Open source technology’s adoption is picking up pace in the financial world as more and more organisations see its potential. However, the very nature of the technology can cause security concerns, especially as companies scale up using it.
In the recent The Fintech Times webinar, Percona, Finos and StandardDAO discussed how open source technology’s security and scalability can be balanced to create a recipe for success.
In the financial world, it’s no secret that organisations are constantly looking for ways to stay ahead of the curve. From disruptors to established players, institutions are increasingly embracing the power of open source software and standards in finance.
This adoption has allowed them to accelerate their product development timelines, meet the ever-growing demands of regulatory bodies, exceed customer expectations, and stay competitive in an increasingly crowded market.
In this webinar, Francis Bignell, journalist and lead LatAm correspondent at The Fintech Times, moderated a discussion with Michal Nosek, senior architect in the Percona solutions engineering team, Gabriele Columbro, founder and executive director at Finos, and Aaron Rafferty, CEO of StandardDAO to understand the benefits and challenges facing open source tech.
Barriers and challenges when launching fintech products through open source
The group began by discussing barriers when launching fintech products. Nosek said: “I think one of the biggest challenges when it comes to fintech products is the potential scale and the number of users that they may have if they’re successful. This is something that is really difficult to prepare for as it can happen so quickly from a technical perspective. I see many companies struggling to scale their products to keep delivering a consistent experience.”
In agreement, Columbro added that another challenge was “the fragmentation of the market. It is a very crowded market, especially in this sort of current economic climate”. However, he pointed out that there was still a huge opportunity for the tech’s adoption: “Besides the world of blockchain, I have not seen fintech folks truly understand or leverage open source yet. Especially not in a way that is actually strategic to their business.”
As the conversation turned to challenges associated with the tech’s adoption, Nosek noted: “There is a trap with using an open source solution. Sometimes it’ll feel super nice, and quick to develop and deploy. But there are restrictions but when you actually realise you need to face your country’s regulations and maybe regulations also in different countries.
“You may end up paying for proprietary version of the software that was supposed to be open source: a kind of open core trap that not all actually people understand. At this point, the majority of the technology’s benefits are gone at this stage.”
Are security concerns surrounding open source justified?
As the group discussed the challenges associated with open source, the topic of security came up. Columbro and Rafferty both pointed out the pros and cons of both adopting someone else’s open source software versus creating your own.
The three panellists agreed that open source’s nature was not a hindrance when it came to security but in fact a benefit. Nosek highlighted: “The truth is, that the more people know how things work, the more difficult it is to break into the system.”
Supporting that the community helps each other, Nosek also said: “It [open source core] actually makes it easier for the whole ecosystem and the whole community. Different companies with different use cases can openly share their problems with their product or potential vulnerabilities” and in turn, other companies can help ensure their software is prepared for this issue. Sharing issues is what helps the system stay safe from bad actors.
The right open source provider
As the panellists spoke about the importance of regulations and compliance when choosing an open source provider, Rafferty emphasised that providers must start a group discussion with regulators ‘now’. In doing so, it would raise awareness and in turn, allow open source to prosper.
The topic then turned to open source’s use cases. Looking to the future, Nosek said: “There will probably be more specialised solutions based on generic solutions. Open source projects will be built on other open source projects to actually solve specific use cases.”
As more organisations collaborate within the space, Rafferty discussed the importance of merging with other industries, using Elon Musk and the possibility of open sourcing Twitter as an example of how different industries can benefit from the tech. “We’re gonna start to see this kind of meld between cross industries.
“That is where we’re going to see new products come out, and we’re going to be able to see new use cases for financial technologies especially. We’re only touching the surface of open source’s capabilities, even though they’ve been around for so long.”
Tips for successful adoption of open source
As the conversation winded down, the trio of panellists shared what they believed the best advice for the tech’s adoption was. Rafferty explained how working with a company that is solidified in the open source space is the best way to accelerate a firm’s understanding of the technology.
A similar sentiment was shared by Nosek who emphasised the importance of doing research on a potential partner in the space. He added that finding the right partner now won’t only just accelerate the firm’s understanding of open source, but down the line, it will save time and resources by avoiding migrating to another solution.
Looking to the future. Columbro reinforced views he had shared earlier in the webinar surrounding AI. Having previously stated that the technology has a lot of potential to bring innovative solutions to the market, he added that: “AI is only going to reinforce and accelerate the usage of open source.”