Despite their history of resistance to adopting open source software, banks are now increasingly embracing open source technology as they seek to counter the emerging challenge posed by fintech. Though many banks are still slow to adopt these innovations, most experts agree that the financial industry will need to adapt to emerging trends like decentralization and open source banking if they want to continue to serve their customers’ needs.
Few expect that adoption to come overnight since full adoption of open source banking requires cultural changes in financial institutions. That takes time, of course, but many of the largest banks are now in the process of developing their own open source ecosystem to remain competitive.
What is open source banking?
Open source banking’s goal is to provide financial institutions with the technologies they need to develop customer-focused products that satisfy clients’ needs. It does this through a collaborative model that allows banking data to be shared by multiple parties via the use of APIs. Customers can benefit from tools that allow them to better manage financial data across multiple accounts, and a host of personalized financial services and products from their banks.
Banking giant JPMorgan Chase has been a leader in the adoption of open source technology. The company has focused on developing their open source operations in a resilient manner, to ensure that the open source software supply chain is as secure as possible. The company has also launched its own enterprise-level, open-sourced blockchain network, Quorum, targeted toward helping businesses build scalable applications.
Late last year, JPMorgan partnered with Mastercard to launch its open banking Pay-By-Bank tool, which allows businesses to provide customers with easier ACH payment options on their online payment pages. The firm has also been actively partnering with and supporting fintech companies that are pushing the bounds of financial technology.
Meanwhile, companies like Visbanking, a leading bank information service provider, have been moving quickly to contribute to the open source community that the banking industry needs to keep pace with these developments. In a press release announcing the launch of the company’s new fdicdata open source package, Visbanking founder Brian Pillmore highlighted the important role open source innovation will play in banking’s future:
“We are excited to contribute to the community with this package and provide it free of charge to everyone. Our team, led by Ugur Dar, has worked hard to create a package that provides access to important data and tools that can help developers in the banking industry to build better models and make more informed decisions. We believe that this open source development will have a significant impact on the industry, and we are thrilled to be a part of it.”
Fdicdata is designed to provide users with easy access to the Federal Reserve Deposit Corporation’s BankFind Suite, which offers a host of information from that organization’s banking data records. The suite is part of the FDIC’s own efforts to modernize by providing a better user experience and improved functionality, including open source API for developers and data miners.