By Kris Sharma, Financial Services Sector Leader at Canonical
From mobile phones to the International Space Station, the modern economy is running on open source and has had a positive impact on every aspect of our day to day life. Even with such widespread usage of open source, the financial services sector had been relatively slow in adopting and contributing to open source in the past but that is changing fast. .
Financial institutions are increasingly faced with the need for agility and business velocity to keep pace with changing market conditions, increased customer expectations while satisfying all the regulatory and compliance requirements, security specifications and corporate standards.
Finserv digital transformation is spurred by technology, and the leading technologies spurring digital transformation are open source.
Why deploy open-cloud technologies?
There are various reasons why developers and enterprises choose open source. Open source code outlives its original authors as it is constantly updated through active open source communities. Open standards and peer review ensure that open source code is tested often and given the source code is freely accessible the open source code is actively checked and improved upon by peer programmers. The existence of active open source communities allows users to find help, resources, and perspectives that reach beyond one interest group or one company. With open source, one is not locked in to use the code in one specific way, thus allowing for flexibility to suit unique business or community needs. Open source is more than just software development, it has become a movement and a way of working. The open source movement uses the values of collaboration and decentralized production model of open source software to find new ways to solve problems in communities and industries.
Open-source platforms are driving emerging technologies like artificial intelligence, blockchain, and container-based architectures that have various use cases for the fintech sector. Open source provides a unique and powerful opportunity for financial institutions to not just adapt to the changing times, but thrive.
How open-source technologies are shaping the banking sector?
Open source software is finally getting the attention it deserves by financial institutions. Over the past few years, financial institutions have been forced to undergo a digital transformation at all levels, spurred on by developments in the fintech movement and the rising popularity of finserv digital players. In the finserv transformation journeys, open source holds formidable promise. Open source is a valuable complement to the existing technology ecosystems at financial institutions.
Digital and IT leaders at financial institutions realise that open source will help them accelerate development of emerging technologies, execute their digital strategy and mitigate risk.
Open source projects have seen more than a billion contributions and open source projects activity also throws light on hot spots of emerging technologies that shall shape the financial services business landscape. Consider AI/ML technologies and platforms that have seen widespread adoption within financial services. Many of AI/ML platforms such as TensorFlow, Jupyter notebooks, Kubeflow that are open source have seen explosion in popularity. TensorFlow, a machine learning platform originally developed in 2011 by a handful of internal researchers at Google. Today, TensorFlow has more than 16,000 repositories and 10m lines of code contributed by the open source community. Kubeflow currently has more than 1000 repositories with 14K commits. The size and diversity of the developer base encourages fintech organizations like PayPal to use deep learning libraries to recognize, and get ahead of, complex fraud patterns.
A financial institution’s long-term success and competitiveness will be largely determined by its ability to be more agile, responsive, and scalable than its competitors. The winners will be those that successfully adopt platform and ecosystem models, and actively collaborate with other organizations to leverage open source for faster innovation and deliver next-gen banking.
Open source allows banks to build the right products that their customers need in today’s fast-paced, ever changing digital world. The use of open source software ensures that banks’ offering is ever evolving and improving, and reflects what their customers really need. Open source also has a key role in enabling financial institutions to reduce their IT budget spend on software licensing and services.
On the path of digital transformation, banks need frictionless cloud computing. They will need to leverage the right mix of cloud services – a hybrid multi-cloud that provides consistent experience and unified management across multiple public clouds, private clouds, and traditional infrastructure.
Open hybrid cloud will allow banks to manage not only their current public and private clouds, but those they may add in the future. Open hybrid cloud will enable scaling and app deployment across public and private clouds for greater consistency and efficiency.
In conclusion, open source not only provides access to trending technology domains but allows finserv IT organisations to focus on creating new business capabilities and spending less time on writing non-differentiating code that could very well be imported from well-worn open source libraries. By determining which services are strategic versus supporting, Financial institutions can embrace open source technologies for ones that are supporting thereby freeing precious resources and internal cycles for strategic services that drive competitive differentiation.