Microservices: The Necessity of Secured and Scalable FinTech Ecosystem
Microservices-based architectures are becoming the mainstream services-based integration model and the de-facto standard of service development for enterprise applications. It offers greater agility and helps growing organizations accelerate innovation in their digital experiences. Today, microservices serve as a business-critical component to omnichannel applications through API integrations and have gained a massive adoption rate by enterprises across the globe. Since an enterprise application over time becomes complex, demands scalability, and needs high responsiveness; microservices can help organizations quickly fulfill their growing business needs.
The global cloud microservices market is poised to expand significantly, with an expected growth from USD 1.33 billion in 2023 to USD 3.72 billion by 2028 at a robust CAGR of 22.88%.
While the microservices approach involves more complexity and monitoring systems, the benefits you can achieve are worth the effort. According to a recent survey by Statista, 85 percent of respondents from large organizations (5,000+ employees) said they are currently using microservices. Before we take you through the best practices for microservices and their benefits for FinTechs, we would like to share a glimpse of how microservices are being used and the most commonly used cases.
The recent survey by IBM with 1200+ IT executives, developer executives, and developers from large and midmarket companies reflects Data analytics/business intelligence applications developed internally or with the help of external providers use microservices the most i.e. 45% and 34% use microservices for finance applications development. As the adoption of microservices is at a surge, most of the organizations using it, completely agree that microservices offer many benefits to their development teams.
Benefits of Using Microservices for FinTechs
Fintechs across the globe are looking to engage customers in the most innovative and captivating ways and to do so they are eagerly implementing new applications across all verticals. It’s important that a new application must be deployed in an agile environment while keeping the security, performance, and cost-effectiveness optimal. The Microservices approach as compared to monolithic architecture not only provides greater flexibility in applications but also offers multiple benefits like:
The Microservices approach offers your team the ability to move faster when it comes to adding new features. Since Microservices enables breaking major app functionalities into independent components, it offers ease of adding, removing, and upgrading new features as the need arises. The approach helps developers to quickly adapt to new technologies, user complaints, and market changes.
FinTechs are adapting to microservices because it’s scalable. Scaling an application for millions of customer bases is impossible and massively expensive if you are using a monolithic setup. Microservices are an efficient use of resources and it leads to lower costs of running each instance of application development. There’s a “sweet spot” where microservices can bring more than 70% efficacy to your digital lending business.
- Enables faster Knowledge Transfer:
The Microservices approach enables your existing and new talents to learn a single system for business growth. Over time new hires can continue contributing to the entire application up-gradation without any hurdle. For example, if you are planning to revolutionize your loan origination and management process, instead of each employee having to know how to create an entire product from scratch, they just needed to learn the single part they need to work on.
Microservices applications are self-contained and you can do whatever you want with them without affecting the rest of the system. Being flexible and reusable, you can implement the features like specialized KYC, improved Fraud management, etc. into your FinTech business and applications at any point in time.
For FinTechs, managing a microservices app is actually easier than a monolithic one. If you’re dealing with thousands of discrete components and transactions, the microservices approach often has better tools and methodologies that handle a large number of components effectively. This also means that whenever you update any feature ranging from identity checks, fund transfers, or settlements the application automatically propagates. Microservices enable your business to easily diagnose application bugs by focusing on the cluster of microservices that’s responsible for it.
The Microservices approach impacts application development massively and enables FinTechs to enhance an application’s real-time performance and availability. With microservices, FinTechs can fast forward to enjoyable flexible architecture that’s much more resilient and offers better performance than a monolithic app.
9 Best Practices of Microservices for FinTechs
Based on our extensive experience with microservices-based digital lending technology, we have listed the 9 best practices and hands-on approaches that will ensure a secured and scalable FinTech ecosystem with microservices for your business.
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Enhance efficiency with Domain-Driven Design (DDD):
FinTechs must use a DDD-oriented approach for microservices because it provides loosely coupled services and enables consistent high-level functionality. The strategic phase of the Domain-Driven Design model will ensure design architecture that can encapsulate business capabilities and its tactical phase, on the other, will allow the creation of a domain model using different design patterns for your business. Some of the design patterns like entities, aggregates, and domain services might help you design loosely coupled microservices.
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Make use of the Single Responsibility Principle (SRP):
With the single-responsibility principle, where every module, class, or function in a computer program has responsibility for a single part of that program's functionality and encapsulates that part only, it becomes very easy for you to maintain, test, and rescue after a fault. Using SRP as a microservice design principle for FinTechs is healthy because if something goes wrong, only one program’s functionality will take the hit, not the entire application, which is unfortunately true for the monolith.
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Facilitate service autonomy with independent microservices:
In case you are planning to take the service isolation a step further then you should facilitate independent microservices. Service autonomy means a microservice can be deployed and scaled as needed because they work together and communicate through well-defined APIs or similar mechanisms that don’t expose the internal workings of the microservices. The codebase for microservices is small which means an individual developer or small team is sufficient to create and maintain the code. With independent microservices, FinTechs can reduce the chances of downtime due to service upgrades while having cyclic dependency during the app’s deployment.
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Use asynchronous communications between services:
It’s very important for FinTechs to ensure proper communication between services to avoid severe suffering from the performance of their microservices. Being a non-blocking communication protocol, asynchronous communication follows event-driven architecture which reduces the coupling between services during the execution of user requests and provides better resilience between microservices.
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Ensure Distributed database for microservices:
Microservices are loosely coupled but still, they retrieve data from the same data store with a shared database, thus to deal with multiple data queries and latency issues FinTechs must use distributed databases for microservices because each service will have a data store of its own to process multiple data queries. Using a separate database for microservices improves security and resilience as well.
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Containerize microservices for scalable and distributed systems:
Containerization of microservices helps FinTechs to improve process efficiency and is one of the most efficient best practices. Containers enable you to deploy and manage services independently as they share the kernel and operating system. With containerized microservices, FinTechs can create a massively scalable and distributed system to avoid the bottlenecks of a central database. They also facilitate rapid rollouts & rollbacks and continuous integration & continuous delivery (CI/CD) pipelines for applications and modernizing the technology stack.
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Implement microservices security best practices:
According to a recent survey by KPMG, 62% of companies in the United States experienced a data breach or cyber incident within the last year. Since microservices communicate with external platforms or services, it’s crucial for FinTechs to tackle security issues and implement microservices security best practices for data protection. By adapting to the DevOps model, you can ensure the security of your entire microservices framework and save your data from hackers proactively.
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Use immutable APIs for simplified parallel programming:
Immutability is a concept that restricts modification or alteration in data or objects, once created. Since both microservices and immutability share the idea of parallelism, they allow FinTechs to accomplish more within less time by applying the Pareto principle. If you are using microservice architecture, parallel programming becomes much easier and secured with immutable containers. Immutable APIs enable you to execute multiple threads in parallel and improve the efficiency of programming.
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Adopt a DevOps culture to boost delivery speeds:
Microservice architecture emerged from a common set of DevOps ideologies that allows organizations to break down the application into smaller services. Adopting a DevOps culture for your organization will enable a cohesive strategy, efficient collaboration, increased agility, scalability, and flexibility for both development and operations.
Conclusion:
Using microservices for your FinTech business is great for many different reasons. Even though they are hard to implement and look like a wild ride, microservices bring incredible benefits of speedier deployment and scalability, reduced downtime, and overall improvement for FinTechs. To bring new applications to the marketplace faster and seize opportunities to drive revenue & customer expectations, your business needs a trusted technology partner. LendFoundry’s expertise in leveraging cloud technology and microservices architecture helps FinTechs achieve agility, scalability, and delivery of large-scale apps at speed. We have invested very significantly in Kubernetes, and other Cloud technologies to deliver a cloud-native, API-first, microservices-based digital lending technology platform for loan origination and servicing.
To learn more about our services and offerings and get the acceleration your FinTech business needs, please do connect with us.
