Businesses across all industries know the advantages of adopting new technologies to improve efficiency and competitiveness. And, although financial institutions are among those in the digital transformation race, many need to catch up to the competition. According to Intel, “While innovative technologies have already radically transformed a number of sectors, the Financial Services Industry (FSI) has been notoriously slow to adapt.”
In an article titled “What Will Banks Look Like in 2030? How New Technologies Will Transform the Future of Finance,” Intel explains, “Partially hindered by antiquated infrastructure and also subject to more stringent regulations than most other sectors, the financial world has some catching up to do as the pace of innovation continues to accelerate.”
We recently looked at how many financial institutions are turning to Kotlin to help with infrastructure modernization efforts. In this article, we’ll look at Scala to see how this programming language is being used to digitally transform the financial services industry.
This industry has seen a shift from traditional systems to more advanced and sophisticated technology stacks in recent years resulting from the increasing demand for real-time data processing, the expanding importance of big data and machine learning, and the need for massively scalable systems that are secure. That’s where Scala comes in.
Scala For The Financial Industry
Scala is a modern programming language that many financial institutions and fintech companies have adopted. JPMorgan Chase, Citigroup, Deutsche Bank, Santander, and ING Bank are just a few large banks and major financial services providers that have turned to Scala to meet their growing needs.
So what is it specifically about Scala that makes it a popular choice in the financial industry, and why is it becoming increasingly favored in fintech?
- Java Interoperability: Scala is compatible with Java. It can easily integrate with existing Java-based systems. This is huge because many financial institutions have existing Java infrastructure. The interoperability between Scala and Java makes it easier for financial institutions to adopt and incorporate Scala without completely rebuilding their existing technology stacks.
- Concurrent and Parallel Processing: Real-time processing of large amounts of data is essential for the financial industry. Concurrent processing (execution of multiple tasks or operations simultaneously) and parallel processing (dividing different parts of a task among multiple processors) are imperative to achieving this requirement in the financial sector. And Scala provides a clean and efficient way to write concurrent and parallel code, making it an attractive choice for financial institutions.
- Big Data Processing: The increasing importance of big data in the financial industry has prompted many financial institutions to invest heavily in big data solutions. Scala is great in this area because it provides a rich set of libraries and frameworks, (e.g., Apache Flink and Apache Spark) and interoperability with Java’s API of Kafka and cross-platform databases like MongoDB for working with and processing large amounts of financial data.
- Machine Learning and AI: As is the case with many industries, machine learning and artificial intelligence have become increasingly important in the financial sector. To remain competitive, many financial institutions invest in this area. With all the recent buzz and excitement surrounding AI assistants like ChatGPT and Bard, the financial sector needs to be ready to implement these tools to meet customer expectations and to remain competitive and relevant. A recent article published by Finance company NerdWallet looked at this very issue, exploring the possibility that ChatGPT could replace financial advisors in the future!
The libraries and frameworks for working with ML and AI provided by Scala (e.g., TensorFlow, Apache Mahout) make it an ideal choice for financial institutions needing to build machine learning and AI systems. And, because of Scala’s interoperability with Java, it can easily access Java machine learning libraries, which makes integrating machine learning functionality into Scala code easy.
- Functional Programming: Scala is a functional programming language, which means it supports functional programming paradigms such as immutability and composability. Robust and reliable systems are essential for financial institutions. And functional programming concepts like these make it easier for engineers to write better, maintainable code to meet these needs. This maintainability and the ease with which code can be modified is especially useful and crucial in the financial industry where regulations change frequently.
A recent article highlighting the best programming languages for finance and fintech in 2023 points out that demand for Scala developers in the financial sector specifically has absolutely exploded. It adds, “From data architecture to cloud-based financial platforms, Scala is the preferred choice these days.”
A Real-World Example
A leading provider of technology solutions geared toward the financial services industry recently experienced significant growth in its client base and the services it needs to provide. It was becoming a real challenge for some of its monolithic systems to deal with millions of transactions and slow downstream services.
Xebia’s functional programming division (formerly 47 Degrees) was enlisted to help audit the organization’s legacy systems, provide fixes to known issues, and assist with modernizing the company’s technology infrastructure. Our experts worked jointly with the internal team to deliver solutions that directly addressed the client’s needs including improving their backend services using Scala. The team contributed to the core of a Scala microservices-based architecture, producing secure and high-performance systems. Along with the usage of functional programming, we ensured code quality and mitigated security vulnerabilities.
Scala has established itself as a popular choice for financial institutions and fintech companies because of its interoperability with Java, complex financial algorithm handling, ability to handle and process lots of data, and the many benefits of functional programming. Companies in the financial industry need to build scalable, reliable, and highly performant systems. And these features provided by Scala make it an ideal solution for doing so.
Giants in the financial industry already look to Scala in their efforts to embrace new technologies, modernize, and remain competitive. This programming language is already playing a critical role in shaping the future of financial technology.
Don't hesitate to reach out if you'd like to learn more about the benefits of Scala for financial services.