Why Kubernetes is the ‘Secret Sauce’ for Bank Digitization
Google “banking” and “disruption,” and nearly 200 hits sprawl across more than 20 pages of search results.
The high interest in banking disruption isn’t surprising. Though disruption is a favorite business buzzword that can easily lend itself to hyperbole, it truly is accurate for the banking and financial services industry.
Digitization has swept the world in recent years, and the banking industry has been feeling the impact in huge ways: Changing customer expectations, the emergence of new digital competitors that have given consumers more choices and an unprecedented need to be nimble and agile.
Altered Banking Landscape
For many retail banks, digital channels that allow customers to do all their banking on a mobile device—obtain statements, open accounts, make payments, manage loans and more—have become more critical than the number of branches and ATMs.
Meanwhile, echoing what has happened in every other sector of the global economy, competition from new digital-native players has dramatically altered the landscape.
“Just as they turned to streaming services and online retailers, consumers are turning to super apps, FinTechs and big tech platforms for essential financial services, such as deposits and payments,” says a recent Ernst & Young (EY) report.
How stiff has the competition become? According to the report, 27% of global consumers now have relationships with neobanks—online-only financial institutions, often startups, that offer traditional and nontraditional banking services via apps. And, in a notable generational trend, 37% of consumers who have chosen neobanks for their primary financial relationships are between the ages of 18 and 34.
All of this points to an inescapable reality: Banks must accelerate their embrace of the cloud and other innovative backend technologies so they can keep moving the needle on the great digital experiences needed to attract and retain customers.
Fortunately, banks have help. Containerization and Kubernetes have become de facto infrastructure technologies for banks (and companies in every other industry) to build, deploy and scale up new applications and capabilities quickly.
Containers offer a logical packaging tool in which applications can be decoupled from the surroundings in which they run and deployed easily and consistently regardless of whether the target environment is a private or a public cloud. This helps banks meet their urgent need to deliver new services to customers quickly and at scale.
Kubernetes, pronounced “Koo-ber-net-eez” and often abbreviated to K8s, is an orchestration tool that automates the deployment, scaling, and management of containerized workloads. Originally developed inside Google and released as an open-source project in 2014, Kubernetes is now hosted by the Cloud Native Computing Foundation (CNCF) and supported by a massive ecosystem of supporting tools.
Banking on Kubernetes
To take a deeper dive into how K8s and containers benefit banks, here are five things the technologies do very well.
1. They help save money. Containerization and K8s allow banks to decrease their IT spending because they can be packed more densely on server instances, reducing the resources needed to run the same application, whether in a data center or the cloud. Across an enterprise, the cost savings can be significant.
By helping banks develop, run and manage cloud applications in multiple environments, containerization and K8s also save resources by delivering agility and reliability and through rapid deployment and updating of applications.
A great example, as told on the Kubernetes site, is Capital One. They needed a provisioning platform for their applications deployed on Amazon Web Services (AWS) that use streaming, big-data decisioning and machine learning. One of the applications handles millions of transactions a day, while others deal with critical functions like fraud detection and credit decisions.
“Kubernetes is a significant productivity multiplier,” the project’s lead engineer says. Running the platform without Kubernetes, he adds, would “easily see our costs triple, quadruple what they are now for the amount of pure AWS expense.” Time-to-market also improved.
2. They enhance developer productivity. Kubernetes speeds up the development, testing and deployment of applications. Also, developers need not worry that an application that worked properly on the local machine won’t work in another environment. The container will run the same way in any environment and can start and terminate quickly, allowing applications to scale to any size. All of this reduces friction in building enterprise applications.
3. They ease management of software complexity. As enterprise applications become more complex, development and operations (DevOps) teams need a tool that can remove that complexity.
K8s offers impressive flexibility in building a bank’s cloud environment, whether public, private or hybrid, by effortlessly running tasks anywhere. It enables teams to easily move existing workloads and create new ones.
4. They foster resilience. “Fail fast” is an Agile software development principle that encourages speed and experimentation while also quickly detecting bugs or other issues and allowing developers and DevOps teams to learn from each problem to succeed faster in the future.
Containerization contributes to this ethos by limiting the scope of application code developers need to understand. To fix a bug, a developer usually only needs to understand how one container works, not the whole application. Thus, it’s usually far easier to narrow down the potential issues and find the root cause.
5. They enable personalization for customers. Consumers today want a high level of personalization in their banking services. This is something the neobanks do well and, therefore, all banks must make personalization a key objective of their digital transformation efforts.
Containerization and Kubernetes are essential here because they are perfect for the microservices environment. This, in turn, is ideal for the rapid and frequent delivery of applications and functionality within large, complex applications. That capability is so vital in today’s competitive landscape.
As these five points show, containerization and K8s should be considered indispensable in helping banks meet their digital transformation imperatives. Banks may face daunting challenges in today’s market, but these technologies are built to help them win.