Banks are always facing new challenges when it comes to growing deposits, and attracting and retaining new customers. In recent years, fast-growing, agile fintech providers with a knack for anticipating the needs of tech-savvy consumers have emerged to challenge banks. Now, not only do banks have to compete amongst themselves for business, they have to develop ways to stay ahead of the game with banking solutions backed by robust technology.
But banks know that financial services technology is not a one-size-fits-all solution. The technology stack that makes sense for a community bank in a rural area is going to be inherently different from a de novo bank, and that’s wildly different than what an enterprise bank with a five-state footprint needs. Rather than try to find a solution that has the least amount of square pegs for an institution’s round holes, banks should explore a microservices software model when building out their technology services.
The microservices model is a method for building applications as small, independent services that can communicate with each other as needed through application program interface, or API, connections.
Instead of a monolithic architecture model — where all software components of an application are wrapped into a single container — a bank can leverage microservices to build their technology stack and precisely identify what functionality they need to best service their customers.
There are many benefits to employing a microservices model when building a bank’s technology stack, but the main takeaways are flexibility, deployment, maintenance and scalability.
Leveraging microservices for software deployment gives banks the flexibility to pick and choose what capabilities are important: what needs to be built into their tech stack, and what doesn’t. One bank, based on its goals, asset size, customer base and internal processes, could have technology needs that are vastly different from those at another bank.
Rather than employing a technology stack designed to capture the gamut of what a bank might need, banks can identify which technology components align with their business needs. Then they can add on additional services, like treasury management or online account opening, as business needs dictate. Contract durations are often shorter for microservices, which gives banks the benefit of exploring software options more frequently.
Deploying microservices is less costly and time-consuming than a fully built-out tech stack. Deploying one microservice at a time gives banks the ability to roll services out in a measured way instead of planning for, staffing for and potentially burning out from a deployment of a large-scale project that takes months — or even years.
Taking on smaller, more manageable projects helps keep costs down and can reduce project fatigue, because banks can leverage smaller teams to manage microservices implementation. This allows staff to spend less time on the project and more time on their day jobs.
A microservices model also eases maintenance over time for a bank. Staff can work on small software components that are maintained separately from, but loosely coupled with, one another independently — without impacting the rest of the infrastructure. This figures into both fixes and enhancements, resulting in rolling maintenance and scheduled updates that keep the bank operating smoothly and substantially limiting service interruptions for customers.
Scalability is a significant benefit of taking on a microservices model. Banks can add on software based on what their current needs are and easily adjust as industry trends and customer needs dictate, rather than adhering to a predefined technology stack that envisioned their future needs down the line. And because the microservices model involves fewer dependencies compared to the monolithic model, banks can more precisely control the pace of their projects based on the capacity of their staff.
Executives considering what their banks need from their technology stack should keep in mind the benefits of incorporating microservices into their infrastructure. These include the connections a bank can make between its existing technology and the add-ons that will give staff, customers and the enterprise as a whole the biggest lift — rather than adopting a one-size-fits-all monolithic application.
This article has been prepared for general information purposes only and is not legal advice. The information in this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship.