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Microservices Architecture in Digital Banking – What makes it different?

Microservices in Digital Banking - Appzillon

Before deep diving into microservices architecture in digital banking, let’s first understand the prevalent scenario. Traditionally, banking applications are built as a single entity, grouped together in a web of codes that can strike fear in the hearts of seasoned engineers. A glitch in such a monolithic setup can bring the entire system down. With a microservices architecture, the story is different. There, the applications are divided into separate individual parts – autonomous. This means that microservices don’t exist as a unicellular unit as they provide a completely independent approach while all pieces still work in unison to complete the task. If a single unit breaks down, it doesn’t affect the whole system. 

What is a microservice?

“A microservice architecture – a variant of the service-oriented architecture (SOA) structural style – arranges an application as a collection of loosely-coupled services.” It is both an architecture and an approach. With microservices, applications are fragmented into the smallest unit lacking interdependency between one another. 

The microservice architecture allows the unrestricted delivery of large and complex software applications and helps an organization to innovate and build on its technical aspect. Each component can be built, deployed, managed, and scaled independently without the need to upgrade or rewrite the entire banking software when implementing a new feature or a few minor changes.

Now let’s understand what are the advantages of microservices architecture in digital banking and its benefits.

Why do we need microservices architecture in digital banking today?

The fintech world has grown significantly over the last decade, with a large pie of growth attributed to the advancements in technology that challenged the traditional banking model. With increased competition, stringent regulations, cultural shifts, and of course the rise of the omnifarious demanding consumer, banks geared up to take the next step in the digital domain, microservices.

Microservice offers better modularity and helps in making applications easier to develop, test, deploy, and update. It helps to prevent customer churn, ensuring high availability, scalability, and performance of software systems. 

Why is microservice different?

There are several reasons why banks need to use the Microservices approach to build their platform when compared to a monolithic platform. Here are a few:

Scalability: 

Banking software solutions serve several customers along with balancing an increasing number of users and requests. Performance issues, system outages, errors are common problems that can crop up if the system isn’t scalable. By employing a microservices architecture or doing away with a monolithic app banking organizations can address all of these challenges.

High-availability:

Banks can provide services without a delay when it comes to microservice architecture. High availability is one of its primary features. Since the features are built independently in the architectures, users can still avail themselves of the bank’s services/products in case of a glitch in the ecosystem. Appzillon’s low-code approach to building digital assets provides a bank with the agility and speed to realize digital initiatives rapidly. The platform makes building and launching omni channel apps 70% faster than traditional platforms.

Hassle-free maintenance:

With a microservices architecture, banks can significantly facilitate infrastructure maintenance, with a dip in the infrastructure costs. As long as services are autonomous, they can be maintained independently from each other. The whole system doesn’t need to be shut down for a single upgrade. This way the number of irate consumers is way lesser than the ones still stuck with traditional systems.

Robust security features:

Of course, banks have to guard sensitive data with stronger system protection. They have to ensure data privacy and compliance as they operate with highly sensitive information -personal user data, transaction details, billing data. With microservices architecture banks and their apps can improve security and facilitate compliance. For example, if potential issues are identified the software experts can resolve them quickly without letting the entire system shut down or be affected.

How can microservice architecture impact the digital banking industry?

One question may come to your mind-if microservices are so great, why aren’t they common in the banking system architecture? The answer is the traditional nature of banking software. Many banks are built on archaic systems and one-dimensional principles. It’s not just the system architecture that needs an upgrade, there is a serious lack of a holistic technological transformation.

But, the banks who have geared up in this digital storm are ready for the next revolution. With the frenzy in getting the customer’s attention, financial institutions not only have to provide the next best thing but apply the latest technology to achieve that. It’s all a number’s game. The ROI is directly proportional to the number of users and prospects and without a scalable, robust, and secured system, this seems to be difficult. They need a weapon that puts them miles ahead of the competition by providing a better, smarter, and simpler customer experience. Microservice-based architecture does this for the banks. It gives banks the flexibility to deliver, innovate and build intelligent digital services to satisfy the customers, quickly.

If you are planning to stay relevant and competitive, explore opportunities with Appzillon, a unified low-code digital platform.

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