There’s a difference between apps that run on the cloud and those built specifically for it, and financial institutions are building out ways to capitalize on the capabilities offered by the cloud.

Legacy apps can run in the cloud. But building an application optimized for software-as-a-service running means deploying “microservices,” Mark Atherton, group vice president of Oracle Financial Services, told Bank Automation News.

For this reason, Oracle didn’t just acquire the FLEXCUBE, its core banking solution — it rebuilt it using microservices. Microservices refer to a way of building applications, an architecture. Many other providers are simply deploying on the cloud without rebuilding to best leverage the cloud’s capabilities, Atherton said.

“We think that this is hugely differentiated for us,” he added.

Increasingly, microservices are an architectural model that more financial institutions are deploying, according to John Kain, Amazon Web Services head of worldwide business and market development efforts for banking and capital markets. Kain told BAN he’s seeing more financial institutions and fintechs build out microservices as a way to offer financial products as services.

Microservices provide a way of “really breaking down a monolithic software problem into smaller pieces that can work together,” Kain told BAN. “And by doing that, it allows individual components to scale and move more quickly.”

What are microservices?

Much like services-oriented architecture (SOA) was based on the idea that certain, repeatable code functions could be bundled as reusable services, microservices rely on coding in smaller, but still discrete, functions or services.

SOA was designed to create large, reusable services for enterprise deployment. To build a SOA, development teams must coordinate and build for reuse.

Technically, microservices refer to a service-oriented architecture. So what’s the difference between this and SOA? The term “micro” here, refers to the fact microservices are manageable by a single development team of five to 10 developers, according to the developer tutorial site Guru99. Therefore, microservices are designed to be independent of other services.

Where did this concept of microservices originate?

Netflix is widely acknowledged as one of the first companies to successfully deploy microservices and trigger the tech industry’s shift to microservices as an architecture. The company now has more than 1,000 microservices, according to the India-based programmer portal, Geeks for Geeks. Netflix has deployed microservices to support 214 million paid subscribers, so it’s working well for the entertainment giant.

What’s the business value of microservices?

The fact that microservices are small but independent functions makes them perfect for apps or as software-as-a-service since they are:

• Scalable;
• Easy to deploy;
• Ideal for supporting embedded finance; and
• Easy to upgrade. Developers can simply revamp them rather than testing and redeploying several large services as a monolith application.

“The differentiation is important for customers, because the microservices architecture changes the deployment and upgrade and maintenance of the application, really, from customization to true configuration,” Atherton explained. “You can make a change in a very small area, in a low code, or almost no-code model, and not have to necessarily retest the entire application in the traditional Java-based model.”

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