# The Lego blocks of SaaS: how microservices can help ensure compliance with changing financial regulations
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-02-22
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: The Importance of Microservices in Scaling Data and
Meta Description: Discover how microservices help businesses adapt to digital technology, manage data more effectively, and navigate changing financial regulations across
URL: https://financedigest.com/the-lego-blocks-of-saas-how-microservices-can-help-ensure-compliance-with-changing-financial-regulationshtml

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_By **Oscar Caicedo,** VP of Strategy and Operations, VAT,_ [_Sovos_](https://sovos.com)

Microservices are a popular form of modular architecture used by software engineers in the creation and scaling of large and complex applications. As economies and businesses across the world continue to embrace digital technology to engage with each other, data and analytics are becoming more important, and software is required to adapt accordingly to this huge scaling process. The use of microservices will become increasingly more prevalent to enable this, creating smaller, manageable pieces of a greater picture in order to avoid complications further down the line – especially when handling business or government-critical data across multiple jurisdictions.

**Challenging complexity**

Differing from country to country, navigating the nuances of governmental financial legislation can be a headache for many [companies](https://www.financedigest.com/allianz-trade-wins-global-banking-finance-reviews-best-trade-credit-insurance-company-asia-pacific-2022.html "Allianz Trade wins Global Banking & Finance Review’s Best Trade Credit Insurance Company Asia Pacific 2022"), particularly when it is constantly being updated. Real time VAT reporting, for instance, is increasingly common across the globe, with many [tax authorities](https://www.financedigest.com/german-tax-authorities-should-show-leniency-to-households-firms-amid-energy-crisis-letter.html "German tax authorities should show leniency to households, firms amid energy crisis – letter") employing continuous transaction controls, such as electronic invoicing, to insert themselves ever closer to transactions.

International businesses, operating across a number of different jurisdictions, face the challenge of keeping up with these rapidly [changing rules and regulations](https://www.financedigest.com/german-regulator-stays-vigilant-as-meta-changes-vr-headset-rules.html "German regulator stays vigilant as Meta changes VR headset rules"). They are under considerable pressure to ensure all the transaction [data they store is clean](https://www.financedigest.com/optable-announces-new-data-clean-room-capabilities.html "Optable Announces New Data Clean Room Capabilities"), correctly stored, and ready to be retrieved and submitted – in the correct format – whenever required.

There is a wide range of varying digital tools and solutions available to help businesses and governments manage this challenge, of course, not least the labour-intensive and time-consuming [research and analysis](https://www.financedigest.com/food-thermos-market-2021-industry-size-growth-trends-segments-and-cost-structure-analysis-research-report-2029.html "Food Thermos Market 2021 Industry Size, Growth, Trends, Segments, And Cost Structure Analysis Research Report 2029") tasks. But these tools can actually exacerbate the problem to some extent. With each solution placing differing [demands on reporting](https://www.financedigest.com/tesla-investors-to-focus-on-demand-issues-in-earnings-report.html "Tesla investors to focus on demand issues in earnings report") formats and data, their use creates a varied and complicated patchwork of reporting and archiving systems, not to mention a huge – and vastly complex – volume of data that must be correctly managed.

**A** [need to scale](https://www.financedigest.com/scams-have-eroded-digital-trust-banks-need-to-do-more-to-combat-the-industrial-scale-of-scams-in-the-uk.html "Scams have eroded Digital Trust – Banks need to do more to combat the industrial scale of scams in the UK.")

For its transactional data to comply with the various legislative requirements, and ensure the accuracy of its tax reporting, an organisation’s technology needs to give an accurate picture of its entire finances, and link together each of its different systems to synchronise and communicate vital [financial information](https://www.financedigest.com/overcoming-information-overload-in-the-financial-sector.html "OVERCOMING INFORMATION OVERLOAD IN THE FINANCIAL SECTOR") across its IT infrastructure.

Sophisticated, flexible APIs are an essential part of this, enabling [businesses](https://www.financedigest.com/business-finance-the-fintech-evolution.html "Business finance: the fintech evolution") to link disparate aspects of their financial architecture, and collect the necessary data through a compliance partner in this manner for accurate reporting to the authorities. Once a “nice to have” bolt-on, they’re now essential for any organisation operating across multiple jurisdictions, enabling them to navigate the [legal minefields](https://www.financedigest.com/property-letting-could-become-a-legal-minefield.html "PROPERTY LETTING COULD BECOME A LEGAL MINEFIELD") of shifting complex government financial regulations without the need to constantly reinvent the wheel.

This is no small task, however. The necessary technology, including these crucial APIs, must be able to integrate with a large number of  different systems, including an organisation’s ERP, billing system, and procure-to-pay platforms. What’s more, as an organisation grows, and government transactional reporting requirements become more granular and complex, the [demands on this technology](https://www.financedigest.com/airway-clearance-devices-system-market-industry-analysis-opportunities-technology-demand-top-players-and-growth-forecast-2027.html "Airway Clearance Devices System Market Industry Analysis, Opportunities, Technology, Demand, Top Players and Growth Forecast 2027") will continue to grow. What’s needed, therefore, is a means of scaling the [technology without the need to overhaul it with every](https://www.financedigest.com/top-5-security-technologies-that-every-finance-institution-workplace-should-consider.html "Top 5 Security Technologies That Every Finance Institution Workplace Should Consider") iteration, combined with evolving, dynamic compliance rules that work on the API basis from a compliance partner.

**Rearranging Lego bricks**

The answer lies in microservices, an architecture that’s becoming increasingly popular with [software developers and seeing links into the VAT](https://www.financedigest.com/how-choosing-the-right-mtd-for-vat-software-can-maximise-business-benefits.html "How choosing the right MTD for VAT software can maximise business benefits") and tax compliance space. By breaking an application down into small, simple modular parts – each of which carries out its own specific task – the microservices approach allows developers to continue scaling that application without the [risk of it breaking the moment an element is added or changed](https://www.financedigest.com/insurers-must-reimagine-traditional-risk-models-to-adapt-to-climate-change.html "Insurers Must Reimagine Traditional Risk Models to Adapt to Climate Change ").

In simple terms, microservices can be seen as Lego bricks. [Every time](https://www.financedigest.com/how-to-nail-your-banking-audition-every-time.html "How to nail your banking audition every time") there’s a change in requirements, those blocks can be rearranged into a compliant product. Instead of continually having to create new technology, modifying an existing process to comply with a specific country’s requirements instead allows [businesses to adapt](https://www.financedigest.com/how-business-leaders-can-adapt-or-replace-covid-related-perks-to-the-post-pandemic-world-while-keeping-employees-on-side.html "How business leaders can adapt or replace Covid related perks to the post-pandemic world while keeping employees on-side") almost instantly. Of course, working with specialists in the space gives [businesses the foresight to make these changes accurately and when needed](https://www.financedigest.com/do-small-businesses-need-branding.html "Do small businesses need branding?").

The benefits of utilising a network of microservices will soon become clear to any [business currently finding itself overwhelmed by the logistical complexity of global](https://www.financedigest.com/global-sulfate-free-body-wash-market-business-opportunities-current-trends-growth-market-forecast-global-industry-analysis-by-2029.html "Global Sulfate Free Body Wash Market: Business Opportunities, Current Trends, Growth, Market Forecast & Global Industry Analysis By 2029") financial legislation. Rather than having to overhaul a [solution from scratch every time an organisation starts doing business](https://www.financedigest.com/the-collective-power-of-partnerships-integrating-payment-solutions-to-drive-business-success.html "The collective power of partnerships: integrating payment solutions to drive business success") in a new territory, or encounters a changing in the legislation of a country with which it already does business, microservices can be used to ensure it complies with that particular requirement for that individual market.

Navigating the shifting regulatory landscape is challenging enough for businesses, without having to contend with the prospect of their reporting structure breaking under the strain. The use of microservices – especially combined with the speed, flexibility, and scalability of cloud architecture – is, therefore, swiftly becoming the only way for businesses to stay ahead of the pace of [technological change](https://www.financedigest.com/how-technology-has-changed-our-lives.html "How Technology has Changed Our Lives") and the sheer volume of transactional data shared between businesses and governments today.


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