The pandemic has accelerated digital transformation within the financial services industry and to serve the on-demand customer, financial institutions must become agile digital enterprises focused on delivering innovative products, services, and customer experiences.
As a McKinsey report puts it: “In a competitive environment of rising cost pressures, where rapid action and response is imperative, financial institutions must modernize their technology function to support expanded digitization of both the front and back ends of their businesses.”
To deliver the innovative, personalized digital services that customers demand, many financial institutions are looking to containerization and Kubernetes as go-to infrastructure technologies for building, deploying and scaling up new applications and capabilities quickly.
Kubernetes (pronounced “Koo-ber-net-eez”) – which comes from the Greek word for “helmsman” or “pilot” – was originally developed by Google and released as an open-source project in 2014. Kubernetes is now supported by a huge ecosystem of supporting tools and is hosted by the Cloud Native Computing Foundation (CNCF).
Containers and specifically Kubernetes have a key role to play in meeting the needs of financial institutions to deliver new services to customers at speed and at scale.
Containers offer a logical packaging tool in which applications can be decoupled from the surroundings in which they run. This allows container-based applications to be installed easily and consistently, regardless of whether the target environment is a private or a public cloud. With containerization, development teams move fast, deploy software efficiently, and operate at an unprecedented scale.
Containers have dramatically risen in popularity because they provide a consistent way to package application components and their dependencies into a single object that can run in any environment. By packaging code and its dependencies into containers, a development team can use standardized units of code as consistent building blocks.
There are several reasons that containers, with Kubernetes as their “partner,” have become a linchpin in building cloud-native applications.
First, containers shall allow financial institutions to reduce their IT spend. 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. Containers make it easier to build workflows for applications that run between on-premises and cloud environments, enabling the smooth operation of almost any hybrid environment. Across an organization, the cost savings can be significant.
Second, they improve developer productivity by allowing organizations to develop, test, and deploy applications faster. And developers don’t have to 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 cuts down friction in building enterprise applications that deliver on business goals and accelerates time to market.
Third, Kubernetes makes it easier to manage software complexity. As enterprise applications become more complex, development and operations (DevOps) teams need a tool that can orchestrate that complexity.
Kubernetes has become the de facto container management system and there is an emerging ecosystem growing around Kubernetes as it expands within enterprises. According to a CNCF survey last year, 91 percent of respondents across industries reported using Kubernetes, 83 percent of them in production, compared with 78 percent and 58 percent in 2019.
A survey conducted by Canonical in June 2021 revealed that despite high adoption rates of cloud-native technologies in recent years, enterprises have yet to cross the chasm to full adoption, though they’re quickly moving in that direction.
Thus, every financial services firm needs to have a well-thought-through containerization/Kubernetes strategy. Three things to consider:
1. Choose the right flavor of Kubernetes. There are a lot out there. For example, each of the major cloud providers offers its own version – Amazon’s Elastic Kubernetes Service, Microsoft’s Azure Kubernetes Service, and Google Kubernetes Engine. If a financial services company is using more than one of the clouds in a hybrid multi-cloud model, it needs a consistent Kubernetes implementation across the software development lifecycle, from development to testing and staging to production. Companies should look for supporting tools in the Kubernetes ecosystem that acknowledges this reality and provides a cloud-vendor-agnostic way to use the technology to its full advantage.
2. Accelerate Kubernetes adoption as an antidote to high cloud costs. Companies initially thought cloud would be inexpensive, but it has become all too common to get sticker shock when the bill arrives at the end of the month. With its ability to provide greater density – more applications on the same host – containers and Kubernetes provide more bang for the infrastructure buck. Portability of containers limits cloud lock-in. (Lock-in defeats the purpose of moving to the cloud in the first place, after all.) The economic argument for containers and Kubernetes should help get any slow-moving enterprises off the dime.
3. Decide on refactoring or “lift and shift.” Monolithic applications remain common in many organizations. In moving to the cloud, companies must decide whether to refactor those applications (breaking them up into smaller microservices to better support the cloud environment) or “lift and shift” (shifting the application to the cloud as is). Each approach has its pros and cons, and financial institutions need to carefully evaluate them.
Containerization and Kubernetes have become inextricably woven into the digital transformation imperative. By understanding why these technologies are so important and how best to leverage them, financial institutions can execute on their digital strategy faster.
