Open source as the foundation of fintech movement

Tavadia from BSE:If we had not changed the technology, we would now be extinctFintech is the name of the game in 2017. The former CEO of Barclays Anthony Jenkins predicted that half of the banks’ branches and employees would eventually be eliminated due to fintech. The impact of fintech has started to kick in in Hong Kong’s employment market, where the demand for technologists has increased significantly in the banking and finance sector.

To keep pace with the disruption and profound changes, many are looking for ways to accelerate its development with an agile infrastructure.

Innovate before fintech scales

“We need to learn how to innovate before the fintech [startups] learn how to scale,” said Brad Harrison, senior managing engineer infrastructure technology solutions, TD Bank, the second largest bank in Canada and the 19th largest in the world. 

To enable its developers to be successful, the bank has turned to open source. At the Red Hat Summit 2016, Harrison said the bank has developed four different private clouds with OpenStack technologies.

“Developers don’t need to worry about VPNs or the infrastructure, we provide the support for developers to be successful,” he said. “Make your developer successful then make your firm successful.”

The urge for rapid application development is also evident at Capital One, the eighth largest bank in the US. The bank has only five weeks to develop a mobile app and put it on the market, according to Jason Valentino, director of mobile engineering operations. 

Valentino said the bank has developed a mobile-first strategy, adopted PaaS and open source to speed up its development. He said the bank has also developed the Capital One Lab to explore and incubate new technologies and products. “We want to bring startup talents into the bank and revised the image of IT teams at the bank,” Valentino added.

Need for speed

On top of speed in application development, FSIs are also looking for agile infrastructure to accelerate the performance and scale of operations. This is particularly the case for stock exchanges, where millions of transactions take place every minute.

“Demands in the capital market space have changed drastically,” Kersi Tavadia, CIO at Bombay Stock Exchange (BSE) told Computerworld Hong Kong. “We needed a lot of speed and the previous architecture couldn’t scale up, the speed simply wasn’t possible.”

In the world of algorithmic trading and microsecond-based transactions, speed could mean life-or-death for a stock exchange. Tavadia said BSE on average processes 400 million orders per trading day, which is a whopping 40 folds increase compared to only five years ago, when the exchange could only process 10 million orders per day.

“If we had not changed the technology, we would now be extinct. It’s as simple as that,” he said.

It was the need for speed that drove BSE to take a bold move—transforming its entire IT system and infrastructure, including the trading systems, from a pure Unix environment into Linux and Windows platforms. This move also brought BSE to win last year’s Red Hat Innovation Award.

The journey to open source

Although Unix was predominantly adopted by the FSI sector for its reliability and scalability, he said BSE’s decision to quit Unix was relatively easy. The previous Unix system was not only slow, its ability to scale was also limited by a lavish upgrading bill.

“The amount of money we spent earlier was unbelievably large,” he said. “The amount we spent on a one-year maintenance contract can be spent on building this whole [new] infrastructure.”

Since the hardware was proprietary, he explained that the cost of upgrading computing power in the previous system was 10 times that of the existing Linux platform. Despite being an easy decision from the cost perspective, the practical journey to open source was more daunting.