Microservices trend makes digital platforms accessible to small banks

When Wildfire Credit Union decided to optimize its customer and employee experience, it turned to a digital banking platform that uses microservices — a trend that’s making digital banking more affordable for smaller banks and credit unions.

The Saginaw, Mich.-based Wildfire Credit Union is looking to expand beyond its region, which is currently overbanked, Jackie Booms, chief digital officer at the credit union, told Bank Automation News. For the small $996.8 million credit union, that meant it needed a more automated online experience — for both employees and customers, Booms said. This quarter, the bank will roll out Backbase’s Customer 360 Employee App, a platform that gives employees one dashboard from which to access various applications.

What won Booms over was Backbase’s ability to use APIs, which supports third-party integrations, and its microservices architecture. Microservice is a single, function wrapped in a web service. An example would be Amazon’s “buy now” button, which allows customers to buy from within a partner site without going to Amazon to find the product. In a digital banking platform, it allows a financial institution to pick and choose which features to deploy, which appealed to Booms.

“It’s a platform where we can choose different features, different companies, and we can pick and choose what is going to work best for Wildfire credit union, and its members and its employees,” Booms said.

Microservices also make digital banking platforms more affordable for credit unions and smaller banks, Phil Benton, an analyst with the Omdia consultancy, told BAN. Previously, digital banking platforms were the domain of large banks, but with microservices, smaller financial institutions can take a pick-and-mix approach to the functions they want for a particular project, he said. Then, they can always add new microservice-based products down the line, Benton said. They can also test out offerings without investing in a massive rollout, he added.

“That’s really important again for, firstly, reducing the initial cost, but also being able to test what kind of works,” Benton said. “That kind of flexibility and that ability to adapt to the customer, based on feedback they’re getting in a real-time basis, is really important.”

In recent years, digital platforms have also adopted cloud-based services, which also makes the product more affordable and within range for smaller banks and credit unions, Benton said. Overall, the cost of these platforms has come down significantly, bringing them into the realm of possibility for smaller financial institutions, Benton said.

While digital banking platforms do enable automation, “to have true automation [a financial institution] obviously needs to have a kind of a digital-ready core banking system as well,” Benton added.

One example is how Customer 360 Employee App helps automate the credit card loan application process. It digitalizes the application process, then automatically sends the data to the credit union’s document storage system, so employees don’t have to manually scan the documents or enter information. “What we’re looking to do is to really minimize the busy work that has to be done in the back office.” Booms said. “We want to take out some of those manual processes that are involved.”

The platform focuses on being an engine that integrates the loan applications so employees can handle a process without entering each app individually, said Vince Bezemer, Backbase’s senior vice president of the Americas. The Java tool is similar to a process management platform, but customized to financial institutions, he explained.

In addition to the Michigan credit union, Backbase’s clients include larger financial institutions, such as Citi, Navy Federal Credit Union, Citizens Bank, Deutsche Bank and Barclays.

But Benton said vendors such as Backbase have also recognized the need to serve smaller financial institutions.

“Smaller banks don’t have as large tech team and development team as the larger banks, but because they can utilize the resources and the expertise of the technology vendors, they can still benefit to the same extent,” Benton said. “The vendors have recognized that and actually have cost it cheaper for the small banks as a result. So it does affect the level of the playing fields; they can offer, you know, some of the same digital services as larger banks, because the vendors are able to deliver it off the shelf.”