Evolution of software architecture: From monolithic to microservices and transitioning back

By Ritu Thareja, Vice President – Software Development, Global Services, Fiserv

In the dynamic world of fintech software, continuous experimentation, modernisation, integration of user feedback, and generation of new features are indispensable for achieving success. The recent landscape of financial services has undergone a substantial makeover, propelled by the imperatives of scalability, agility, and rapid development cycles. Among the notable shifts, the transition from monolithic architectures to microservices stands out.

Distinguishing Monolithic Architectures and Microservices

Traditionally, the banking software landscape was dominated by monolithic architectures. This approach involved constructing applications as tightly integrated single units encompassing all functionalities and components. However, the emergence of microservices has revolutionised software development. Microservices involve breaking down applications into loosely coupled services. Unlike the monolithic approach that integrates everything into a single application, microservices utilise a modular approach that offers several benefits crucial for financial service providers:

• Scalability and Performance: Microservices allow independent scalability, empowering financial organisations to manage a substantial volume of users and transactions. This approach both enhances performance and optimises costs.

• Agility and Faster Time to Market: Microservices enable autonomous teams to work concurrently on different services, resulting in speedier development cycles, rapid feature releases, and shortened timeto market.

• Fault Isolation and Resilience: The loosely coupled nature of microservices ensures that a failure in one service does not disrupt the entire system. This fault isolation significantly bolsters overall system resilience.

• Technology Diversity: Microservices provide the flexibility to employ diverse technologies for different services, harnessing the strengths of various frameworks, programming languages, and tools.

Microservices in the Limelight: Triumph of Adoption

Numerous financial organisations have initiated the migration of their monolithic systems, applications, and architectures to microservices, with others actively formulating transition strategies. Nonetheless, microservices come with their own set of challenges:

• Integration Testing Complexity: A single financial business request often triggers multiple microservices, complicating the testing of complete workflows and necessitating close coordination among teams.

• Increased Complexity and Operational Overhead: Microservices introduce heightened complexity, demanding additional infrastructure, deployment mechanisms, and monitoring procedures.

• Challenges of Distributed Systems: Microservices architecture relies extensively on network communication, introducing potential latency, network failures, and complexities associated with distributed systems.

• Resource Constraints and Skill Gaps: The adoption of microservices requires substantial investment in infrastructure, tooling, and training.

Having said that, monolithic architecture still has some advantages. It simplifies operational complexity by keeping all components within a single application, streamlines deployment processes, boosts performance with lower latency, and brings down infrastructure costs.

Coexistence and Hybrid Approaches

In the world of software architecture, both monolithic and microservices approaches have their own strengths and weaknesses, which depend on the specific situation and needs of an application. Some companies have faced difficulties with microservices and returned to monolithic systems, while others have adopted a middle ground by using a hybrid approach that combines the benefits of both methods. Ultimately, the choice of architecture comes down to thoroughly understanding the requirements of the project, the skills of the team, and the trade-offs and goals involved.

In the fast-paced financial industry, being quick to launch and ensuring that applications are available when needed are extremely important. Microservices architecture has proven its worth in many situations.

Organisations need to be aware of how software architecture is evolving and make well-informed decisions that fit the unique circumstances of each project. Whether they choose microservices, monolithic architecture, or a combination of both, the key factors are adaptability, innovation, and a deep understanding of the organisation’s needs.