This report examines two things: the concept of Microservices, which is drawing attention as an innovative method of software engineering; and the essence of the architecture revolution by Modularization of the system and business behind the Microservices. This report is the second part of the Digital Transformation series that report the possibilities of legacy & ecosystem migration, and of innovation and emerging technology in the Japanese banking industry.
“Microservices” is a method of designing and developing software as a combination of services, each of which can be placed independently. This development methodology is highly compatible with today's financial environment, where web services are widespread and Fintech collaboration is crucial. On the other hand, the highly integrated “Monolithic” Japanese core banking system, whether a megabank’s self-managed, independently operating system or a regional bank’s shared system, is the opposite of this innovative architecture, in terms of its concept, development, operation, and maintenance.
The architecture revolution based on modularization of the system and business was discussed in Part 1 of this series (Digital Transformation: In Search of a New Banking Model). In this paper, we discuss the utility of network community, sharing some ideas of how it can be effectively implemented. The business models of UNIX and Linux, and the trend from Free Software to Open Sources, which form the base of Microservices, will offer numerous suggestions to the modern banking industry, which needs to tie up with the digital community and to build new customer relationships with them.
Microservices will offer great benefits not only to software engineering but also to your business. In today’s digital society, where highly networked community activities continue to develop, drastic paradigm shifts are progressing. Any past successful experiences no longer work at all. Today's banks are pressed to undertake architectural innovation in these three ways: redefining information value; building a mechanism for commercializing information; and creating a community centering on information and alliance strategy.
In this fast-moving digital era, learning from our predecessors’ experiences can be truly invaluable. We seek to discover the origins of Microservices in the Open Sources that bloomed in the Digital Renaissance of twenty years ago because we are convinced that today's digital transformation will not end up being a mere buzzword in our history. Both Microservices and Open Sources were natural developments in an era of hackers, and the age of the development of the software engineering industry.
What are the key focal points of the Microservices debate?
- A highly integrated, monolithic Japanese banking accounts system is the opposite of this innovative Microservices architecture in its development, operation and maintenance practice.
- It is important for Japanese banks, which need to quickly commit themselves to legacy modernization and digitalization, to respond to modularization and openness, and to change from a system platform to a customer experience platform. To that end, a revolution in software engineering is crucial.
The power of Open Sources:
Business Innovation: Open Source licensing could allow the use and redistribution of open-source software without compensation or even credit. For example, you could combine one program together with another possibly proprietary program without the need to notify the original copyright owner. In this way, giving away source code is a very good way to build platforms quickly and cheaply.
Technology innovation: In open source, sharing of source code contributes to the creativity of the entire community. People developing relevant programs can share each other's achievements through sharing of source code. It is also possible to bring various resources together to create much bigger projects.
How should banks maximize the advantages that Microservices bring?
- Microservices and Open sources are not effective only for software engineering. They will be quite helpful when the digital society, where highly networked community activities develop, tackles these three significant issues: redefining information value; building a mechanism for commercializing information; and creating a community centering on information and alliance strategy.
With Microservices and Open Sources now in hand, financial institutions need a paradigm shift in order to become digital financial services companies. The architecture they use should be a modular model. Microservices and Open Sources are the means for modularization, not the ends.
Microservices: Software Engineering Revolution above the Cloud