Core Banking: The big boom in microservices! 👨‍💻

Whether you look at the American tech giants or just at the most promising European fintech companies, there's a common denominator. All of these companies have adopted the systematic use of microservices.

Traditionally, microservices were not widely used in the financial sector, but this manner of developing software provides a considerable competitive advantage to new enthusiasts. How and why are microservices revolutionizing technology to such an extent? In particular, why—as it has been for several years now—is this happening in the world of finance?

Let's find out together in this article!

What is a microservice? 💡

Before we examine the benefits of microservices in detail, let's start by clearly defining what we're talking about here.

By definition, a microservice is an autonomous and independent piece of code. Once microservices are incorporated into a network and connected to other microservices, then you will have created a totally modular and scalable application or software.

Thus, while earlier generations of Core Banking Systems (CBS) were true monoliths, consisting of a single block of code, next-generation CBSs are networks of independent units composed of tens, hundreds, or even thousands of microservices.

Why are microservices so successful? 🚀

Many of the characteristics of microservices demonstrate the success they enjoy. Here are some concrete examples.

More manageable

The primary advantage of microservices is that they are unquestionably very easy to manage. These small units of code are much easier to handle than a single large block of code.

Instead of having to work with an entire string of CBS code, the modular approach allows a team of developers to focus on the microservice for which they are responsible. They examine it from every angle and know every last detail about it, inside out. Therefore, they are thoroughly familiar with exactly how it works.

Moreover, since the development team independently manages its own microservices, it does not need to cooperate or synchronize with other teams to launch a new version. This way, the team can react quickly, incrementally, and autonomously, testing its own versions and carrying out updates as they develop solutions.

More scalable

From a business perspective, microservices allow you to start with a Minimum Viable Product (MVP) and then progressively add new features and services—managed internally or by a network of partners—to improve the marketability of the solution.

This flexibility is found not only on the customer side but also on the bank side since, thanks to microservices, it is much simpler to set up and develop internal company procedures and reporting tools to meet compliance requirements.

Rather than just tacking on new features, with microservices, it is simple and easy to add and remove scenarios by working on a single microservice without affecting the whole solution.

For these various reasons, a CBS built with microservices is, therefore, extremely scalable and adaptable to current challenges facing the banking sector, and especially to Open Banking due to its "plug and play" logic.

Finally, microservices as a whole are less expensive. Indeed, the modular approach is a game-changer: the old way of doing things did not allow you to break up the various components—security constraints, storage capacities, server power, or even business continuity plans—in order to work on them independently as you can with microservices. Microservices are efficient and lightweight. You only need what you need, no more, no less!

More robust

Finally, above all, microservices are much more resilient than the old way of doing things.

For example, whereas the failure of a single bulb in a series string affects the entire lighting system, in a parallel string, only that one bulb is affected. It’s the same when a microservice fails; the failure remains local and does not affect the entire system. This way, not only is the damage reduced, but it's also easier and faster to repair a malfunction!

In addition, microservices allow you to deploy updates and maintenance operations without "downtime," thanks to the "Blue/Green Zero-downtime Deployment feature.”

The new microservice is deployed in an inactive, identical, and tested environment. Once complete, this new environment is activated, and traffic is then redirected from the current environment to the new environment. In the event of an issue, the redirection is interrupted, transparent to the end-user, who won't notice anything.

The explosion of microservices, truly symbolic 🔥

The modular architecture provided by microservices is undoubtedly one of the most significant differences between a legacy CBS and a next-gen CBS.

Thanks to this revolutionary manner of developing software, the financial services industry can now react quickly in customizing its services, an unthinkable feat back in the day of using a legacy CBS.

The Orchestration Challenge

While microservices deliver immeasurable benefits to players in the banking industry, microservices also present a significant technical challenge, especially getting each microservice perfectly synchronized with the other microservices and then perfectly orchestrating the entire network to work like a well-oiled machine.

Fortunately, several best practices can help you meet this challenge.

The first is to limit the number of connections between microservices so as not to fall back into the trap of an overly rigid and interconnected architecture. It’s best to limit the number of interconnections for each microservice to a handful.

The second-best practice consists of grouping microservices by category according to their function and objective, with, for example, a central category handling money movements and customer balances and sub-categories designated to handle such-and-such applications.


Finally, for traceability issues, it is important to be able to easily display the architecture of your solution at any time, for example, by using an orchestration platform. This way—regardless of the complexity of your organization, when working on a particular microservice—you will be able to clearly identify the consequences of your actions and the features that may be affected.

Are you ready to adopt a next-generation CBS to make the most of microservices? Find out more about our solution!

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