Comparative Analysis of Monolithic and Microservices Architectures in Financial Software Development

This paper examines the comparative benefits and challenges of monolithic and microservices architectures in the financial services industry.Monolithic systems, characterized by a single, unified codebase, have historically dominated banking and financial institutions due to their simplicity and ease of deployment.However, they often struggle with scalability, adaptability and compliance as the industry evolves.Microservices architecture, which decomposes applications into independently deployable services, offers advantages such as flexibility, fault isolation and rapid scaling-qualities essential for modern financial operations like real-time transactions, fraud detection and personalized services.This study explores the transition from monolithic to microservices in the financial sector, discussing best practices, industry case studies and the implications for scalability, security and compliance.