Microservices versus monolith - Do the benefits of moving to a modern, modular approach offset the challenges of making the change? It’s a debate that has raged across industries and markets for many years now. But with disruption and uncertainty taken to a whole new level during the global pandemic, the need for greater speed, agility and customer-centric solutions is driving even the naysayers to explore their options.
In a recent IBM survey of more than 1,200 IT executives and developers in large and mid-market companies, the majority agreed that the benefits of a microservices approach were real, and they were, therefore, likely to increase their reliance on microservices (78%) or adopt microservices (56%) within the next two years.
You don’t have to look far to find examples of modern financial companies that have reaped the benefits of a microservices architecture. There is an increasing number of app-based challenger banks based on thousand core-banking microservices. This infrastructure helps fintechs scale and surpass a million of customers.
In contrast, most large financial institutions were built on conventional monolithic platforms, where all core banking services were developed as a single, fully integrated IT solution. This also has its benefits – there is no need to build interfaces between services. Payment processing and account monitoring, for example, can easily communicate with each other as they form part of the same technology stack.
The difficulty with this model arises when dealing with where the tasks become so large and complicated, they need to be adapted at regular intervals. This requires a new approach to systems development - one that allows quick adjustment and scaling to user needs and requirements.
Customer onboarding and transaction monitoring is a prime example. Financial institutions must manage an ever-growing number of AML regulations, which must be continually updated to reflect new and sophisticated forms of financial crime. An efficient AML and transaction monitoring system pulls millions of client transactions and processes them against hundreds of business rules, for different timeframes, data points and threshold settings.
At the same time, these systems must also interact with independent services that flag transactions against Politically Exposed Persons and sanction watchlists. With the amount of data to be processed from disparate sources, and to manage this on a scale that can facilitate business growth, reliable delivery is vital at each part of the chain.
This is where microservice architecture comes into its own. In contrast to legacy technology, the microservices model breaks software development into smaller, independent units, where each unit works closely together but executes a particular function or service.
Modular AML and transaction monitoring platforms use this approach to develop scalable solutions that can quickly adapt to changing user needs. Specific services or functions can be worked on in isolation rather than working on the platform as a whole and, as they make use of the cloud, they can be created and scaled from any location in the world. This allows separate compliance teams to work on dedicated parts of the complex technical system while covering a single and focussed business capability.
API technology allows microservices to communicate with one another securely but also act independently. This means AML systems can link up internal data siloes with external data sources safely. All of these data points can then feed into an overall insights engine, which uses granular rules and machine learning models to create a clear picture of a client’s current and historic behaviour, a network of relationships and a comparison to its peers.
As well as internal operational alignment, a key benefit of the microservices approach is that it allows individual parts of the output, data, and intelligence to be deployed separately. Each of the microservices can be productised to benefit the individual client’s internal operational tools. So, where a company already has a strong in-house CRM solution, an external partner can enhance existing processes by plugging into this system rather than replacing it, for example adding more advanced risk detection capabilities.
Using cloud technology adds another layer of efficiency. Microservices can operate on different servers but make use of the cloud to provide access from one location. Any back-end changes made via the cloud will not disrupt the service - updates and new features can go live instantly and with no downtime.
As microservices become more intelligent, they can also provide valuable data insights, both on the end customer and the future development routes for the solution - the platform becomes more sophisticated and highly tuned with each new transaction it processes.
At Sentinels, we are firmly on board with a microservices approach. We believe that microservices allow developing products and services to focus on precision and fulfilling client-specific needs by flexibly supplying different parts of the solution.
For more information visit: https://www.sentinels.ai
To support your use of the website of Sentinels, we, Sentinels traded by Slimmer AI Sentinels B.V., need to register some of your information. We consider taking proper care of your data of utmost importance. We treat all information you provide as confidential.
In this privacy statement, we explain how we process your data. If you have any questions, remarks or complaints please contact us at email@example.com.
Your data is used for the following purposes:
Based on your data, the website of Sentinels does not make autonomous decisions that affect you or other people.
The website of Sentinels only stores your data as long as your account exists. You may delete your account at any time. If you use the website of Sentinels without a personal account, we only store the data you provide for as long as needed to be of service to you.
For security reasons, we store your IP address up to a maximum duration of 1 month. However, when a user attempts to access the website of Sentinels in a way that clearly differs from its intended use, this can be considered suspicious activity. As a result, the IP address may be stored for a maximum of 2 years for security purposes, and the IP address may be reported to organizations involved in internet security.
Any statistics based partly on your data will be stored, but cannot be used to identify you.
The website of Sentinels has no intention to process information of users younger than 16 years of age, unless they are permitted to use the website of Sentinels by their legal guardians. However, we have no reliable way to determine the actual age of users. We, therefore, advise parents to be involved in their children’s online internet activities to prevent any data from being gathered without their permission.
If you feel that we gathered personal data from minors without proper permission, please contact us at firstname.lastname@example.org. We will remove the data upon your request.
All your data is protected by state of the art technology. This ensures that your data cannot be accessed by parties who have no business doing so. If you feel that this is not happening in an appropriate way, please contact us at email@example.com.
Sentinels traded by Target Holding B.V. does not sell your data to third parties. Your data is only shared when this is needed for proper operation of the website of Sentinels, or to fulfil lawful obligations.
Any data we share with third parties is based on a data processing agreement with these parties. This agreement ensures that the parties process your data under the same terms that we do. Any shared data will be as restricted in scope and size as possible, given the purpose for which it is shared.
The website of Sentinels may also make use of third-party cookies like Google Analytics. These cookies allow us to analyze the operation and usage of the website of Sentinels.
You are entitled to view your data stored by the website of Sentinels, and you are entitled to have your data corrected or removed. You can send a request to do so to firstname.lastname@example.org.