Compounding the problem, core banking systems are often designed in such a way that they can only run when the core ledger is closed. There are a number of reasons this makes sense, such as to avoid resource contention between batch processing and online traffic, as well to ensure transformations are run on a stable (static) data set. Given that our traditional model of banking was only open for business 9am - 5pm, shutting the core made perfect sense for early generation systems. As consumer demand changes, and 24/7 banking became the norm, third generation systems generally adapted by shortening the time the core was shut for, and by giving the ability for the system to run in ‘stand-in’ mode so that payments are buffered as the bank transitions over the end of day process. This comes with its own complications as we add considerable complexity into the system, we find ourselves building a bank within a bank to handle stand-in and having to jump through hoops to fold in the stand-in ledger at the start of the next banking day. The net result is running the same batch based operations throughout the banking day is often not feasible.

To summarize our exploration into the challenges the banks face with their incumbent core’s, we draw focus to one common limitation - given that they are all inherently monolith in nature, they can only be scaled by one dimension - vertically. This fundamentally inhibits the banks’ agility, both in terms of adapting to change, and their ability to reduce cost.

Fortunately for the banks, there is hope. We are dealing with a common problem that exists in many domains both within and outside of financial services, a problem that begins to be addressed with a microservice based architecture. In such an architecture each part of the system can dynamically scale in and out, enabling the application to elastically adapt to whatever processing needs you can throw at it whilst keeping non affected parts of the system scaled down, ensuring the overall footprint (and as a result cost) of the system remains low. As a result a microservices based architecture paves the way for a scalable, and real time focused core banking system.