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Hybrid Database Approaches in FinTech: Combining SQL and NoSQL for

Optimal Performance

Article · January 2025

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 Hybrid Database Approaches in FinTech: Combining SQL and
NoSQL for Optimal Performance
Author; John Olusegun
Date; January, 2025
Abstract
In modern FinTech, the value of a robust and well-integrated database is incalculable. By harnessing the unique
strengths of both SQL and NoSQL technologies, FinTech enterprises can achieve the best possible balance of
read/write operation speed and operational efficiency. This paper seeks to clarify the concept, present a clearer
breakdown of the solution type, and conduct a survey of some of the broader trends and main players in the
development of these systems. To frame the qualitative approaches, this essay first examines several highly
informative examples of how and why hybrid SQL/NoSQL systems are developed and used in FinTech, to evaluate
their empirical details and their share of the market.
In doing so, the unique characteristics and potential motivations for design and integration among these developers
are briefly discussed. All the examples used in this survey are currently in use across a number of different FinTech
applications in the United Kingdom and Europe, with capital rises starting as recently as four months ago to some
two and a quarter years ago, indicating a continuing relevance and perceived demand for NoSQL integrations with
pre-existing SQL technologies. However, it is important to highlight that this essay's focus is the area of data, rather
than the motivations behind such funding streams, and this can be partly seen from the perspectives and priorities of
the aforementioned developers and enterprises.

Keyword: hybrid databases, SQL, NoSQL, FinTech performance

1. Introduction to Hybrid Database Approaches in FinTech

Despite their widespread distribution across the globe, products and services provided to consumers, financial
technology companies require handling the increasing amount of data associated with their customers’ transactions
and financial activities. It was reported that an average investment bank processes twice the data processed by
internet giants daily. With changing financial behaviors and customer profiles, consumer financial data are growing in
volume and also in complexity. Traditional databases have been known to be inadequate at handling this complex
financial data. NoSQL databases resolve the scalability problem of SQL databases. NoSQL databases usually have
the advantages of scaling to large volumes and utilizing horizontal scalability on commodity hardware. Data that can
be classified as financial data require such high performance and also scaling landscapes. Therefore, FinTech
organizations require databases that have the advantages of SQL and NoSQL databases.
The necessity of hybrid database infrastructures has been felt by several payment services in charging their services
in real time. Frauds in financial institutions are increasing. To detect these frauds, systems that analyze and also
compare past and current data streams in real time are required. This involves a large volume of data. Financial
statistical applications also analyze data streams. Therefore, financial statistical applications, as well as fraud
detection applications, stand to benefit from such hybrid systems, which have a dually optimized indexing
mechanism. Given these challenges, it is also evident that FinTech development systems warrant a hybrid approach
towards NoSQL and SQL.
 Comparative chart showing the scalability and performance characteristics of SQL vs. NoSQL databases.

2. Fundamentals of SQL and NoSQL Databases

The Structured Query Language (SQL) is designed to manage structured data better than other mechanisms. It is
designated as a domain-specific language, specifically for managing data stored in a relational database management
system, or for stream processing in a relational data stream management system. A SQL server’s role is pronounced
in the FinTech community, where SQL’s relational capabilities are leveraged to the fullest. SQL databases work with
schema, meaning that the structure of the database is always defined up front. Most platforms and e-commerce
systems are organized around a central product, that is, around a primary key. Two commonly used types of SQL
databases are PostgreSQL and MySQL. PostgreSQL was the first commercially available SQL database globally and
is still very popular. MySQL is the pulse of many content management systems, and it is likely that you have
interacted with MySQL daily without knowing it.
Non-SQL databases, or Not Only SQL databases, approached the problem with a focus on being able to build
systems that scaled across multiple machines, either for performance reasons or for high availability, or both. These
were designed for scale and speed, rather than a perfect representation of data. NoSQL databases operate in a flexible
environment where data can be made available anytime without needing extensive surveying or extra processing.
They are excellent for unstructured data storage cases in FinTech, where you might have data in the form of video,
email logs, billing, and other transactional records. NoSQL databases excel in social networks, mobile services,
gaming applications, and much more. The two most popular NoSQL data stores that dominate the space are Apache
HBase and CouchDB. As SQL and NoSQL databases are designed around relations, using one exclusively would not
offer the best performance to the user or FinTech companies applying such technologies. Hence, a mix of both SQL
and NoSQL can optimize how data is stored, transferred, and processed.
 Illustration of the unstructured nature of data handling in NoSQL systems.

3. Benefits and Challenges of Hybrid Database Approaches

There are several benefits and challenges associated with hybrid database systems. Below, the benefits and
advantages are enumerated, and the section following outlines the operational and technological implications
associated with these benefits.
1. Benefits 1. Consolidating and managing divergent data 2. Expedited performance and advanced functionality 3.
Lower total cost of ownership 4. Built-in flexibility 5. Large volume, complex data management
2. Challenges 1. Database migration and integration 2. Data consistency 3. Cost
While the advantages of hybrid database implementations can outweigh these challenges, it is essential for
organizations to plan for integration complexities and risks associated with partial data duplication to ensure the
strategy fits their operational scope and technical craft. For companies seeking to become more digital, thinking
through their infrastructure and its effect on operations and customer service is increasingly important. Since the
efficiencies that digital services provide cost-wise and in speed, the benefits of choosing a hybrid database system can
directly affect the timeliness and sophistication of services for customers. This section lays out the implications and
benefits for firms examining their database strategy or considering a hybrid approach.
 Infographic for benefits; grid matrix for challenges.

4. Implementing Hybrid Database Approaches in FinTech Companies

The transition from traditional, SQL-based solutions towards hybrid approaches will look different at each
institution, but the general guide may look as follows. A FinTech company needs to evaluate which business needs it
needs to address with a technology solution in order to determine a preferred hybrid database strategy. Technical
components of such an implementation are typically intended to cover certain prerequisites, such as data migration
tools, database backup services, as well as to aid in the process of integration with a system, i.e., installable database
libraries for building an in-house solution. Such solutions should be actively monitored for consistency, integrity, user
experience, and query speed. Next, a company would need to prepare its infrastructure for such an implementation,
covering adapted network settings, VPNs, and firewall rules. At the actual implementation, the company will need to
migrate the data, make it accessible for each kind of database, and set up near real-time synchronization. Then,
databases compatible with the software used by the company should be installed, and software configurations ought
to be modified. Such an undertaking would normally require scaling the demands of the organization, team training,
and internal collaboration. However, when implementation is executed successfully, a case study looking at a
successful transition at another financial institution could systematically absorb the transition experiences into
organizational learning, enabling the company to avoid most of the failures such experiences produce. Several
recommendations for implementing the transition to a hybrid approach are offered. When an organization moves
toward a hybrid connected data architecture, it should adopt four main principles: the coexistence of data layers, the
employment of the best suitable database technology for a given task, as well as expense minimization and service
maximization. To put it differently, starting on the infrastructural level, the FinTech should aim to devise
specifications for creating a 'tolerant' technological base. A hybrid approach typically spans two levels, the business
and technical infrastructure. At the business level, the approach specifies a shared data model and suggests potential
data services. A viable counterpart for coexistence at a technological level is supporting a number of distinct database
technologies with a middleware layer.

5. Case Studies and Best Practices in FinTech

To validate the best practices defined in the previous sections, we provide detailed case studies of the main
applications and architectures that would benefit from a hybrid approach. Each case study identifies a specific
challenge to be addressed, the strategy to handle the challenge, the operating conditions for the considered
application, including the specifics of the data and how it is operated on, and the resulting solution and its
performance. In the following, we present many case studies deriving from real-world examples. Domain logic
should be removed or modified to ensure no identifiable information is available for each case.
The enthusiastic adoption of hybrid databases in general raises the need for a methodology of scaling out based on
hybrid database technology, rather than scale-up or scale-out alone. Consequently, providing insights and solutions on
the effective integration of options would contribute to onboarding practitioners from the industry to deploy the
technology without tearing down their infrastructure to scratch. Furthermore, we propose engineering strategies and
design guidelines that have been practically considered and are ideally recommended for real application in the
industry. The design pattern is based on three main components: SQL, non-relational data store, and database
connection pool. As specialized skills in non-relational databases are not available in the industry, these designs focus
on ACID transactions that can be executed on a non-relational database and implemented atomically into traditional
live applications with access to data.

6. conclusion
In this paper, we have argued for modernizing financial market infrastructures with systems that combine native
SQL database management systems with NoSQL engines. In light of these trends, we consider the main results of our
study to be the following. First, combining relational and non-relational data systems provides a technological
foundation that can erase the constraints of legacy financial infrastructures. Second, the concrete benefits of the
technology solution for a financial market infrastructure, such as that of a stock exchange, are as follows: improved
query capacity, consistent reporting latency, optimal report turnaround, instant reading from the hybrid engine, and
reduction of systemic risk. Furthermore, implementing a native SQL and NoSQL hybrid engine could yield
processors with more resiliency.
Implementing a full-fledged native SQL and NoSQL hybrid system may take a significant amount of time, and
some parts of the system may especially be challenging to implement in a real use case. In conclusion, we note that
the research mainly points to the technology side of a financial market infrastructure. A hybrid system may take years
of tweaking, testing, and regulation compliance. In addition to what we listed as future research points throughout
this paper, the reality of harnessing a native SQL-NoSQL hybrid system could trigger a new wave of research in the
database industry spurred by the financial industry, which has the potential to reduce the need to repetitively analyze
and model processes over and over again, with performance tuned to different use cases. In the past two decades,
generally two groups of database researchers and practitioners did not see the future of the database query language
and the market infrastructure this way. More research can be had in database markets and data sharing and the right
models that can underpin this new market as well.

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