It may not seem to be an easy connection to make, but as financial institutions (FIs) continue their quest for innovation, they may learn something from a toy: Legos. Because fashioning new payments initiatives must mean paying attention to the small details and approaching it brick by brick. It’s an analogy that Mark Ranta, payments practice lead at Alacriti, takes seriously. In a recent interview with PYMNTS, he said that microservices, which are the bricks, can help FIs pivot toward new offerings for consumers and corporates alike.
At a high level, he said, “microservices are the building blocks from which products and solutions are built.” A set of microservices, strung together, can create an end-to-end functionality, where solutions are ready to be marketed and used by end customers. Picture the microservices as a discrete set of instructions, noted Ranta, that can be brought together in a flexible, even interlocked way.
That flexibility, he contended, stands in stark contrast to traditional product or service buildouts, which had historically come as monolithic applications. Traditional 9-to-5 batch processing, marked by paper flows, is shifting toward 24/7/365 always-on payments functionalities.
“This goes hand in hand with what we’ve seen as a trend in terms of cloud computing and having a different operational mindset at the financial institution,” said Ranta, adding that the central infrastructure needs to be always on and always available.
As open banking has taken root, and application programming interfaces (APIs) have allowed for tighter backend integrations, software sets are able to more easily communicate. One microservice in an application can talk to another, said Ranta, without having to run yet another application in its entirety.
Moving Beyond The Monolithic Applications
“Where we are on the technology arc is the breaking down of the monolithic application into consumable forms, which are the microservices,” Ranta explained. APIs let the external development professionals interact with services to stream them together and offer new permutations across multiple software products. To continue the Lego analogy, it’s a bit like taking the bricks used to build a sports car engine, combining them with a motorcycle and then stringing them together into a new engine.
“You could string those two [sets of engine pieces] to create a red pickup truck or a blue-with-red flame car,” he said. “When you think about it in those terms, we’re talking about restacking and repositioning those workflows, which is opening up a whole level of opportunity to rethink products and services.”
In a real-world application, a traditional ACH product could conceivably sit “next” to a wire product, noted Ranta. Microservices could bring those disparate offerings together, marry them in the cloud and allow information from one application to help streamline the other — without changing everything in the background.
According to Ranta, development teams now have the ability to work on those individual services without impacting other services. That’s critical in an ecosystem where payments tech and networks date back to the 1970s. Thousands of software updates have taken shape over the years, and banks are hesitant to embrace a rip-and-replace mentality.
“Of microservices, it’s laser focusing, fixing one item or updating one item in the overall workflow while still allowing the workflows to continue around it, as opposed to having to take the whole system offline, run the update and then put it back online,” said Ranta.
From a financial services standpoint, interoperability is improved and invisible payments — marked by payments functionality embedded in consumer-facing software — become reality.
“The key is to allow different parts of the bank to start working more easily, and better, with one another, to start leveraging microservices and similar items that run across different products or business lines,” he said.