Open Source software has taken the world by storm over the last two decades or so. If you look under the hood of any of the big software applications, you will see a number of open source libraries being used in the product. For example, if we look at the number of libraries being used in the Adobe Reader XI, the list of third party license/notices run into 61 pages, with a variety of open source software being used ranging from graphics libraries to compression and even some libraries from marquee projects like Open Office, Mozilla and the Android projects.
However, we do not see many domain specific application softwares in the open source world. Things are slowly moving into this direction, but there is a lot of progress to be made. And, this may be the next big thing in the open source world, where one would see new companies release mainstream application products which are open source, with an “Open Core” business model and giving the Traditional vendor companies a run for their money with their quality, feature set and rapid innovation.
Benefits of Open Source Software
It is now widely know the immense benefits of open source products:
- Quality – Open Source leads to more high quality-products or libraries. I would mention the example of Boost libraries for C++, which is a very high quality peer-reviewed cross-platform C++ libraries.Also, making a product open source leads to more set of eyes looking at the code, thus enabling more peer review of code and probably, leading to faster fixing of defects as well.
- Innovation – When you have open source products, there is a likelihood that more people would be using your product in the way you would never have imagined. This leads to feature requests and often redesign of the applications, making them better in general.
- No Vendor lock-in – Since you have the source code, there is no need to be locked into a particular vendor when looking for upgrades and maintenance of the product. An open source ecosystem leads to more service providers, who would work be more than willing to enhance and maintain upgrades or fulfulling special requirements of the client.
- Transparency – Software cannot get more transparent than this. With an open source product with significant community,
- Security – Obscurity does not help when it comes to information security in software products. Open Source software leads to a healthier and more secure products.
- Stand on the shoulder of giants – Lots of great open source software has been possible because of the large number of open source projects which done been done before. A lot of “big data” applications and frameworks may not had been possible without Hadoop.
OSS being used in Financial Firms
If you look at technology stacks in any of the large institutions (particularly, financial institutions, as we are in the financial technology space), one would see a large number of open source products being used everywhere.
GCC and Clang have been leading the way in terms of feature support for C/C++ compilers and they have been way ahead of the commercial competitors, in terms of the new C++11 standard support.
Open Source Technology Platforms
Given the fact that fundamentally most technology platforms within capital markets do very similar things (access information, manage trades and risk, comply with regulation, etc.), there could be a significant growth potential in the market to collaborate constructively. They can leverage off latest and greatest open source technologies and developing technology solutions for the financial markets in an open-source fashion, leading to lower cost of platform development, deployment and use that is highly desired by various financial services players (especially in the current market conditions where there is a massive slow-down since last few years and the revenue / profit model of these participants has been significantly eroded, and the requirement to spend to technology is only increasing) and let the niche players build their specialty or specific premium solutions on top of the core open source core financial services technology solutions.
Rise of electronic / low touch trading
Investors will need less and less hand holding from brokers and their traders. They will do more self-directed trading with the ease of use of technology. The western and developed markets have already seen this trend in the past decade (around 70% of American and 50% of European trading is driven by electronic tools); the emerging markets will move towards a similar ratio of technology driven trading. The trading workflow will move to more web and hand-device based platforms.
Low latency trading growth will slow down; given the massive investment required to push it to faster speeds (example Chip based / FPGA trading platform cost is very high and the potential returns do not justify the investment)
Self-learning machines leading to virtual and artificially intelligent trading is an area that may witness some reasonable growth.
Virtual simulation of trading environment and virtual trading may meet advances in the gaming industry.
Enhanced User Experience
The user experience for traders would continue to dramatically improve with the ease of information access, simpler and automated trading workflows (like 1 touch or even no touch fully automated trading).
Devices interactivity enhancements
As people become more mobile and the technology through cloud and various computing devices (mobile, tablets, laptops) support the ease and continuity of platform access, the boundaries between all these devices would be blurred and the user would seamlessly pick up any device in any location and be able to access information and trade into any financial markets. The optimization between the location, cloud access, computing power used, based on the proximity and the markets to be traded could lead to interesting business opportunities.
Social driven trading
Social networks would play an important role in the trading life-cycle as the information sharing becomes faster, more trust-able and the investor sentiment analysis becomes more feasible through the social platforms like Twitter, Facebook etc. Social collaboration and interactivity may lead to better trading ideas which can create more value over time.
Blurring of boundaries between capital markets players
There is likely to be more competition across the value chain of financial services players like brokers would continue to match orders like exchanges do, exchanges would offer broker alike trading and algo platforms so as to control the shift of liquidity, institutional investors may also get into broker and exchange roles somewhat to avoid information leakage etc.
There would also be a large consolidation among various capital market participants. And the competition among exchanges, brokers, investors would continue to become more global as world becomes .
Rise of regulation:
The regulatory bodies will try to control the increase in adoption of technologies within the financial services (given that s very hard for them to follow, understand and regulate the innovation in the market) leading to slower future growth in innovative ways of trading. There will be a shift towards more transparent modes of trading (example move from OTC to exchange listed / cleared products).
Tomcat is more or less the standard application container for most Java applications. In the J2EE space, JBoss is as prevalent as WebSphere.
MySQL and PostgreSQL have led the way for most open source databases. And, in today’s you will not find many applications which do not support one of these two leading open source databases.
Firefox and Chromium have been the first browsers with support for most of the upcoming standards, be it features in the latest HTML5 standard or CSS standards. Microsoft Internet Explorer has been more of a laggard in this space. Also, commercial browser vendor Opera has ditched their own browser rendering engine Presto in favour of Webkit (Blink, actually).