By Hemish Kapadia
Banking has now recognised digital as a significant transformation priority with institutions seeking to satisfy a new generation of customer needs more demanding and adapted from penetrating fintech entities in the market. The core of this kind of transformation is to meet the necessity of remodelling the old, monolithic applications into new, more sociable and extendable structures. Switching to microfrontend frameworks can be said to be a promising answer, as it opens operation efficiency and better customer experience.
The Case for Microfrontends
Mainframe applications, while they were the building blocks of banking systems of the past, are now more of a problem. These tightly coupled architectures usually incorporate all features and functionalities into a single code base which makes development slow, updating a system a very tedious process, and scaling also very challenging. For instance, a modification of the customer interface of the mobile banking app may result in a wholesale re-installation of the entire system, meaning more time is spent on it and the operational risk is much higher.
Microfrontends are not just applicable to enhancing the frontend, but they epitomize an architectural approach that breaks down an application into sharply different, independently deployable components. Unlike in the monolith, where a single app rules a specific area of the business process like a formidable client onboarding or payment, each microfrontend is an application that manages discrete servicing tasks. This makes innovation occur at a faster pace since teams will be focusing on unique segments of the feature rather than the whole stratified feature.
Leveraging Module Federation
Web pack 5 Module Federation is one of the biggest advancements that make the transition to microfrontends possible. This attractive feature makes it possible to share code and dependencies between several applications at runtime. Suppose in the banking application, there are a few old modules like the account services module, investment services module, and loan services module. The smooth functioning of these modules makes it possible to decouple them into separate applications that inter-operate on a single platform through Module Federation.
For example, one of the largest global financial institutions used Module Federation to upgrade its customer portal. Earlier, even the change in the loan application process involved several teams and a long time for implementation. Credit, as a microfrontend, allowed for the independence of the loan module as its own thing. Teams could refine modules—fixing the looks and adding features—without waiting on changes in unrelated modules. This led to quicker delivery cycles of the platform, which translates into better satisfaction amongst customers.
Key Benefits
– Scalability and Agility: Microfrontends allow banks to grow individual services at a fast pace. For instance, the system can provide additional services during tax season to allow for handling of the many loan requests without compromising the other services.
– Improved Customer Experience: Banks should work on modularity and therefore offer smooth user experiences with complex, easy-to-use current interfaces. As evidenced by a Deloitte survey, 80 percent of banking customers now expect personalised digital interfaces, a reality that micro frontends can satisfactorily meet.
– Faster Time to Market: Modular architectures also shorten the time it takes to develop tests as well as implement various features into software. Banks can release multiple versions for their software paths more often and make sure they predominate in the industry.
Trends and Market Insights
This push to modular architectures corresponds to trends of the industry. According to the report conducted by Gartner 70 percent of enterprises will incorporate modular applications to transform their legacy systems by 2027. In the case of the banking industry, it is accelerated by the realization of open banking as well as the regulations such as PSD2 in Europe which demand integration with other services.
In particular, micro frontends are gradually actively implemented alongside cloud-native platforms. IBM conducted a study that revealed 60% of financial organizations will transition the core applications to the cloud by 2025, and this move aligns well with using a micro frontend architecture.
Addressing Challenges
Although the advantages of micro frontends are apparent, the process is not without its hurdles. One of the areas of concern is how the Partitioned State is partitioned across several independent modules. For instance, to maintain a common user session while migrating from the account services to the investment management modules, effective state management approaches need to be adopted.
The two major issues include: Security is the other factor of consideration. Unfortunately, distributed architectures are much more susceptible to cyberattacks compared to centralized ones, thus, they need additional security layers, API gateways, token-based authentication, and end-to-end encryption.
Fortunately, solutions like Module Federation have intrinsic mechanisms to solve all these problems. By allowing integration and encapsulation at run time, it allows the microfrontends to share a common look and feel while keeping data safe.
Conclusion
Banks can no longer afford to maintain antiquated and outdated systems because the current business environment demands the opposite for organisations to succeed. This approach provides a way to get out of the monolithic architecture hell to Scalability, Agility, and Improved Customer Satisfaction. The module tools like Module Federation should therefore be embraced by leaders in the banking industry so as to enable them to fulfill the needs of today and tomorrow as they transform their organizations.
The time to act is now. Therefore, they are more important than ever, so embrace the modular future and work towards making your organization future proof in the digital economy.
The author is Senior Digital Transformation Architect.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.
