Open Source and Cloud: A Power Couple in Financial Services

Mark Hermeling, CTO, Asset Control, explores the opportunities driven by the combination of open source technologies and cloud in financial services firms.

Open source technologies are increasingly attractive to financial services firms. They are in broader usage across the sector as they are more widely available and are easy to adopt, lowering the barriers for usage in new projects.

As well as helping clients reduce software and infrastructure costs, the increasing adoption of open source is fuelling innovation across the sector and has become increasingly key for firms across financial services. Open source is ideal to use in sandbox environments and experimentation, often leap-frogging existing legacy technology stacks. Its wide acceptance and growing ease of use helps firms to drive strategic decision-making and deliver their operational goals.

The psychology of engineers often fuels further innovation. Typically, they like to work on cutting-edge projects and they appreciate the peer recognition that stems from contributing to open source projects. Using the software also makes it easier for firms to start small on new projects without having to go through a protracted procurement or tendering process. This in turn can deliver crucial time to market advantages, accelerate the development process and – through lower cost - quickly build a portfolio of innovative projects.

Driven by Cloud

In addition to the benefits outlined above, the uptake of open source technologies by financial services firms is also being driven by the growing prevalence of cloud resources. In fact, the two technologies often go hand-in-hand.

One of the reasons they are such a good combination is the fact that they came of age together. Open source NoSQL database technologies like MongoDB and Cassandra are highly-scalable, flexible and good for big data storage and processing, all qualities that the use of the cloud can further support.

The two technology areas complement each other really well. Traditional applications, using e.g. a commercial RDBMS as a database, can of course be shifted to the cloud but will not necessarily benefit from scale advantages and the more flexible way of provisioning resources that cloud infrastructure brings.

Today, adopting open source typically means deploying cloud native apps and migrating workloads to public or private cloud built on open source infrastructure. Open source often provides foundational technology, including languages, libraries and database technologies that can provide a rich foundation to quickly develop applications. Firms can maintain cost-effectiveness, while tapping into the expertise of the open source user community.  Also, deploying open source in the cloud allows firms to adopt a more agile opex-based model, sourcing capacity when they need it, which in turn leads to lower capital expenditure.

In addition, open source technologies have to be weighed against the increasingly deep and proprietary tech stack offered by the main cloud providers as they can provide some insulation against the problem of vendor lock-in. That, coupled with an increase in the uptake of managed services options, is making open source still more attractive to financial services businesses and further driving innovation within these organisations.

Why managed services matters

A managed services approach can, after all, play a key role in helping financial firms overcome the challenges they may face today as they migrate over to a cloud-based managed services approach.

Firms will, for example, need to ensure they are picking the right open source projects where they will attain optimum value and also ensure they use the right open source tools. There will, after all, often be a range of competing tools available to them which could potentially be applied to a specific problem and choosing the right one is critical. Some technologies, such as Python, Spark and Cassandra, have caught enormous momentum. Others may have lost it. So it is important that firms do their normal sourcing homework. 

Aside from these more general challenges, financial services firms will be likely to have more specific data management issues that they need to address. They should be aware that there may be constraints on where they can put their data. They may, for example, need to store sensitive customer information in the cloud outside certain countries in order to avoid breaking any privacy or data protection laws. They may have concerns about keeping proprietary algorithms outside infrastructure that they alone completely control.

They may well also want to use NoSQL database technology that came out of open source for data management purposes. Cassandra is good for time series data modelling, while Spark is effective as a data processing framework. As financial services firms look to optimise their data usage, data scientists need to be equipped with the requisite data preparation and data quality solutions as well as with the tools they would need to analyse the data and test their data models.

In addressing a move to open source, firms should look to leverage the help of curated, open source solution providers that both understand the cloud and use open source themselves and therefore benefit from some of the advancements that have been made in order to deliver cost-effective scalable solutions.

By partnering with a commercial provider in such a way, firms will also be able to access support from providers. In other words instead of taking on the onus for leveraging the technology alone, the onus will be on the provider to deliver the underlying technology which will often also involve using various cloud infrastructure providers to help financial services clients optimise their cloud infrastructure deployment and get the most they can out of open source technology today. 

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Mark Hermeling, CTO, Asset Control

As CTO, Mark is responsible for the overall leadership of Research and Development at Asset Control and works closely with Product Management and Technical Services to drive continued growth and product innovation.

Mark has more than 20 years of management experience, developing and managing software products and services, predominately in Finance Services, including roles at Sungard and Accenture. In his most recent position, Mark was CTO for Glint pay, where he managed their technology function. He holds two Bachelor degrees from The Hague University of Applied Sciences and a Master’s degree from the University of Delft, the Netherlands.

About Asset Control

Asset Control is the market leader in data quality software solutions for financial data. Focused on business user enablement, we help clients simplify complexity and ensure users across buy and sell side make the most of their data assets by providing easy data integration, data cleansing, distribution and data discovery solutions.

We service a blue-chip client base globally and our award-winning solutions provide rigorous processes to secure high-quality data, easy integration into business user workflows and a trusted environment for advanced analytics. Delivered through managed services, cloud or on-premise deployment, our highly scalable products help the world’s most successful financial institutions meet their risk management, valuation, security master and operational needs with mission critical reliability.

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