May 16, 2020

Open Source and Cloud: A Power Couple in Financial Services

Asset Control
Mark Hermelin
open source technologies
Cloud
Mark Hermeling, CTO, Asset Con...
6 min
Mark Hermeling, CTO, Asset Control,exploresthe opportunities driven by the combination of open source technologies and cloud in financial services firms...

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

Mark Hermeling

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.

For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.

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Jun 10, 2021

FIVE things fintechs must do to keep investors onboard

Fintech
Investment
venturecapital
AI
Brandon Rembe, CPO, Envestnet...
4 min
Fintech innovations drew in first-time investors who reshaped the markets. What new advancements will help them continue their rise?

New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.

Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?

The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.

Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.

Equal access to financial wellness education

Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.

The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.

More personalisation

Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.

For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.

Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.

The rise of AI-Powered Advice

Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?

Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs. 

Focus on financial mental health

New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.

It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.

Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.

Gamification for good

The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.

Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.

Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.

The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.

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