May 31, 2023

Microservices: The Future of Financial Systems Architecture

In the continually evolving landscape of technology, microservices have emerged as a potential game-changer in the world of finance. Their promise: a shift away from cumbersome legacy systems, increased flexibility, and an accelerated time-to-market. Yet, as with all promising advancements, it's not all plain sailing. This article delves into the practicalities and challenges of adopting microservices based on the insights from the recent Technology & Innovation Forum virtual workshop and a series of vendor interviews conducted by the Finativ team.

Understanding Microservices

Microservices, or microservice architecture, is a style of structuring software applications as a collection of loosely coupled services. These services, 'micro' in scale, are designed to execute a specific business function and can do so independently. They're supportive of a cloud-native and API-led strategy, offering potential benefits such as increased flexibility, resilience, and a reduced dependency on single vendors.

Business and Systems Design with Microservices

At the forum, the consensus pointed towards starting small with a proof of concept (POC), covering a limited functional scope, cost, and risk. Microservices, according to members, should be well-defined, small, and with a specific purpose. This makes them easier to implement and faster to demonstrate success and business benefits.

However, there is a clear need for a coherent vision that doesn't overly rely on legacy vendors. Businesses must be cognisant of potential architectural impacts and future requirements, facilitating greater involvement of business users in technology discussions and decisions.

Managing Microservices: A Balancing Act

While the role of an individual ERP system provider may be diminished in the world of microservices, the role of systems integrators is growing. This growth introduces new tensions within IT teams. The desire to break up monolithic architectures into microservices is challenged by the recognition that a microservices environment is harder to manage, requiring continuous curation, development, and testing.

Vendors urge the adoption of technical best practices, from DevOps to testing, coupled with an ethos of continuous improvement. Meanwhile, lenders recommend a clear taxonomy and consensus around business objectives for technology deployment.

Navigating Organisational Change

The adoption of microservices is not a mere technological shift but a significant organisational change. This change necessitates a strategic approach that includes strong executive sponsorship, organisational flexibility, and an environment that encourages experimentation.

Vendors encourage the adoption of a service-led design approach, while lenders underscore the importance of aligning tech and non-tech colleagues. A shared understanding between business and IT is critical to the successful implementation and utilisation of microservices.

The Future of Microservices

Though microservices offer a new direction for software architecture, they are not a one-size-fits-all solution. The path to microservice adoption is riddled with both opportunities and challenges.

However, as one forum participant wisely observed, "In 5-10 years' time, the requirement will look different – start now because by then, a strategy of being service-oriented and defining the customer experience will be very valuable."

The rapidly changing landscape of microservice tools is a testament to ongoing innovation. The call to action is clear: stay informed, be prepared for change, and don't be afraid to make mistakes.

Become a Part of the Exclusive Community Driving Digital Transformation

If you are driven to connect with industry leaders, share best practices, and actively participate in driving digital transformation in the motor and asset finance industry, we invite you to join us. Our community is uniquely focused on technology in our sector, offering unparalleled opportunities to engage in thought-provoking discussions and innovative thinking.

The next Technology and Innovation Forum is scheduled for Wednesday 21st June and will explore best practices for driving digital transformation. Join your peers at this event to delve deeper into the future of financial technology. To sign up and participate in this peer-to-peer group, visit Finativ Technology and Innovation Forum.

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