Future of Fintech - A Whitepaper by RapidValue
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This whitepaper discusses the evolving landscape of fintech and emphasizes the need for adaptive enterprise architecture to cope with rapid changes in technology and regulations. It promotes the use of microservices and DevOps to enhance scalability, flexibility, and security in fintech applications, contrasting them with the limitations of monolithic systems. The document underscores the importance of robust security measures and a modern technological infrastructure to ensure the sustainability and success of fintech enterprises in a competitive environment.
Future of Fintech - A Whitepaper by RapidValue
- 1. Future of Fintech The Enterprise Architecture Future of Fintech A Whitepaper by RapidValue Solutions The Enterprise Architecture
- 2. Future of Fintech The Enterprise Architecture index 01 Executive Summary 02 Introduction 03 Best Practices to Build a Robust Fintech Application Microservices Benefits of Microservices 05 DevOps 06 Benefits of DevOps 07 Security 10 Conclusion ©RapidValue Solutions 11 About RapidValue 10 Author 10 References
- 3. Future of Fintech The Enterprise Architecture Looking at the way Fintech has evolved over the past decade, it is appropriate to say that change is the only constant when it comes to the quest for survival in today’s competitive Fintech world. New technologies are introduced in the market often which leads to change in the industry landscape at a faster pace than we could imagine. Fintech brings some of the innate challenges that are compelling companies to adopt innovative approaches, to avoid sudden breakdowns. Few of these challenges are: Considering the challenges, it is essential to develop a strategy which diversifies the risk of never ending changes in the Fintech Industry. A flexible, independent and secure architecture that can adapt seamlessly is of paramount importance. This whitepaper explains some of the important practices such as Microservices, DevOps and stringent security policies which can help make a Fintech system robust. It also, helps us understand the importance of a system especially in the Fintech industry which constantly changes its operating standards, whether it is due to the increase in competition, customer demands or regulations. Systems built on monolithic architecture as opposed to Microservices, break down if one of its components gets affected. Similarly, if a system is not agile it will not stand the test of time and will break eventually. Executive Summary •• Financial industry goes through frequent changes in regulations, tax structures, license policies and capital requirements. •• Fintech industry adopted technology in early stages and therefore, has the most outdated systems. These systems are inflexible and prevent changes in the architecture. •• Investors and stakeholders apply pressure on Fintech companies for a quick ‘go-to market’ strategy. This leads to unstable foundation to the companies that makes it harder for companies to adapt to enhancements. •• There is a constant exchange of large data which is at high risk and needs highly secure systems to protect it. 1 ©RapidValue Solutions 1 Future of Fintech The Enterprise Architecture
- 4. Future of Fintech The Enterprise Architecture Introduction In order to build a system that can stand the test of time, we need to be aware of the most common problems as well as the solutions. Technology change and a demanding market often pose challenging situations for Fintech application developers. Whenever we implement a new solution or modernize an existing legacy system, we should ask the following questions: This whitepaper addresses these concerns. These approaches, if adopted early while building the Fintech architecture, can prevent the system from crashing when a new enhancement is introduced. •• Is the solution scalable enough? Is the system that is being built monolithic? If yes, then reconsider. •• Is the system architecture agile? Will it be able to adapt to the ever changing technology landscape of the Fintech Industry? •• Is the system secure enough to handle malicious hackers? 2 ©RapidValue Solutions Future of Fintech The Enterprise Architecture
- 5. Future of Fintech The Enterprise Architecture The main problem with such an architecture is that it’s easier to build and faster to implement. However, it creates tight dependencies during feature enhancements. Implementing enhanced features in an application which is built on a monolithic platform is time consuming. It degrades the code quality, therefore introducing bugs and often breaks the application. This is what happened in the scenario mentioned above. A solution to this is building each feature as a separate unit as stated, while making it as independent as possible. This can be achieved using Microservices. Unified Team Team members do not have to work on a huge code base. Instead, each member can work on his/her own component services which are easier to develop, manage and test. Thus, increasing the team morale and the productivity. Benefits of Microservices Best Practices to Build a Robust Fintech Application This section explains some of the best practices to consider while building a Fintech application. As already stated, Fintech companies are under a lot of pressure to deliver applications quickly. To achieve this, developers often adopt a monolithic architecture. A monolithic application is built as a single unit, thus creating dependencies. Is the solution scalable enough? Is the system being built monolithic? If yes, then reconsider. Microservices is composed of multiple modules that represent end-to-end functionality of a particular feature. It segregates the application into small fragments and then ties them together. Each fragment remains independent and any change in one does not affect the others. Let’s see why this approach is instrumental in answering our first question with a real-life scenario. Problem Statement An efficient system of a banking giant all of a sudden crashes following a feature enhancement. WHY did this happen? WHAT caused it? And HOW can it be resolved? Microservices Maintenance Small projects are easier to maintain. It’s easier to enhance, test and deploy. 3 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 6. Future of Fintech The Enterprise Architecture Testability Microservices increase the testability of the application. As each service is self- contained, the system can be developed and tested independently. Whenever any change needs to be deployed, only the affected service will have to be modified, tested and deployed. Other services will remain unaffected. To conclude, monolithic architecture is easier and faster than Microservices for the initial application development because it’s a straight forward/basic/simple one. However, in case of new requirements/application enhancements, which is inevitable, Microservices reduce a substantial amount of time and workload as you could redeploy that particular service. Without making alterations to the entire application. thereby, increasing performance. Whereas, in case of monolithic services, the entire application will have to be deployed on multiple machines which results in unnecessary cost. Agility It’s easier to add/modify things in smaller projects without having to worry about the impact it causes on all other modules in the application. As long as the APIs are not changing, the developers can easily implement new features without impacting other interfacing systems. Reusability Various modules can reuse the functionality by invoking the Microservices. Rather than implementing the same functionality in each and every module. Moreover, if the application needs to be integrated with othermodeslikemobile,web,tablet,etc.the services can be reused across the devices. Scalability Microservices enable to scale the components on a need basis. For example, out of ten services, if only one service has high load, then that service alone can be scaled by deploying to multiple servers Availability Instead of deploying one huge application on a single server, Microservices allows deploying smaller components across multiple machines. Thus, increasing the availability. 4 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 7. Future of Fintech The Enterprise Architecture DevOps DevOps essentially, has two parts to it. The first is automation, which can be introduced. For instance, when the developer checks in the line of code while pushing it live in a production environment. The second is collaboration, where we move away from the heavyweight bureaucratic processes, such as filling tickets that go to silo teams to systems where people are working together in a hydrous environment, collaborating and pulling everyone in the same direction. Let’s consider the next problem statement in order to understand this better. Financial industry used to and at many places, still operate in siloes. If you consider development and operations, they typically work in a very different way, use different tools, use different languages, have different reporting lines and budgets etc. Is the system architecture agile? Will it be able to adapt to the ever changing technology landscape of the Fintech industry? Problem Statement Post financial crisis of 2008, the financial companies had to operate in a rather lean structure and cut down the operational costs in terms of manpower, while still maintaining the efficiency and security. Code Code Development Development Breaking the silos by adopting DevOps and moving towards a more collaborative approach. Operations Operations 5 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 8. Future of Fintech The Enterprise Architecture The organizations unknowingly started adopting DevOps practices in order to deal with the manpower crisis. All that they were actually doing was getting remaining people to align and collaborate more effectively. By speaking the same language and using aligned processes and tools to improve the speed, agility and efficiency. This is how they moved towards more collaborative and automated model back in 2008. This also, is the idea behind DevOps. How did they achieve the same amount of productivity with lesser headcount? What approach did they adopt? •• More efficient pipeline - From developer’s desktop to production. •• Cost savings - It lowers cost as the same kind of code is delivered by fewer overheads. •• Faster delivery of value (Innovation) – Reduces cycle time from idea stage to production implementation phase. Benefits of DevOps 6 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 9. Future of Fintech The Enterprise Architecture Before assessing the system, let’s have a look at the probable reasons due to which the data security concerns are growing. Organizations today try to give an integrated omni-channel experience to the users with the help of a number of banking, wealth management and payment services. Thus, increasing the data vulnerability. Increase in the use of mobile phones as authentication devices through the use of biometrics, onetime passwords (OTPs) and code- generating apps (e.g. Google Authenticator) Is the system secure enough to handle malicious hackers? Fintech companies work with a lot of sensitive data and that too in large quantities. Undoubtedly, the more the data the better the insights but if misused, this can crash the system. Fintech security thus, holds a very important place and can never be ignored while building a new system or introducing enhancements. Thus, the most crucial questions that one should ask when it comes to application security is: Security has reduced the reliance on conventional authentication mechanisms such as passwords and PINs. Due to technological innovations, this highly confidential data is in the digital form and rotating in the system. It is possible to misuse the data. To avoid such a situation, we can make use of adaptive authentication or risk-based authentication, which analyses user behavior in making decisions on granting access. Therefore, it is essential to keep in mind the security concerns even before starting the development of a Fintech application. In order to achieve this, the developers have to be made aware of the seriousness pertaining to the security. The information at stake can cause major issues, if not dealt with strict security regulations. There are two types of customer data that has to be dealt with: •• Data that is currently part of the system and interacting with it. •• Data that was once a part of the system as few customers are likely to have de-subscribed in order to overcome any potential threat. 7 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 10. Future of Fintech The Enterprise Architecture The system architecture should be built keeping in mind the nuances of a secure system. Some of the practices that need to be followed are: Identify the service architecture that one is willing to use. Following are few areas that would require attention: Define the data protection controls. Following points are worth considering. Safeguard the security of a Fintech application, post development phase. The following parameters ensure that the application remains secured. Always align with the security compliance regulations. 1. 2. 4. 3. •• Platform operations. •• Server and database hosting. •• Management of access. •• Secure in-house communication. •• Compliance requirements. •• Secure and encrypted data transmission. •• Payment integrations, if your application involves banking transactions, lending, crowdfunding, etc. •• You should know who all have access to the data and should be able to revoke the access when necessary. •• Workstations and mobile devices should be protected via encryption, firewalls, screen locks etc. •• Penetration testing - This involves a tester that will act like a hacker and attempt to gain access to your service/data. •• Outside vendors - We should have control access permission in place for the outside vendors who are a part of our organization. The app should be developed to limit their access to your most sensitive data. •• Scaling issues - As the system grows in size, its integration with various other systems also, increases and that leads to vulnerability. The interfaces of various systems through which they interact should be properly protected to avoid any breach of data. •• Data should always be encrypted, when it is housed, accessed, and transferred. •• For a device that gets stolen/ lost/ discarded, device inventory controls should be made active along with encryption in place. 8 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 11. Future of Fintech The Enterprise Architecture •• Data labelling – As the name suggests, this technique labels the data into classified, confidential etc. This helps the user to know what data they are handling and processing and follow necessary security measures. •• Selective data sharing – This allows us to share the data at a particular platform that can be accessed by a certain group of people and not everyone. Data can either be stored at the enterprise, organization, or site levels etc. •• Identity-aware data sharing – Sometimes, just sharing the data at enterprise level doesn’t solve the purpose. Depending upon the vulnerability of the data some more checks should be initiated. One such example is identity-aware that only allows access to a certain personnel even when they belong to a larger acceptable group. Apart from the architectural changes, there are cyber security concepts that should be considered such as data labelling, selective data sharing and identity-aware data sharing. 9 Future of Fintech The Enterprise Architecture ©RapidValue Solutions
- 12. Future of Fintech The Enterprise Architecture Conclusion The Fintech revolution has left the traditional financial industry with a lot of aspects to contemplate on. How does one stay ahead in the digital age and avoid being history? The answer to it might lie in the fact that organizations need to possess a proper technology infrastructure in this digital disruption era. It is absolutely essential that the Fintech solutions integrate with the existing systems in the financial industry. There is a dire need of structuring a new generation of financial services with agile development strategies. Companies are building an open architecture world after an in-depth understanding of financial services processes. The future of Fintech has a composable infrastructure. Established institutions are re-assessing both the customer experience and their operating model. References Author ANAM FATIMA Fintech Consultant RapidValue https://www.fortinet.com/blog/industry- trends/why-securing-fintech-is-necessary- for-financial-startups-and-industry-leaders. html https://dzone.com/articles/migration-to- microservices-architecture https://habiletechnologies.com/blog/ microservice-architecture-better-alternative- monolithic/ https://www.enterpriseinnovation.net/article/ banks-must-architect-constant-change- 630533299?r=23 If you’d like to know more about Fintech solutions, please reach out to us at contactus@rapidvaluesolutions.com 10 ©RapidValue Solutions 10 Future of Fintech The Enterprise Architecture
- 13. Future of Fintech The Enterprise Architecture Disclaimer: This document contains information that is confidential and proprietary to RapidValue Solutions Inc. No part of it may be used, circulated, quoted, or reproduced for distribution outside RapidValue. If you are not the intended recipient of this report, you are hereby notified that the use, circulation, quoting, or reproducing of this report is strictly prohibited and may be unlawful. RapidValue is a global leader in digital transformation solutions including mobility, omni-channel, IoT, AI, RPA and cloud to enterprises worldwide. RapidValue offers its digital services to the world’s top brands, Fortune 1000 companies and innovative emerging start-ups. With offices in the United States, the United Kingdom, Germany and India and operations spread across Middle-East, Europe and Canada, RapidValue delivers enterprise services and solutions across various industry verticals. www.rapidvaluesolutions.com +1 877.643.1850 www.rapidvaluesolutions.com/blog contactus@rapidvaluesolutions.com ©RapidValue Solutions April, 2018