# How open-source technology is securing the future of financial services Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-09-28 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: The Fearless Future of Financial Services: Embracing Meta Description: Discover how open-source technology is revolutionising the financial sector, offering innovative solutions to meet evolving customer expectations and stay URL: https://financedigest.com/how-open-source-technology-is-securing-the-future-of-financial-serviceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/graphicstock-back-view-of-bearded-young-businessman-woking-with-graph-and-charts-on-computersuclohxohx1-1736837749712-compressed.jpg) _By_ **_Tim Oldfield,_** _Financial Services Client Director at_ [_Mango Solutions_](https://www.mango-solutions.com/) _(an_ [_Ascent_](https://www.ascent.io/) _company)_ A decade or so ago, financial services firms would have run a mile at the thought of entrusting the future of their businesses to open-source technology. It was considered far too risky to expose such a highly regulated industry to software whose source code any member of the public can inspect, modify, enhance and even distribute – all free of charge. The advantages of financial bodies being able to manipulate code to meet their specific requirements to support fast and competitive innovations was clouded by security fears, many of which prevail. However, [financial services](https://www.financedigest.com/can-financial-services-brands-ever-be-credible-on-social.html "Can financial services brands ever be credible on social? ") leaders are now waking up in a world where competition is fierce and fast. New [fintech rivals are taking advantage of open source to offer customers better products and services](https://www.financedigest.com/britain-seeks-to-boost-banking-services-from-fintechs.html "Britain seeks to boost banking services from fintechs") that meet fast-evolving expectations. Open-source technology is no longer a risky option; it is the fearless [future of financial services](https://www.financedigest.com/the-future-for-financial-services-is-digital-engagement.html "The future for financial services is digital engagement"). **The “olde worlde” of financial services technology – shattered** Traditionally, the [financial services sector](https://www.financedigest.com/the-financial-sector-must-act-to-tackle-internal-data-security.html "THE FINANCIAL SECTOR MUST ACT TO TACKLE INTERNAL DATA SECURITY") relied on developing its own, tried and tested, proprietary software. Closed source, of course. Why? Because it wanted to [address compliance and security](https://www.financedigest.com/infosecurity-europe-agenda-spotlights-innovation-as-security-leaders-address-cybersecurity-spend-in-the-face-of-economic-headwinds.html "Infosecurity Europe agenda spotlights innovation as security leaders address cybersecurity spend in the face of economic headwinds") concerns with confidence, while creating and protecting its competitive Intellectual Property (IP). Then, a few years ago, as the rest of the world was starting to embrace open-source technology with [open arms](https://www.financedigest.com/after-rescue-by-open-arms-99-migrants-wait-to-dock-in-europe.html "After rescue by Open Arms, 99 migrants wait to dock in Europe"), something happened. Established technology vendors started acquiring open-source organisations. In 2018, [Microsoft bought GitHub for $7.5 billion](https://www.financedigest.com/microsoft-to-gobble-up-activision-in-69-billion-metaverse-bet.html "Microsoft to gobble up Activision in billion metaverse bet"). The following year, IBM acquired Red Hat for $34 billion. New challengers were now [running ahead with digital transformation and disrupting the market with a stream of innovative digital banking services](https://www.financedigest.com/russian-services-activity-shrinks-for-third-month-running-in-dec-pmi.html "Russian services activity shrinks for third month running in Dec -PMI"). Established financial services were having to jump to it, or risk losing out to ambitious new competitors. **A brief history of [open source in the financial](https://www.financedigest.com/australia-financial-crimes-regulator-opens-investigation-into-britains-entain.html "Australia financial crimes regulator opens investigation into Britain’s Entain") sector** Some would argue that the shift to open source within the [financial services sector](https://www.financedigest.com/how-big-data-is-sending-shockwaves-through-the-financial-services-sector.html "How big data is sending shockwaves through the financial services sector") began around 10 years earlier, when the financial sector started to move from closed-source Unix servers to open-source Linux platforms. This would massively speed up data processing, storage and trading infrastructures. In January 2016, the Second Payment Services Directive (PSD2) – the European regulation for [secure electronic payment services – boosted innovation](https://www.financedigest.com/why-the-finance-sector-must-prioritise-mobile-security-over-innovation.html "Why the finance sector must prioritise mobile security over innovation") and helped financial services adapt to new technologies, increasing the importance of Application Programming Interfaces (APIs). Many [finance businesses](https://www.financedigest.com/2016-the-year-of-technology-financing-the-year-of-business-growth.html "2016 – THE YEAR OF TECHNOLOGY FINANCING, THE YEAR OF BUSINESS GROWTH") started to depend on open-source programming languages such as JavaScript to build and implement APIs, as well as micro-services and other front-end assets to manage multiple customer activities. Then in 2017, the Open Banking initiative – promoted by the European Commission to open up [financial services and stimulate competition and innovation – further pushed the adoption of open source integration standards and APIs to help financial services firms work](https://www.financedigest.com/turning-a-blind-eye-wont-work-for-financial-firms-as-the-fca-tightens-its-grip.html "TURNING A BLIND EYE WON’T WORK FOR FINANCIAL FIRMS AS THE FCA TIGHTENS ITS GRIP") together better across borders. These [key developments allowed financial services firms](https://www.financedigest.com/how-green-are-your-investments-why-esg-data-integration-is-key-for-financial-services-firms.html "“How green are your investments?” – Why ESG data integration is key for financial services firms") to innovate faster and at a lower cost than before. Customers benefited from new services such as automated loan approvals and trading, chat bots and [fraud detection](https://www.financedigest.com/the-clues-to-detecting-fraud-are-hidden-in-relationships.html "THE CLUES TO DETECTING FRAUD ARE HIDDEN IN RELATIONSHIPS"). Success stories such as Capital One started to appear. They [invested in open source so they could deploy software faster and at scale while managing code vulnerabilities and security](https://www.financedigest.com/2018-it-security-predictions-methods-for-attacks-investment-areas-cybersecurity-strategies.html "2018 IT Security Predictions-Methods For Attacks, Investment Areas & Cybersecurity Strategies") risks. Within six years, [Capital One was one of the world’s largest digital banks with millions](https://www.financedigest.com/collegiate-ac-and-shuman-capital-launch-e300-million-european-student-living-fund.html "Collegiate AC and Shuman Capital launch €300 million European Student Living Fund") of accounts. **A new generation of** [data science driving business intelligence and real-time analytics](https://www.financedigest.com/data-analytics-scenario-planning-and-the-finance-department.html "Data analytics, scenario planning, and the finance department") Open-source programming languages such as R and Python are driving advancements in AI and [machine learning](https://www.financedigest.com/machine-learning-engineer-jobs.html "Machine learning engineer jobs"), generating live data insights across the board – from risk management to customer intelligence – allowing businesses to deliver hyper-personalised experiences in real time. While a cultural shift in many financial organisations is still a work in progress, global IT and [data quality teams can rest assured that many of the latest generation of analytics solutions now deliver secure](https://www.financedigest.com/the-challenge-of-keeping-data-secure-why-in-house-security-isnt-enough.html "The challenge of keeping data secure: why in-house security isn’t enough") and compliant access to popular analytic languages like R. Secure end-to-end validation mitigates the risk of adopting and managing open-source [software for repeatable and consistent analytic](https://www.financedigest.com/how-to-use-momentum-analytics-software-to-improve-portfolio-performance.html "How to use momentum analytics software to improve portfolio performance") environments, saving time and resources while generating tailored, dependable results. Governance-related concerns that previously formed a barrier to open-source [adoption among financial services](https://www.financedigest.com/matching-digital-adoption-with-cybersecurity-in-the-financial-services-industry.html "Matching digital adoption with cybersecurity in the financial services industry") can be safely consigned to the history books. Instead, firms can deploy the latest AI tools and [machine learning approaches to predictive modelling and statistical analysis](https://www.financedigest.com/grinding-machines-market-global-industry-analysis-and-forecast-till-2031.html "Grinding Machines Market Global Industry Analysis and Forecast Till 2031"), extracting business-critical information from many thousands of data sources. Moreover, organisations can draw on a rich pool of today’s graduates, who are experienced in programming languages like R for data science, [big data](https://www.financedigest.com/hedge-funds-suffer-big-outflows-in-q2-data.html "Hedge funds suffer big outflows in Q2 – data") analysis and visualisation. **The** [future of open source in the finance sector](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors") Today, banks are [working out how they can use open-source technologies](https://www.financedigest.com/what-is-5g-technology-and-how-it-works.html "What is 5G technology and how it works") to turbocharge their business intelligence and fuel data-driven transformation. The [benefits of open-source technologies](https://www.financedigest.com/the-benefits-of-adopting-cloud-technology-in-the-finance-industry.html "The benefits of adopting cloud technology in the finance industry") are compelling: powerful, low cost and reusable platforms and procedures that can be adopted across many projects. And with the next generation of open-source solutions delivering ready-made access to the tools required, it will be fascinating to see where [data innovation in financial services](https://www.financedigest.com/data-fake-will-be-the-new-real-in-financial-services-in-2023.html "Data: Fake will be the new real in financial services in 2023") takes us in the next 10 or even two years. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---