By Nigel Abbott, Regional Director North EMEA, GitHub

Innovation in financial services (FS) is universally regarded as table stakes, and Covid-19 has undoubtedly accelerated digital transformation. The old cliche that necessity is the mother of invention has really rung true.

While FS businesses want to move fast and embrace innovation at pace and scale, they inevitably face familiar hurdles. Innovation can be hampered by challenges such as difficulties in streamlining operations, managing security and the ability to act fast.

Open source represents a shot in the arm for digital transformation in FS. The bottom line is that it is an enabler of innovation. The fact is that 99% of software projects contain an open source component, and as many as 72% of Fortune 50 companies use GitHub to collaborate and build better software, faster. It is driving innovation in every sector worldwide.

Here’s the challenge though: while FS companies are increasingly moving towards open source, historically open source adoption has been slower than other industries. The knock-on effect is that the pace of innovation has not accelerated at optimum pace.

This relative reluctance to embrace open source to its full extent has been perpetuated by four myths that need busting:

1. Open source is not prevalent in FS

This could not be further from the truth. All enterprises, including FS companies, consume open source at an astounding rate. FS institutions rely on open source software to build the best software for their customers, improve infrastructure, and unlock the potential of their engineering teams. Nationwide, for example, has completely redesigned its DevOps processes to allow it to respond faster to market changes and keep pace with customer expectations. However, much of the time FS businesses simply don’t realise they are using open source. When they actively embrace it and participate fully in the open source community, the impact is transformative.

2. Open source means you are giving away your IP and data for free

Quite the opposite. Open source does not require FS businesses to share all their secrets and give away their competitive advantage. Instead, taking an “innersource” approach allows financial institutions to take the skills of developers who are accustomed to using open source tools and brings these inside the company firewall, providing a secure internal platform for working collaboratively on projects.

That means FS businesses benefit from working within a community of like-minded people, that allows them to share expertise, code and reuse workflows. And companies can rest assured that any nonpublic code will remain securely within their environment – and only developers with appropriate permissions will be able to contribute. This approach is favoured by the likes of Stripe, who found that an innersource culture doesn’t only benefit developers – it can also be used to encourage contributions across all groups, from infrastructure to marketing.

3. Open source security is an issue in FS

There remains a common misconception that there are higher security risks associated with code openly available to anyone who wants to use it. Yet open source is fundamentally secure because of the collaborative nature of how code is built. As the old saying goes, “many eyes make for shallow bugs”. Finance businesses can rely on open source projects to reduce the amount of time and financial investment in delivering secure products. Research from Red Hat actually found that for enterprises using open source, security is regarded as a top benefit.

4. Financial organisations do not contribute back to the open source community

This is untrue. Financial enterprises of all shapes and sizes are big participants in the open source community and are leading by example, sharing meaningful code contributions. Challenger banks and institutions such as Goldman Sachs contribute to open source initiatives via foundations such as the Fintech Open Source Foundation, FINOS. By opening up their code and ideas, FS companies can share lessons and support the whole community – helping them deliver better services and more value to their customers. And crucially, they are advancing a community that they can systematically tap into and benefit from.

Covid-19 has created an innovation imperative. While the relationship between open source and FS firms has been complicated, it is abundantly evident that the sector recognises its ability to expedite innovation. Now is the time for the industry to tackle misconceptions about open source head-on and fully unlock its power to supercharge innovation.