Three challenges, six misunderstandings and four steps of cloud-native transformation of financial core systems

In recent years, the development of cloud-native technology has been in full swing, and the transformation of IT systems to cloud-native has become a consensus. What is left for all walks of life is the time and method of when and how to be cloud-native.
The financial industry, as the vanguard of various transformations, has also been reluctant in promoting cloud-native transformation. Why is the financial industry so active in cloud-native transformation?
According to Ma Zhenxiong, product director of Ant Group's Digital Technology Division, this comes from three driving forces: business, policy, and technology. Among them, changes in business models have brought new demands for flexibility, agility, stability, security, and openness. Requirements for independent and controllable policies, multi-cloud and cross-cloud, etc., promote the continuous innovation and development of financial technology. In order to achieve these two, the final foothold is on the construction of technological chassis.
Cloud native, which integrates the strengths of technologies in all fields, aims to reconstruct enterprise infrastructure, and naturally becomes the darling of technological transformation in the financial industry.

Three challenges for financial cloud-native transformation

At present, in terms of IT budget, investment and construction, the financial industry is far ahead of most traditional industries, but while the cloud native has achieved remarkable results, there are still three challenges.

• At the cognitive level , the cloud native system is very large, and the financial industry's cognition of cloud native still needs to be improved. Cloud native in the financial industry should be a system covering the entire application life cycle from a more comprehensive perspective, not just a simple technology stack.
• At the application level , the financial industry generally transforms incremental applications to cloud-native, but most of the existing applications are still under the cloud, which is a monolithic architecture. If you want to reconstruct all existing applications from monolithic to distributed, you need to gradually transform in batches and at a slow pace. After the transformation of the distributed architecture, it is still necessary to select the development framework at the application level and do unified technology stack management. At present, the financial-grade cloud-native distributed solutions represented by Ant Digital SOFAStack provide a package of solutions to help financial institutions and enterprise customers solve the problems of cost, efficiency, stability and flexibility in the process of architecture upgrade and transformation, and achieve The unified management, observation and governance of incremental applications on the cloud and stock applications off the cloud enables single applications off the cloud to quickly acquire the service governance and observation capabilities of the distributed architecture.
• At the level of infrastructure platforms , most of the financial institutions at the head are based on open-source technology stacks to develop their own infrastructure and technology platforms, etc.; the financial institutions at the waist and tail are limited by their own research and development conditions and consider purchasing commercial products. It is necessary for each financial institution to fit its own current situation, find a feasible path to build a bank-wide unified application infrastructure, and truly implement it in the whole bank.

Six Mistakes to Avoid in Core System Transformation

In many applications in the financial industry, the core system is called "the beating heart" and "the jewel in the crown" , and its importance is self-evident. Financial institutions need to ensure security compliance, overall evolution, and high availability of architecture during cloud-native distributed upgrades. Therefore, architectural transformation of core systems is often cautious.
Although the centralized architecture still has strong competitiveness and stability, in the wave of high-speed iteration of financial digitalization, the problems of the centralized architecture have become increasingly prominent, such as the inability of system deployment to respond to business needs in a timely manner, poor system flexibility, and high costs. .
The "Red Book" on the transformation of financial core systems released by Alibaba Cloud summarizes six common misunderstandings in the current core system transformation:

• Misunderstanding 1: Transition from a simple system to a core system for architectural transformation.
  The so-called "from simple to extravagant and easy, from extravagant to simple", the transformation experience of non-core systems has very limited reference and reference significance for the cloud nativeization of core systems. Including independent and controllable considerations at the core architecture level as soon as possible can Effectively avoid additional costs caused by secondary migration.
• Misunderstanding 2: Pursue complete decoupling of technical architecture, and fragmented suppliers are not bound.
  The high efficiency and stability of the underlying architecture should be the first goal of transformation, and it is the best practice to perform local optimization and decoupling when the underlying architecture is stable.
• Misunderstanding 3: The core system is divided according to functional modules, and then crowdsourced to different developers to avoid being bound by one manufacturer.
  Business modules can be decoupled and subcontracted to different suppliers, but the technical architecture needs to be unified in planning and standards, and professional suppliers are responsible for the design and carrying of the technical architecture to realize the combination of “unification” and “distribution” in the core areas.
• Myth 4: Business applications and technology platforms are not related to each other.
  Under the cloud-native architecture, this view is no longer applicable, and the overall performance of the core system needs to be guaranteed by introducing additional frameworks, mechanisms, and designs.
• Misunderstanding 5: Choose application migration instead of major architectural changes.
  The core system transformation pursues the balance between output and production capacity. The upgrade of technical architecture can promote output, and the increase in production capacity brought by cloud native can also further promote output, thus becoming a boosting engine for digital transformation.
• Misunderstanding 6: Choose the best suppliers in each field to complete the tasks they are good at.
  Compared with choosing a supplier, the core transformation is more important to choose to have end-to-end practical ability, and to be able to make strategic long-term investment and overall control in terms of concept, methodology, design planning, platform architecture and standard specifications one's business Patner. Only in this way can we truly achieve business agility and core downshift with financial institutions, so as to promote digital transformation, instead of paying for a bunch of documents titled digital transformation.

Taking the banking industry as an example, with the advent of the all-round digital financial era, the core banking system is fully entering the cloud-native era, and issues such as agile delivery, high concurrency, and elastic scaling have become necessary considerations in the construction of the core banking system.
Head banks have strong self-research and implementation capabilities, and can do rehearsals and attempts to move down the core, but for small and medium-sized banks, the reality is still very skinny.
For different types of enterprises, SOFAStack provides different solutions. For head banks, SOFAStack checks and fills gaps and enhances capabilities without destroying its own technical precipitation; for small and medium-sized banks, SOFAStack helps build from 0 to 1 A unified and standardized infrastructure and technology platform will help the transformation of science and technology.

At the product/service level, SOFAStack provides business modeling and design, microservice application development, distributed middleware, CI/CD, application deployment and release, service orchestration, unified application operation and maintenance, disaster tolerance and high availability, and security aspects. Solution, and compatible with open source microservice operating environments such as Dubbo and Spring Cloud. With SOFAStack, financial institutions can realize the smooth migration of traditional applications to the cloud, unified governance on and off the cloud, automation of operation and maintenance under multi-cloud heterogeneity, and technical risk protection, maximizing the value of cloud migration.

Four steps of cloud-native transformation of core systems

Based on the above challenges and misunderstandings, Ma Zhenxiong suggested that the cloud-native transformation of the core system of the financial industry can follow four steps:

• Sort out the complete cloud native panorama, and make a full current analysis of itself;
• Based on business goals, sort out and formulate target architectures for both platforms and applications;
• Do the deviation analysis between the current situation and the future target structure;
• Break down the work and develop an executable phased implementation plan.

At the same time, based on his own experience, Ma Zhenxiong said that the learning path of "cutting in from the runtime, seeing the whole picture, and then gradually extending to other fields" is more suitable for individual developers who want to engage in the cloud native industry.
"SOFAStack's mission is to provide the technological support required in the process of digital transformation of the financial industry and become an operating system for cross-cloud applications in the financial industry. For developers who are interested in working in the cloud-native industry, 'from the core to the overall situation and then to the bypass' It is a recommended learning path. Let us join hands to promote the implementation and iteration of cloud-native technologies through open source and co-construction, polish end-to-end trusted native capabilities, and help thousands of technology practitioners in the financial field. ” Ma Zhenxiong concluded road.