The rise of FinTech has already had huge implications for the financial services industry. From digital currency to digital deposits, financial services organizations are having to divert from their old school ways of closed, monolithic legacy applications.
For example, Zelle recently launched as a response to the rapid money transfer service from Venmo. Leading banks including Bank of America, Wells Fargo and JPMorgan Chase teamed up to work on a new digital payments solution for rapid money transfer – one that would outperform their existing applications built on legacy technologies. Zelle also recently announced a number of new technology partners, including IBM, to help accelerate the adoption of Zelle with their financial institution clients, and to help bring them into the modern era of FinTech.
Of the established financial services players that have been dependent on legacy technology and monolithic systems that require significant overhead and lead time to deliver value, many are struggling to satisfy the needs of their customers. In order to remain competitive, this often means a complete transformation toward secure, modern, lightweight applications, which can be a major pain point for financial organizations with these legacy technologies in place. To resolve this, banks and financial institutions are quickly taking advantage of the benefits realized by undergoing a digital transformation.
More and more financial services organizations are starting to embrace modern infrastructures with lightweight, mainly open-source technologies, and methodologies like DevOps and microservices, to keep up with competition from the new, agile FinTech companies.
To bridge the gap between legacy applications and lightweight, modern infrastructure, financial institutions, including some of the top banks in the world, are turning to application modernization toolsets to lead their digital transformations. As digital transformation strategies coalesce into reality, there are five main areas financial IT teams need to focus on:
Modern application architectures take advantage of innovative web technologies to speed application development and delivery by giving developers and engineers end‑to‑end control. For financial services organizations, traditional approaches to content delivery can’t keep pace with ever‑increasing demands for application acceleration. To address this, these organizations can use application modernization techniques to ensure a smoother transition to mobile interfaces, faster deployment, more developer agility, and better control over computing resources.
This is also important for organizations looking for a toolset to bridge the gap between several legacy monolithic applications and modern containerized environments. For instance, at NGINX, we’ve recently seen one of the top banks in the US use modern application technologies, including reverse proxy, authentication, requesting routing, and API gateway services to extend a monolithic application with new mobile apps for better cross‐device customer experiences.
Critical applications require a platform that meets specific demands. These requirements can be best met cost-effectively through a combination of public cloud for on-demand scalability, private cloud for enhanced data and security protections, and dedicated servers for best-in-class performance and reliability. To meet these requirements, the most innovative enterprises have begun their transition to the hybrid cloud.
However, for financial services organizations looking to move to a hybrid cloud, new challenges arise – from managing disparate infrastructure configurations to keeping data stores synchronized across on-premise and cloud-based servers. Organizations are building hybrid clouds with technology stacks that are not shackled with technology interoperability or vendor lock-in constraints.
Moving to microservices
For years, financial services organizations have relied on homegrown, monolithic applications, which are easier to build in-house. However, this simple approach has huge limitations in that successful applications always grow over time. After a few years, a small, simple application will have grown into a large, complex monolith, leaving development teams in a world of pain. Any attempts at agile development and delivery will flounder as the application is overwhelmingly complex and simply too large for any single developer to fully understand.
Many financial services organizations are solving this problem by adopting a microservices architecture pattern. Instead of building a single monstrous, monolithic application, the idea is to split your application into sets of smaller, interconnected services. Componentizing software functions like this into microservices makes it easier to scale up a project, and easier to maintain. With individual codebases for separate systems, it becomes easier for developers to reason about the effects of changing code. With individual deployments and infrastructure for different services, it becomes easier for DevOps teams to add more computing resources only where they’re needed.
Replacing expensive hardware-based solutions
It can be prohibitively expensive to scale up proprietary hardware‑based solutions, and dividing application development and deployment between two different teams creates needless delays in the rollout of an improved web app.
Even if enterprises are not moving their infrastructure to the cloud, they’re increasingly adopting more flexible and agile development and deployment methods, and are finding that these provide the features and performance they need for highly available application delivery, while drastically reducing CapEx, OpEx, and even data‑center footprint.
Software‐based solutions also enable financial services to reduce their dependence on data centers and build out a public/private hybrid cloud with the most effective and scalable infrastructure designed for modern applications.
Upgrading from Apache
The Apache HTTP server has been a solid platform for almost any web technology developed over the last 20 years, but time – and the decline in market share for the top million busiest sites over the last five years – is showing that the architectural decisions made when the code was first laid down are becoming limiting factors in its suitability for modern web demands.
Financial services organizations who built their applications on Apache are beginning to see it hit scaling and performance issues. They need a supported web server that is future‐proof for a microservices environment.
For instance, we’ve recently seen a multi-billion-dollar, multinational financial services corporation migrate a large server farm running Apache and HAProxy. The huge server farm had hit significant performance and scale issues & needed to transition to a more lightweight, high‐performance solution. Using advanced proxy and load‐balancing features enabled the enterprise to create a global infrastructure layer for internal applications.
We’re at a crucial point for financial services organizations that need to bring their applications into the 21st century to keep up with new competitors. It’s more important than ever for these organizations to embrace the move to modern, agile technologies like cloud, microservices, and software-based solutions. In doing so, they can take advantage of the massive customer bases they have built, along with their trusted experience, without the worry of losing out to newer, more hotly tipped offerings.