Microservices for Loan Origination

Author: Paul Thomas

In the not so distant past, all enterprise computing relied on monolithic applications to power business functions.

Initially, these monolithic applications were created to meet exact business needs, they were made-to-measure so to speak. But, just like any organically evolving thing, the measurements, requirements, and wants of a business have a habit of changing as time goes on.

These monoliths needed to keep pace with evolving business needs, so as the business developed, features and functions were added to meet new business demands.

Fast forward to today and these monoliths have morphed into unwieldy giants patched up to help keep the business moving forward. And, to make things a little more difficult, they are often connected to other monoliths through hard-coded integrations to expand functionality.

While this rigid connection between large applications might not be a problem initially, the challenge comes when the business requires a new function or feature. Now the business faces making changes akin to open heart surgery to the giant applications that are powering their loan origination processes.

What could possibly go wrong?


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When loan origination goes from made to measure to make it work

As the monoliths grow, business agility shrinks. Instead of having software that adapts when a business wants to launch new products or make strategic changes, these monolithic applications force businesses to implement processes according to the software's capability, rather than the needs of the business.

Why? Because, organizations cannot implement changes that will negatively impact integrations. And, once an integration is implemented, it is rigid and brittle. In other words, changes are difficult, if not impossible, to make without potentially breaking the integrations and the applications.

Organizations previously tolerated the inflexibility of monolithic applications because the legacy technology that was so heavily ingrained into their organization was still allowing them to remain competitive. However, digitization of financial services has made the industry a very different place.

Forward thinking technologists and business strategists know that to compete against fintechs and to create better customer experiences their business needs technology that supports agility, flexibility, and real-time approvals.

Enter microservices for loan origination

Recently, you have, no doubt, encountered the term microservices. Based on light-weight, fast, internet protocols, a microservice architecture describes a business application developed by combining a set of independent, small, modular services.

Each microservice is discreet and is intended to run a specific business function. When called during orchestration, each service is reached using a lightweight communication mechanism (often an HTTP resource API), and each service is designed to serve a single business goal.

One design goal of a microservice architecture is to break down a monolithic application into its constituent, business-function parts. This simplification is referred to as decomposition. The result is a set of discrete, reusable services.

Decomposition breaks applications down into, essentially, service end-points designed with one particular purpose. In the loan origination domain, for example, a scorecard service, an age calculation service, or blacklist checking service, is developed and exposed for use in building a decisioning process. These services can then be used as part of a larger overall flow as needed.

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Benefits of microservices

The largest promise a microservices architecture presents is agility. But there are many other benefits, such as scalability, ease of testing and deployment, and simplified enhancement and maintenance. In a computing age where user demands and technological capabilities keep evolving and growing, the more flexible and responsive your approach to building applications is, the more future-proof against a rapidly-evolving tech future it will be.

Additionally, the composed – rather than dependent – nature of a microservices architecture enables business analysts and developers to understand the functionality of a process or service better since they are isolated and discrete. The nature of microservices also improves fault isolation, meaning larger applications will not be affected when a single module fails.


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Provenir fully supports a move to microservices

The Provenir Platform is designed to empower an agile and future-proof risk strategy, that’s why our technology fully supports a microservices architecture.

Modularity and reuse is at the core of Provenir’s approach to deployment – build once; reuse many times. This principle goes hand in hand with a microservices architecture as decisioning components can be exposed as lightweight services.

To support these discrete services, Provenir provides the capability to create REST-based endpoints for all business functions developed using Provenir Studio.

For example, when a user defines a scorecard in Provenir it can be exposed as a standalone endpoint, meaning the scorecard itself becomes a service. Simply pass the required data to the endpoint and receive the calculated score back.

Or, as another example, an entire KYC process can be defined within Provenir—including OFAC checks, blacklist checks, calls to third-party data providers—and this process can be exposed as a service. Just pass the customer’s identifying data to the service and get a “yes” or “no” back.

Exploring microservices for loan origination

In today’s digital first world your business needs to be fast, agile, and smart. With growing consumer demand for real-time approvals, and the increasing threat of digital fraud, you need a loan origination system that gives you the power to rapidly respond to both threats and opportunities.

With a microservices approach to loan origination you’ll be able to gain the agility and speed you need to stay ahead of risk and create world-class consumer experiences.

At Provenir, our goal is to help you build your decisioning solution, but not from scratch. In other words, you can create, test, and adjust made-to-measure loan origination processes, whenever you need them.


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