Microservices – how to redefine the possible in digital transformation


Digital transformation is more akin to a journey than a destination and all banks start out from different points. Although the journey is necessary, there are many barriers to progress, including: inertia, existing structures and lack of knowledge of the required modern technologies.

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The structure of many banks is an accident of history. Most have grown up along product lines. In the beginning, there was just cash, followed by cheques then increasingly sophisticated instruments and products. Many bank infrastructures are rooted in this analogue past, with technology that is designed to support physical products distributed through a branch network.

Over time, new channels were added, including phone, ATM, connected trading systems and the internet. Each channel has its own support group, which has exacerbated a siloed structure and culture. In practice, this has also created a conservative culture that favours incremental progress rather than ‘first-principles’ thinking.

Achieve cultural and structural change

Few banks have the right skills to implement a shift to microservices and the benefits this will bring, in the short term. This is relatively new technology and much of the available talent is consumed by sectors outside of finance that are more appealing to the young and able.

In the digital age, there is no shortage of opportunity for those with good microservices credentials and it can be difficult for banks to build teams with the right mix of skills and business knowledge to implement real transformational change.

In an attempt to overcome some of the cultural and skills challenges, many banks have launched digital or direct banks on greenfield sites, either as new brands or subsidiaries. While this has bought time and increased customer convenience, these digital banks often lack the product richness of traditional banks, so they may fall short of customers’ rising expectations.

How to enable continuous delivery

Most banks realise that doing nothing is not a viable option – they face the known threat of traditional competitors and FinTechs but there are also many unknowns, such as the threat of ‘Big Tech’. It is still not clear what Amazon and Google will do in financial services – but they pose a real threat to all banks, particularly those with legacy technology. All banks and financial services providers need to adopt microservices to remain commercially viable and relevant. But how?

Tech giants like Amazon and Google have shown that software development is a process and not just an event. With thousands of releases per day, these companies consistently meet or exceed customer expectations, increasing engagement and transactions while building loyalty.

Continuous delivery using microservices enables smaller, more frequent software changes, delivering customer benefits faster and resulting in a more stable platform than was ever thought possible. How?

Agile principles and continuous delivery have redefined what is possible in computing, and can bring about a cultural shift within an organisation that adopts these principles. DevOps teams are no longer part of an IT department working in isolation but are now part of the business. DevOps teams have the opportunity to operate at the heart of the business, since technology is now central to everything a bank does. In practice, the DevOps team will work with the business to deliver innovation and business value to clearly-defined delivery principles.

An endless cycle of benefits

A microservices architecture has fewer dependences than traditional IT and can support fast, controlled change. A set of delivery tools will support version control, safety and increased automation, particularly of testing and deployment. New releases can be deployed into the live environment with no downtime. This new approach contradicts the traditional view of the inevitable trade-off between frequent changes and platform stability.

As discussed, the real benefits of microservices are to become more agile and customer-centric. This is about much more than meeting customer needs and expectations. It is about using modern technologies – such as artificial intelligence – to analyse data to anticipate customer needs, and offer a bespoke service.

Over time, the migration to microservices and continuous delivery can deliver a seemingly endless cycle of benefits. But the move may not be worth it for all applications, and timing is crucial. No two banks are the same – each has its own brand or ‘special sauce’ that makes it attract and retain customers and remain successful. It is crucial that a technology transformation builds on all that is good about the bank and that changes are made seamlessly without inconveniencing customers.

All banks begin their transformation journey from different locations. GFT has a proven methodology that decomposes microservices and delivers business benefits at every stage of bank transformation. Our evolutionary approach has been developed and honed working with many clients at the heart of the global banking industry.

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