Microservices deliver the maximum

Written by Paul Thomalla Non-Executive Director, Payments Historian, Podcaster, and Specialist
Microservices deliver the maximum

Microservcies allows a director to get the maximum bang for their operational buck. This is in terms of cheaper running costs, while still encouraging innovation, faster time-to-market for new launches, and development and operations (DevOps) agility in order to meet enhanced customer experience (CX) expectations of a seamless 24x7 data-rich service.

Allied to a modernized IT architecture that necessarily uses scalable efficient cloud computing and containerization, microservices can deliver faster, less disruptive new product lauches, easier compliance or bolt-on capabilities, such as an instant payment connection, and maximum agility in enabling fintech app partnerships to flourish.

New services can be swapped in or out on-demand in a service oritentated architecure (SOA) environment that is much more flexible than the silo-bedevilled, traditional bank IT estates that were previously prevalent before digital transformationsbegan. End-to-end digital transformation is a journey upon which cloud adoption, native cloud app devleopment, containerization and so on are all developmental steps – microservices is another element in the mix.   

Mastering the detail

Getting the maximum from a micro approach seems counter-intituive, but sometimes mastering the detail delivers the best results. That is certainly the case with microservices as a new payment app or validation enhancement to a payment process can be added without disrupting other adjacent services, or adversely impacting resiliency, downtime and so on across an entire product suite.

Agility is maximized and disruption minimized , as very local amends or additons can be made to microservices without affecting the entire offering. For instance, a payment hub can ask for user or trusted end client identification (ID) before processing a payment instruction without worrying if it will cause downtime or unintended consequences further down the line, such as accidentially stopping SWIFT cross-border payments in the hub.

As a microservice is just that – a micro element in a wider picture – and because it’s isolated, with its own IT architectural pathway, a change can be made to it simply. Equally, a new microservice can more easily be added without causing disruption to existing services or 24x7 ‘always-on’ uptime access.  

Microservices eliminate complete solution upgrades and associated re-testing along the chain becomes unecessary. You don’t have to change entire code segments, but can instead make more detailed, targeted changes to specific granular services that have their own pathways. The same applies when you add a new product to a service platform, meaning you can more easily add an app from a partner fintech, collaborate simply on a non-competitive financial utility like a shared Know Your Customer (KYC) platform, and so on.

You can more easily flex to meet new market demands as well, such as the requirement for real-time instant payments. As Canada, the US and other markets add real-time rails in the coming years, joining approximately 50 other nations that have instant payment infrastrcutures, a bank that has a microservices stance can add this capability without undue disruption. They don’t need to develop it for online, mobile or branch-based end points either as the service exists across the whole product suite – if a modernized IT architecture is in place, with the supporting elements of the cloud and containerization.

Key benefits

The key benefits of miscroservices are:

  1. Faster time-to-market: for new product launches.
  2. Quicker, easier amends: to existing services. The ‘rip & replace’ requirement is eliminated. The legacy IT that held innovation back when developing new services v nimbler fintech-enabled start-up neo banks, is also removed.
  3. Microservices encourage innovation and culture change: as an SOA is more agile and amenable to amendment, without causing disruption or downtime to other services or systems, it encourages innovation. A move away from big, heavy iterative 1.0, 1.1 upgrades that can involve significant holistic testing, certifying and implementation delays is incubated because you don’t have to do a complete solution overhaul anymore. You can make a tweak quickly, so weekly, daily or faster turnarounds – and corrections – are possible, encouraging experimentation. Indeed, product teams can be self-sufficient dialling up services from an SOA-like infrastructure to alter the mix of their offering, with the support of smaller internal operationally-focused IT teams always on tap, if needed. This encourages self-sufficiency.       
  4. Fintech partnership capabilities are enhanced: services can be swapped in or out, including externally developed apps, in a more flexible IT environment, which is also more efficient as it is scalable.
  5. Right-sizing your IT estate: means efficiency is maximized. Cloud computing and containerization is needed to operate on a microservices basis, so capacity can be scaled up or down on-demand. Right-sizing saves total cost of ownership (TCO) money, which is vital as banks’ Return on Equity (RoE) has fallen this past decade, while post-crash compliance burdens and costs rose, and fintech-enabled challengers better met enhanced CX expectations of a fast, data-rich 24x7 service. It’s needed if you want to stay in business.

As open application programming interface (API) usage accelerates, enabling easier data exchange practices and aggregated payment processing, the fourth ‘partnership’ benefit listed above will become more important. Microservcies can help you manage it.

Conclusion: Microservices will be a hot topic at Sibos 2020    

Microservices deliver digital value, a key theme of SWIFT’s Sibos 2020 online conference this year which will encourage discussion within financial services about how the industry can progress. Open APIs and indeed microservices also touch on the future of finance, another crucial Sibos 2020 theme, because the battle for business increasingly lies in the services layer, not in the infrastructure layer, as it used to when merely providing connectivity and capabilities was enough to win customers. Those clients now expect cheaper, faster, always-on more CX-focused services, and they don’t care about a bank’s underlying IT complexity, infrastructure or data linkages. All they want is a seamless, convenient 24x7 data-rich service, preferably securely accessible on a front-end mobile app. It’s the service that matters.   

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Written by
Paul Thomalla

Paul Thomalla

Non-Executive Director, Payments Historian, Podcaster, and Specialist

Paul is accountable for the development of Payments within Finastra and externally to understand, influence and ultimately, help lead the change in payments across the globe. Amongst other areas he has advised on the UK’s NPA, PS2 and PSD3, CRD5, the role of AI and Blockchain in Payments and how to...

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