functional needs as they are independent and doesn’t alter the functionality of other components. This not only improves customer experience but also optimizes business efficiency.

8. Employee efficiency

In an application, every component will have different techniques and concepts to work on. The traditional monolithic architecture prohibited the use of diverse concepts across the application that led to minimal team efficiency. Microservices, on the other hand, facilitates the usage of different technology, programming language, etc., for each component. Hence, employees can be selected based on their skills and capabilities to work on each components leading to improved team efficiency.

9. Integration made easy

The API layer present in the microservices architecture permits seamless application functionality across all platforms. Any implementations made across the components can be integrated in a hassle-free way across different web platforms. This also helps IT teams to explore different options to enhance CX as the final integration happens in a smooth way.

10. Controlled third-party assistance

Most stakeholders’ pain point is taking the assistance of third-parties without giving out their confidential core architectural details. But, in microservices-based architecture, the core system is separated from the rest of the application. This makes it easy for bankers to share their application details with the third-parties without having to reveal their core architecture.

A Takeaway

With the current customer expectations and increased competition, banks have to be steady and stable with respect to leveraging technology. While there are a plethora of technological options ready to be explored, the core system of banks must undergo a re-invention to sustain all those technical enhancements. That is the reason why most banks are shifting their core to microservices-based architecture.

Latest posts by Aishwarya Iyyengar (see all)