Containers and Microservices Significantly Accelerate Banking IT

By: Michael Fettweiss, Sales Manager in Financial Services at Red Hat & Andreas Neeb, Enterprise Solution Architect at Red Hat

Due to the increasingly competitive nature of the market, it is clear that financial institutions need to bring new products and services to market in a faster, more efficient manner quickly. An increasing number of near and non-banks are already offering services related to payment transactions, the credit industry, and investment consulting and this trend will continue.

Intensified competition will likely force banks to secure customers quickly with new offers and services. However, innovations in the banking sector are often encumbered by the use of traditional IT models, which use the waterfall process for development. More and more banks are starting to make changes, though. Agile development methods are now more frequently used. Methods and technologies such as containers and microservices have taken on a special significance.

In terms of agility, monolithic applications quickly reach their limits due to their very nature. Even if developers only change a small part of the application, the entire application usually has to be re-tested at great expense. Container technologies and microservices architectures allow these development processes to be made much more flexible.

Linux containers and microservices accelerate IT processes

Linux container technology offers a convenient and effective means of quickly developing and deploying applications. Firstly, Linux containers make it easy to package software, which allows developers to bundle applications together with their runtime dependencies and execute them on compatible container hosts. These containers are quickly ready for operation and are more portable than traditional applications, since they contain the entire application environment. They can also facilitate the isolated and efficient provisioning of multiple applications on a single host operating system. In both cases, system resources are allocated to the containers. The Linux kernel is shared across all of the instances running on a system, meaning that little management is required.

Advantages such as high agility and ease of management make container technologies suitable for a wide range of applications. PaaS solutions in which many processes run in parallel and isolation from each other in one system, have been implemented with containers from the start. Containers are particularly well suited for applications that consist of components and run on microservices architecture.

Unlike monolithic architectures, microservices are made up of loosely coupled, independent services with a self-contained, technical functionality. Thanks to interface versioning, it is largely possible to rule out that changes made to one service affect the functionality or characteristics of another service. It is also possible to perform updates with extensions or enhancements in a more frequent and targeted manner, without having to update the entire application. We already know from service-oriented architecture (SOA) that it is more efficient to exchange smaller services with defined interfaces. Scalability is also far superior compared to that of monolithic architectures, as services can be independently scaled to meet requirements.

Currently, browser-based applications in particular are frequently designed as microservices, such as for e-commerce applications or for online and mobile banking applications in the banking sector. The following should be noted in this regard: The assumption that containers and microservices are only suitable for designing new applications is largely incorrect.

Existing applications can also be transferred, and many more of these are suitable for transfer than one might assume: experience from Red Hat’s banking projects show that up to 80 percent of applications lend themselves to this. The migration process is very simple for Java applications, for instance.

Bimodal is trending

These changes mean that there will be two IT speeds emerging for banking IT as a whole. The traditional banking IT infrastructure with the core banking system will remain at the forefront. It is designed with security and stability in mind, which are prioritized over allowing new functions and services to be quickly implemented. Because of this, traditional IT needs to be supplemented by an infrastructure that supports quick and flexible application development and deployment.

This assessment is shared by many market researchers, including Gartner (which champions ‘bimodal IT’). They believe that the vast majority of businesses will soon use IT architectures based on a combination of traditional and agile process models. This includes the traditional and secure operational IT basis and a non-linear, agile IT design. Traditional scale-up applications with strategically important data run on the operational IT infrastructure, whereas agile IT application models use scale-out application models, which make it possible to respond quickly to new business requirements or framework conditions.

An IT model that combines tradition with innovation allows users to deploy the most appropriate IT environment and platform for different workloads and business requirements, such as bare metal servers, classic scale-up virtualization environments, or IaaS (Infrastructure as-a-Service) and PaaS environments in private, hybrid, or public clouds.

In light of the current shift towards digitalization and the dynamic changes in market and customer requirements, aspects such as agility, flexibility, and speed are critical in IT. From a technological viewpoint, container and microservices architectures will be unavoidable in the future. Banks will have to contend with this development if they strive to remain competitive.