Open source is a source code that is made freely available for possible modification and redistribution (Source : Wikipedia).
Open source code has been there for long outside of the Fintech and Banking domains, although things are changing now as more and more companies and banks are leaning towards not only using open source software but also opening up their own code in some cases as well as contributing to open source projects.
Open source is a good thing as it helps solve real life problems and also encourages collaboration and new development of software that can benefit the industry. Many banks and FIs (Financial Institutions) have started using open source softwares now and also contributing or even open sourcing their own codebase.
Using Open source software provides the following few advantages to banks and FIs. First of all, they are not locked-in with a vendor for any specific products which also reduces the costs associated with licensing. This also reduces the overall development time by utilizing pre-developed modules instead of starting from scratch all the time. Open source can also be customized to serve the needs of the banks and FIs as sometimes they have different use cases internally.
Also, some notable companies/institutions have started or already have solutions which can be used to create new banking/fintech services that can reduce the overall time-to-market in such a fast moving landscape.
- Apache Fineract - Apache Fineract is an open source system for core banking as a platform. Fineract provides a reliable, robust, and affordable solution for entrepreneurs, financial institutions, and service providers to offer financial services to the world 2 billion underbanked and unbanked.
- FINOS - Fintech Open Source Foundation which provides an independent setting to deliver software and standards that address common industry challenges and drive innovation.
- Open Bank Project - Open Bank Project (OBP) is an open source RESTful API platform for banks that supports Open Banking, XS2A and PSD2 through access to accounts, transactions, counterparties, payments, entitlements and metadata - plus a host of internal banking and management APIs.
- Moov.io - Moov is a portable, extensible, open-source platform for embedding banking services within any application.
Although open source is prevalent outside Fintech and Banking for long, it's the right time for Fintech to start using the solutions that are already available and even start contributing and open sourcing more so the whole ecosystem can benefit from it.