Serverless is the latest evolution to infrastructure management. And so far, it’s been making it easier, faster, and cheaper for companies to develop software. According to ‘Serverless Architecture Market’ by Verified Market Research, the global market is expected to rise from $7.29 billion in 2020 to over $36.84 billion by 2028, growing at a CAGR of 21.71%. Fintech is only one of several fields that have begun to fully utilise its benefits.
But what role does serverless architecture play in the fintech industry, especially in developing fintech applications? Keep reading this article to learn all you need to know about serverless architecture… at least for now, anyway.
Defining Serverless Architecture
Serverless architecture refers to the process of creating, publishing, and maintaining applications without the need to handle the underlying infrastructure beneath them. ‘What is Serverless Architecture?’ by MongoDB explains that in a serverless model, you only need to create a code and push it to a serverless platform in the cloud. This bypasses the need for traditional server management, virtual machines, containers, and other infrastructures.
Anything called serverless can essentially be described as the following:
• Abstract — Because you don’t manage the server on which your program runs, you don’t know much detail about its OS, updates, and network. This allows you to focus on the development aspect, and not administration.
• Elastic — Your serverless provider usually gives you the computational resources depending on how light or heavy the load on your application is.
• Cost-efficient — Costs will scale with usage, meaning it will depend on whether your app is being used or not.
• Restricted Lifecycle — Again, service stops when usage of your application stops. If you relaunch, then a new container will be relaunched as well.
The Current State of Financial Technology
Like many others, the fintech industry suffered quite a blow from having traditional working and business flows disrupted by the COVID-19 pandemic. In our article on ‘Cloud Usage by Financial Services’ containing research from Flexera, over 62% of fintech organisations plan to move even more workloads to the cloud in 2022. This shows how the current landscape allows agile, fast-adapting companies and tech-driven startups to thrive.
For instance, some of today’s most highest-valued startups are in fintech and they make use of serverless architecture, such as Stripe and Klarna, which are valued at $95 billion and $31 billion respectively. Cloud migration also supports some of the biggest trends in fintech this year, including mobile banking, cloud banking, artificial intelligence and machine learning, blockchain, and also improving customer experience through technology.
How Fintech Benefits from Serverless Architecture
There are many benefits to making the move, and we’re examining the most valuable ones one by one. Firstly, companies will benefit from lower costs. Operational processes in fintech uses a lot of memory, requires large servers, and incurs large costs. Serverless models free companies from these burdens through charging only at runtime. Moreover, you can use cloud services’ free tiers, and you don’t have to worry about over or under-provisioning.
There are virtually no limits to scalability and flexibility. Companies can introduce newer services and scale them at a faster pace, thanks to traffic-resistant systems. Serverless architecture also allows minimal contact with other services, making it a system that’s much harder to exploit. Therefore, security is greatly increased, which matters in an industry that deals with money and sensitive information.
Companies in the fintech industry are required to ensure business continuity and to rely on multiple providers for backup. Serverless models work in these cases as most are based on the same model. And with proper design, an error in a single function is not likely to affect the work of an entire app. Lastly, it provides a low entry barrier for beginners and new developers — again, making it a fantastic environment for fresh startups on the scene.
The Future of Fintech and Serverless Architecture
By all means, the merging of fintech and serverless architecture isn’t perfect. But it shows a lot of promise, and provides a lot of workarounds for some of the biggest challenges fintech has had to face in the last decade. Through serverless architecture, companies won’t have to worry about high costs and operating runtimes. This allows them to redirect energy and resources towards developing great products, scaling them, and making them reliable to customers.