Meeting Bank-Grade Requirements for Real-Time and Resilient Core Banking with Finxact on AWS
By Chintan Sanghavi, Sr. Partner Solutions Architect – AWS
By Mark Kampf, Vice President of Technology – Finxact
Many midsize and large banks have over time developed their own in-house core system or licensed a third-party core system. A core banking system is the critical infrastructure for the bank that serves as the system of record for its customers’ loan and deposit positions, and as the transaction processing engine for all transactions against those positions.
Today, most banks are still running legacy core systems developed over 30 years ago for mainframe computing. These software applications pre-dated the internet and were monolithic by design.
Mainframe transaction processing capacity remains formidable, but the suitability of such monolithic infrastructure applications for this age of cloud computing and real-time, contextual commerce is presenting challenges for banks that require agility in deploying new products and ready access to core transaction data to improve customer experiences.
Finxact is an AWS Partner that was begun five years ago by a team of engineers with deep experience in the design of core banking systems. Its mission was to couple this domain expertise with the most modern cloud-based technologies and programming languages to produce a core platform for the modern era of banking.
In this post, we will describe the architecture of Finxact including various AWS services used. In addition, we’ll explain how Finxact meets stringent requirements of a core banking solution.
The Finxact core exposes all functionality via APIs which are Restful services of JSON payloads. This means that a comprehensive and extensible financial services model, accessible via API endpoints, empowers the bank with immediate and complete access to its data, positioning it to deploy products quickly, attach third-party solutions quickly, and leverage the most advanced artificial intelligence (AI) and machine learning (ML) tools for data-driven decisioning.
The Finxact core information architecture runs on Amazon Web Services (AWS) so that it can perform these functions at optimal scale and stability.
Figure 1 – Logical architecture.
Finxact’s API-first design makes the system of record 100% accessible for banks and their partners to rapidly integrate products.
The Finxact core is an open core platform, designed to communicate with any third-party application via APIs. However, Finxact’s pre-integrated solution stack (Finxact+) provides banks with even faster time to market, a tried-and-true solution ecosystem that includes best-in-class providers of account origination, card processing, fraud monitoring, and back-office workflow experiences.
The Finxact core has a number of technological innovations, including:
- Multi-position accounts: Accounts comprised of multiple positions and asset types.
- Real time: Event-driven platform eliminates traditional batch processing.
- Temporal data persistence: Retrieve any data or event as of a specified datetime.
- Multi-time zone: Eliminates geographic boundaries.
- In-balance transactions: Always in-balance transactions to support real-time settlement.
- Component library: Allows for configuration, not coding.
- Extensible data model: The data model can be extended by third parties.
- Audit traceability: Highly auditable with traceability back to originating message payloads.
- Scalability: Highly scalable, ACID-compliant transaction architecture.
As shown in the diagram below, Finxact delivers a software-as-a-service (SaaS) solution. The bank can access the Finxact solution via AWS PrivateLink, or if there is need to access this solution from on-premises environment the bank can access it via AWS Direct Connect.
In addition, Finxact adheres to security best practices defined by AWS like encryption, key rotation, and least privilege principles. This ensures the entire connectivity and internal processing of transactions is optimally secure to meet the bank-grade security standards of the financial services industry.
Figure 2 – Infrastructure architecture.
The Finxact core uses Amazon Relational Database Service (Amazon RDS) which enables real-time, ultra high-performance transaction processing and enables high transaction integrity (ACID) at elastic scale. This ensures transactions are perforce always-in-balance while eliminating end-of-day reconciliation and batch processes.
The Finxact core leverages Amazon RDS as a temporal data persistence layer, which allows the context around any historical transaction, event, or application occurrence to be re-created as of an instant in time.
This allows the Finxact core to provide “as-of” time indicators to recreate granular views into an actual event or potential event. It also enables 100% real-time, as-of any date/time position states for straight through non-stop processing, without cutoffs or offline operations.
Figure 3 – High availability of database.
As shown in the above diagram, Finxact’s databases are clustered and available in multiple AWS Availability Zones (AZs). Hence, each AZ will have multiple instances and the same data is synchronously replicated to other AZs.
This architecture ensures that if one Availability Zone is down due to some reason then another AZ will be able to process transactions and there will no downtime associated with the loss of an AZ.
In addition to multiple AZs, Finxact has implemented high availability by creating read replicas of the database in a different region than the primary. Amazon RDS uses the asynchronous replication method of the database engine to update the read replica whenever there’s a change made on the source database instance. This ensures the disaster recovery region is up to date with the data.
In case of disaster recovery, the Finxact team can promote the read replica as the master database. This ensures there is minimum or no data loss, and recovery time is very short. This combination of multiple-AZs and read replicas creates a high availability solution to meet the stringent requirements of core banking with industry-leading recovery time objective (RTO) and recovery point objective (RPO) times.
Finxact is using Amazon Elastic Kubernetes Service (Amazon EKS) for its compute and load balancing. This provides the flexibility to start, run, and scale Kubernetes applications in the cloud. Amazon EKS helps Finxact to provide highly available and secure clusters and automate key tasks such as patching, node provisioning, and updates. This enables Finxact’s clients to achieve high availability, scalability, and related requirements for their core banking solution.
Customer Spotlight: Live Oak Bank
Live Oak Bank, the largest SBA lender in the country, recently converted its entire retail deposit operation to Finxact on AWS. A great deal of planning and preparation goes into core conversions to ensure customer experience is minimally impacted.
During a compressed window of time over a July weekend, the bank operations team and Finxact project teams were tasked with converting all of the account balances, transaction histories, and customer information from the bank’s legacy core to Finxact on AWS.
“The power of the cloud is on abundant display during a core conversion,” says Mark Moroz, EVP Head of Product at Live Oak Bank. “We saw this up close. Everything that you’ve scrupulously planned must happen in hours, not days. During our conversion, on multiple occasions, we needed to wipe environments and start over if something unanticipated was revealed in the mappings.
“With Finxact running in AWS, we could push out environments that were highly parameterized to reflect our iterative refinements in minutes and continue to iterate until any anomalies were diagnosed and resolved. This was a beautiful technology to watch in action. We converted all accounts with 100% accuracy and balanced to the penny, 16 hours ahead of schedule.”
The Finxact core’s SaaS delivery model on AWS helps customers to meet the stringent availability, security, and performance-related requirements of core banking. It also helps in reduction of capital costs, infrastructure costs, development costs, and maintenance costs.
The Finxact core has proven in production environments to be a compelling banking solution that allows banks with the highest scalability, availability, and security standards to achieve their objectives.
Finxact – AWS Partner Spotlight
Finxact is an AWS Partner that couples domain expertise with modern cloud-based technologies and programming languages to produce a core platform for the modern era of banking.
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