7 ms·

Open source is coming to financial services

231 points by jseliger 5y ago

travisporter 5y ago
Andreessen Horowitz (known as "a16z"). I guess they don’t count the space? That would make it a17z
- sillysaurusx 5y ago
  ... I never once made that connection. Thank you.
zz865 5y ago
> Just as modern architects can source the best-in-class parts from around the world to customize a home for its occupants (windows from Italy! toilets from Japan!), Good analogy. This stuff doesn't apply to 99% of us.
webmobdev 5y ago
I'll believe this when banks start using Postgres ... it's amazing the stranglehold that Oracle has in this sector (I mean, when considering the price they charge).
greenail 5y ago
You could argue that it is not the technology stack that creates a barrier to entry for financial services but rather the existing relationships and levels of comfort with the regulators. Said another way, let's assume the regulator is not keeping up on the latest and greatest trends. Let's also assume the regulator wants to avoid adding lots of extra work and due diligence. We could assume the regulators were not quite as smart as the higher paid banking executives. What do you think the response will be when you push for big changes that need to happen quickly? What incentives exist for regulators to change?
094459 5y ago
Odd that this post omits any mention of FinOS, a pretty significant stakeholder in open source and financial services. I wonder why they missed that out?
squiffsquiff 5y ago
Financial services are already all over open source software. What even is this article? AWS heavy open source base: https://aws.amazon.com/financial-services/ https://aws.amazon.com/financial-services/ Gcp, same story: https://cloud.google.com/solutions/financial-services https://cloud.google.com/solutions/financial-services
- sumtechguy 5y ago
  Yeah this sort of feels like one half of an advert campaign. The 'build a need' part. Then a bit later we will get to see who is selling something that just happens to fix it. The links you gave are more for 'banks like to keep their stuff in house but we can keep it secure if you rent our machines'.
pid-1 5y ago
Cool stuff, most banks, brokers and hedge funds have no FOSS culture. That said, the major blockers for financial services, at least in my country, are sort of unrelated to open source software being available. Thinking about the most basic questions one needs to answer to start a fintech: 1. I want to create a bank. How do I do that? 2. I want to issue credit cards / lend money / make a payment system. How do I do that? 3. I want to start an investment fund. How do I do that? Those are just some examples, but each one of those questions lead to infinite rabbit holes of laws, regulations, bizarre costs and arcane systems to integrate to. I have more experience with (3) and stuff like getting reliable market data, connecting to brokers and exchanges, sticking with compliance rules, etc... are easily the most painful and costly bits of my job.
- bloudermilk 5y ago
  What would you suggest as a good starting point for a founder looking at (3)?
  - carnitine 5y ago
    Speak to a lawyer who specialises in it. Everyone who starts a fund pays a lawyer to do all of the paperwork, in many cases it’s pretty boilerplate.
- molsongolden 5y ago
  In the USA, there are XaaS solutions for most of these now. It's possible to start a bank, issue cards, facilitate payments, etc. all on pre-built infra + APIs and your job becomes building the user experience and customer/vertical-specific tools on top.
- blitzar 5y ago
  #1 & #2 dont touch with a barge pole. #3 get a copy of excel.
- fijiaarone 5y ago
  These are the three biggest questions that keep the financial services sector (at least those who think about technology and innovation) up at night. 1. How can I prevent someone else from creating a bank. 2. How can I prevent someone else from being able to issue credit cards / lend money / make a payment system. 3. How can I prevent people from being able to make investment funds.
bob1029 5y ago
As someone who develops software products for the financial services sector, I can assure you that the thing most stakeholders are looking for right now is simplification of operations, not sharding operations out to even more vendors (OSS or otherwise). Every single one of our customers is looking for a path back to something that looks like the mainframe in terms of vertical integration of the business stack. Most got taken for a really bad ride by legions of consultants over the last ~2 decades and now have to visit 5-10 different system interfaces to take care of a single customer - A horrible combination of green screen, web sites and random pieces of paper that have to be scanned in just right. The list of procedures for some types of activities is bigger than the stack of disclosures the end customer receives. Many of our clients are stuck in some contorted stance with half their stack in AS400-land and the other half scattered to the various "cloud" services which are mostly just random websites/services with shitty SOAP APIs (or no APIs at all). The only financial services companies that are seeing positive uplift from these sorts of initiatives are those with enough resources to try this path, fail at it, and then decide they wanted to build 100% of their own stack in-house anyways.
- 3maj 5y ago
  >The only financial services companies that are seeing positive uplift from these sorts of initiatives are those with enough resources to try this path, fail at it, and then decide they wanted to build 100% of their own stack in-house anyways. The issue is a lot of the executives that join the bank's C-suite after 10-15 years of experience usually come from consulting... And as you can imagine they keep hiring and re-hiring their old firms to have 2-3 business graduates come and make a PPT telling a room full of engineers and developers how they should be building complex systems.
  - bob1029 5y ago
    > and make a PPT telling a room full of engineers and developers how they should be building complex systems. This is unfortunately not an experience I am unfamiliar with. I have to pretend to eat a big plate of humble pie on the first technical call with a lot of our clients. Once you learn their first reaction is going to be to reject your proposal on arbitrary grounds (i.e. a new security theater show), you start to present simpler proposals purely for the sake of tripping their initial response. Once you get them to fire their objections across the way, it is really easy to review the impact and build the real proposal that meticulously deals with each point that was raised.
cynusx 5y ago
It's always helpful to make the distinction between problems and solutions; it's true that traditional finance providers are horribly stuck in legacy systems, however their main problem is not so much that they are unable to rebuild. Their main problem is that decision power is so federated across the organization that it's impossible to even decide to rebuild their stack in a vertically-integrated way. The only way an organization can revamp this is by actually owning the technology entirely in-house and building up a completely independent product and engineering division. At the end of the day, changing code is orders of magnitude cheaper than a change management project with 12 managers and mandated retraining of 400 internal personnel. In my humble opinion, this type of change in the financial services industry can not come from incumbents.
m-i-l 5y ago
Another Strange article from A16Z. Open banking (PSD2 etc.) is primarily about open data and open APIs, not necessarily open source.
- twelve40 5y ago
  yeah it really read like the author is mistaking open APIs for open source.
  - rmesters 5y ago
    Actually, the article uses "open banking" correctly in this case. The author believes that if all banks used open sourced tools for exposing their data via APIs (as opposed to building everything from scratch), we'd have more connectivity - which is true. In Europe, for example, there's 6,000 banks and there's at least thousand different interpretations of what is a PSD2-compliant API, which makes connectivity hard - you have to use an API aggregator to connect to all these APIs (unless you want to connect to each API separately). If they all just used open source libraries, we'd have less APIs to connect to, which means better connectivity.
monkeydust 5y ago
Man the a16z marketing machine is working hard unfortunately at cost of quality. For those interested in FS and open source today, especially through a capital markets lens check out: https://www.finos.org https://www.finos.org Lots of great projects, one I used recently and a favourite was this: https://github.com/finos/perspective https://github.com/finos/perspective
- texodus 5y ago
  I work on perspective, glad you dig it! We just released 1.0 this week after 4+ years of open-source-first development. Perspective was, in a previous life, a proprietary internal engine for Python/desktop applications at JPMC, that was ported and open-sourced to FINOS as a web assembly based browser component. Open sourcing perspective had a huge impact on the project, not just from the awesome community contributions and engagement and support from FINOS itself, but (as a huge surprise to me) the perspective project's visibility within our company.
  - lifeisstillgood 5y ago
    >>> runtime mode allows ludicrously-sized datasets I think I am in love :-) This is what WebAssembly is supposed to for! Could it easily find the "how to contribute" if there is one please point me at it :-)
- hn_throwaway_99 5y ago
  I went to the finos website and looked at their list of repositories, and literally none of them looked like things I'd be interested in from a financial services/banking perspective. I saw a lot of very "high level infrastructure" repos for things like processing JSON, standardizing models, etc. The example you gave, Perspective, honestly looks like the most interesting of the ones I saw, but it's still a generic data visualization component. I contrast that with the Moov.io repos (full disclosure, I'm familiar with them though I haven't contributed), and they're actually nitty gritty details of dealing with the banking system (at least in the US), things like processing ACH files, wires, ISO 8583 (card network) messages, Image Cash Letter, watchlists needed for KYC and OFAC checks, etc.: https://github.com/moov-io https://github.com/moov-io TBH it just sounds like a very apples-to-oranges comparison.
joshuaissac 5y ago
> While fintech has traditionally been default local — most banks are driven by country-specific regulations, infrastructure, and consumer payment preferences — many global companies are now adding financial services. This is not true at all. Regulations that span multiple countries like the EU's MIFID I (2007) have been around for a long time. Even institutions in countries outside these markets would need to comply when they want to participate in the market. One of the companies I worked for previously has been licensing financial software (including those implementing national and international regulations) for decades to financial institutions across world, and they were not alone in their market. Going global is nothing new in this industry. Neither is open source. QuickFIX, for example, is two decades old.
- villasv 5y ago
  Americans are very comfortable in extrapolating the US experience as a global reality. Here they’re talking about the Wild West of small banks that they have.
  - fakedang 5y ago
    That was precisely my thought when reading this article. Literally how many startups spawn in America for simple financial tasks that are easily handled by banks in the UKEU? In some cases, there are banks in India and most of the developing world that have more advanced services for consumer banking than the US. China has obviously already raced ahead far more than the US.
zz865 5y ago
This is just fluff. Financial services and banks are not the same thing. The biggest problem with banks in the US is no free accounts, we need banks with physical branches to offer accounts for poor people to have. There is no money in this so a16z would not be interested. Everyone else is looked after already.
- reaperducer 5y ago
  we need banks with physical branches to offer accounts for poor people to have. Coming soon to a USPS near you. It'll be like 1965 again.
- molsongolden 5y ago
  There are free bank accounts at many banks? Also, lots of neobanks are offering free accounts and features because their revenue comes from interchange on spending + interest + future cross-sells or lending.
  - zz865 5y ago
    Not with branches, which is what half the population wants.
    - deleted 5y ago
      [deleted]
- fijiaarone 5y ago
  Why do people without money need to have bank accounts? If you answer is: To be able to make payments Then maybe a better question is -- Why should people need bank accounts to make payments. Note: Banks are not likely to ask this question
  - hakfoo 5y ago
    As much as anything, people need bank accounts to receive payments to be part of a modern economy. Many retirees would fall well into the "people without money" category, but they still need to get their Social Security payment direct deposited. Many employers, especially in low-wage "people without money" sectors, aggressively push extortionate-fee prepaid-debit products on their workers if they can't accept a conventional direct deposit. Putting everyone on a single network, at the very least for this use case, reduces cost and complexity. Can you imagine the guaranteed confusion and error in a system where 40% of your employer's payroll was paid over ACH, 25% via crypto transfers split among a dozen blockchains, and the rest via paper cheques or prepaid debit cards mailed out? Yes, it's not the only possible solution to a payments ecosystem, but it's the closest thing to a universal one we have. People understand how it works and there are well-established risk and mitigation models for it. This is part of the reason I'm a bit hesitant about things like the "self banking" paradigm via cryptocurrency. Even once we solve the nuts-and-bolts problems of risk mitigation and seamless user experiences, it's likely to be a sharded market for the short term. I can easily imagine incurring fees and delays because my money is in a Dogecoin wallet but the water company only wants Monero to settle their bill.
rexreed 5y ago
What is the agenda pushing here? This is clearly not a push for change in the actual financial services or banking sector. Is there an attempt to shift power away from "traditional" banks to "untraditional" financial services institutions. The idea of Lyft being a financial services provider has me more concerned than optimistic. I don't want a service intermediary controlling the financial future of the person providing the service. Scary.
lordnacho 5y ago
Hedge fund guy in me thinks this is all marketing. The whole XaaS picture thing looks like a nice OSI stack type of thing, but it's not how the systems work together (funnily enough networks don't work that way either lol). They're more like a graph, maybe a bowl of spaghetti. For instance the compliance part reaches into everywhere. You can't just write an API layer and do .complies() -> bool. Some of it even requires you to implement PTP timestamps. And it certainly reaches into reporting, where you have all sorts of strange requirements. I recently looked at a file with over 100 columns to be populated. Having said that there's plenty of use of OSS. I've rarely been anywhere that doesn't use Linux or git or various other common software. I haven't seen a lot of proprietary languages either (Delphi/Slang/Matlab).
reggieband 5y ago
I don't like to be too negative, but this article feels like a senior partner or committee brainstormed article topics and assigned it to someone else. It's almost like someone started with an outline of the headers of each article section and the contents were filled in with the most obvious possible content. It feels like the kind of topic/article that GPT-4 or later will pump out en masse in the not too distant future. It's as if someone at a16z said "we need more blog content and we want an article on open source finance" and this was the result. On the other side, I appreciate that VCs like a16z are pushing forward these ideas. I don't necessarily think this article is a reflection of the current reality but it does suggest a future. It signals that a16z is looking for startups to invest in to move this space forward.
ericmay 5y ago
A16 should remember that they also provide financial services and this same thing is coming for them too and might come for them more quickly than traditional banks.
darcys22 5y ago
This has also been my opinion for the accounting industry. Just like c compilers before gcc were proprietary and poor performing the accounting software that exists has many limitations. That means there is a huge opportunity for an open source system to blow them out of the water. Ive been building one myself but i know there are many more coming for this industry :) https://github.com/darcys22/godbledger https://github.com/darcys22/godbledger
- jkhdigital 5y ago
  Is it okay to pronounce it “God Bledger”? Sounds way cooler
  - darcys22 5y ago
    Of course :)
Ericson2314 5y ago
I dunno, all I want is Federal Reserve accounts at the post office, thank you. Develop the code in-house, and it will be guaranteed open source for!
- reaperducer 5y ago
  I dunno, all I want is Federal Reserve accounts at the post office, thank you. It's coming. Already being tested in Baltimore, The Bronx and a few other places.
  - Ericson2314 5y ago
    I am stoked, but it will be a fraught process. Right now it's being rolled out as "a payday loan alternative"---i.e, it's for poor people. Historically, trying to avoid political battles by making services poor-only (whether means testing or otherwise) has been loosing strategy as the Republicans let it through (battle win!) but the service becomes shitty and paternalistic without a strong broad electoral mandate. The key is making something just about everyone will want to use, letting people vote with their feat, and then it becomes untouchable. We need the accounts to make UBI stick, but perhaps we should think about it the other way too. Next crises, don't bother with people's existing accounts and instead say "there's a check waiting for you with your already-existing PO account". Just like Facebook getting people to make shadow account for their friends and spamming you to claim in the olden days!
fijiaarone 5y ago
Buzzwords are coming to venture capital marketing hype.
lsiebert 5y ago
Wonderful. One of the things I'm most concerned about is how credit card payment processors and banks basically define what you can easily buy online. Something can be perfectly legal, but if there's no way to pay for it, it won't be available.
brighton36 5y ago
Why isn't there a more robust commercial space around plaintextaccounting.com? I would have thought text/journal would at least be a mime type by now...
hn_throwaway_99 5y ago
I feel like a lot of comments are missing the point of this blog post. In the past 5 years or so, there has been an explosion of "XaaS" API companies that many of the new fintechs or "challenger banks" build on top of. For example: 1. There are lots of Banking as a Service platforms for fintechs that want to essentially be the end-user facing platform, but then funds are held at a chartered, FDIC-insured bank. Companies like Q2 and Treasury Prime. 2. There are then a slew of companies for things like Card Issuing as a Service, KYC as a Service, Fraud Monitoring as a Service. Companies like Stripe, Marqeta and Lithic on the card issuing side; Alloy, Socure, Unit21 on the KYC side; Sift on the fraud monitoring side, etc. This post is basically arguing about open source companies providing "lower level primitives" in the form of libraries that people can build on top of, i.e. libraries for creating and processing ACH files, sending and receiving wire transfers, financial ledgers, syncing for required OFAC checks, etc. Building these things from scratch today is extremely difficult, not just because it takes time, but because (at least to me), it feels like so much stuff in the financial industry is poorly documented, or perhaps its better to say that the documentation is only half the story - what is required in practice and by what regulators really care about just takes "tribal knowledge" from banking experience. Not saying one way or the other whether I think the author's thesis is correct, but I think it's a good topic for discussion, and is orthogonal to things like Open Banking APIs.
shireboy 5y ago
I’m looking for bank import tools (ala Plaid) for customers, and it occurs to me that it is absolutely ridiculous in this day and age that there is no universal API for securely delegating read only access to bank transactions. My personal banks managed to finally work with Mint, but even then, some will break if two factor authentication is enabled. This should be a standard.
helsinkiandrew 5y ago
Worked in Financial Services for a couple of decades and I don't buy this it sounds like a sales talk from a consultancy company. Banks do use (and sometimes contribute) to Open Source libraries - but usually non financial lower level technical things - Apache Commons, front end libraries, FinLib, Messaging systems etc. Many public/commercial APIs/feeds have SDKs available by the provider and even when not most of the the work involved goes in getting the data/messages to and from the banks system/data format/language. Most code for things like entity matching, fraud detection is highly tied to the data the bank has which often - due to the various other banks the bank has purchased and has partnerships with - may be a huge mass of data. An open source library would probably help with 5% of the work. Great if its being pushed by consultancy that can do the glue work for a fee. In the area where I've mostly worked in - the trading side of investment banking, the computing systems - trade handling, pricing is seen as a competitive advantage, that you don't share with competitors. I made some fixes to a low level communication/transaction library for a vendor library we used (giving them the code meant we wouldn't have to patch it every release) that took nearly 9 months to get approval. I could see Banking services as a Service would be more appealing to the banks i've been in.
- simonswords82 5y ago
  If you are referring to retail banking I totally agree. In asset and also in wealth management but to a lesser degree it is a total disaster zone. Technical debt is being hidden to keep shareholders happy but it is not sustainable. Open source is not being used - at least not in the areas of systems we come in to contact with at Fundipedia.
nix23 5y ago
>More than 40 percent of banks’ code is built in COBOL, a 60-year-old programming language. More then 95% of operating-systems-kernels are build with C a 49 year-old programming language. I really can't hear that stupid sentence anymore.

231 points by jseliger 5y ago

travisporter 5y ago

Andreessen Horowitz (known as "a16z"). I guess they don’t count the space? That would make it a17z

sillysaurusx 5y ago
... I never once made that connection. Thank you.

zz865 5y ago

> Just as modern architects can source the best-in-class parts from around the world to customize a home for its occupants (windows from Italy! toilets from Japan!), Good analogy. This stuff doesn't apply to 99% of us.

webmobdev 5y ago

I'll believe this when banks start using Postgres ... it's amazing the stranglehold that Oracle has in this sector (I mean, when considering the price they charge).

greenail 5y ago

You could argue that it is not the technology stack that creates a barrier to entry for financial services but rather the existing relationships and levels of comfort with the regulators. Said another way, let's assume the regulator is not keeping up on the latest and greatest trends. Let's also assume the regulator wants to avoid adding lots of extra work and due diligence. We could assume the regulators were not quite as smart as the higher paid banking executives. What do you think the response will be when you push for big changes that need to happen quickly? What incentives exist for regulators to change?

094459 5y ago

Odd that this post omits any mention of FinOS, a pretty significant stakeholder in open source and financial services. I wonder why they missed that out?

squiffsquiff 5y ago

Financial services are already all over open source software. What even is this article? AWS heavy open source base: https://aws.amazon.com/financial-services/ https://aws.amazon.com/financial-services/ Gcp, same story: https://cloud.google.com/solutions/financial-services https://cloud.google.com/solutions/financial-services

sumtechguy 5y ago
Yeah this sort of feels like one half of an advert campaign. The 'build a need' part. Then a bit later we will get to see who is selling something that just happens to fix it. The links you gave are more for 'banks like to keep their stuff in house but we can keep it secure if you rent our machines'.

pid-1 5y ago

Cool stuff, most banks, brokers and hedge funds have no FOSS culture. That said, the major blockers for financial services, at least in my country, are sort of unrelated to open source software being available. Thinking about the most basic questions one needs to answer to start a fintech: 1. I want to create a bank. How do I do that? 2. I want to issue credit cards / lend money / make a payment system. How do I do that? 3. I want to start an investment fund. How do I do that? Those are just some examples, but each one of those questions lead to infinite rabbit holes of laws, regulations, bizarre costs and arcane systems to integrate to. I have more experience with (3) and stuff like getting reliable market data, connecting to brokers and exchanges, sticking with compliance rules, etc... are easily the most painful and costly bits of my job.

bloudermilk 5y ago
What would you suggest as a good starting point for a founder looking at (3)?
- carnitine 5y ago
  Speak to a lawyer who specialises in it. Everyone who starts a fund pays a lawyer to do all of the paperwork, in many cases it’s pretty boilerplate.
molsongolden 5y ago
In the USA, there are XaaS solutions for most of these now. It's possible to start a bank, issue cards, facilitate payments, etc. all on pre-built infra + APIs and your job becomes building the user experience and customer/vertical-specific tools on top.
blitzar 5y ago
#1 & #2 dont touch with a barge pole. #3 get a copy of excel.
fijiaarone 5y ago
These are the three biggest questions that keep the financial services sector (at least those who think about technology and innovation) up at night. 1. How can I prevent someone else from creating a bank. 2. How can I prevent someone else from being able to issue credit cards / lend money / make a payment system. 3. How can I prevent people from being able to make investment funds.

bob1029 5y ago

As someone who develops software products for the financial services sector, I can assure you that the thing most stakeholders are looking for right now is simplification of operations, not sharding operations out to even more vendors (OSS or otherwise). Every single one of our customers is looking for a path back to something that looks like the mainframe in terms of vertical integration of the business stack. Most got taken for a really bad ride by legions of consultants over the last ~2 decades and now have to visit 5-10 different system interfaces to take care of a single customer - A horrible combination of green screen, web sites and random pieces of paper that have to be scanned in just right. The list of procedures for some types of activities is bigger than the stack of disclosures the end customer receives. Many of our clients are stuck in some contorted stance with half their stack in AS400-land and the other half scattered to the various "cloud" services which are mostly just random websites/services with shitty SOAP APIs (or no APIs at all). The only financial services companies that are seeing positive uplift from these sorts of initiatives are those with enough resources to try this path, fail at it, and then decide they wanted to build 100% of their own stack in-house anyways.

3maj 5y ago
>The only financial services companies that are seeing positive uplift from these sorts of initiatives are those with enough resources to try this path, fail at it, and then decide they wanted to build 100% of their own stack in-house anyways. The issue is a lot of the executives that join the bank's C-suite after 10-15 years of experience usually come from consulting... And as you can imagine they keep hiring and re-hiring their old firms to have 2-3 business graduates come and make a PPT telling a room full of engineers and developers how they should be building complex systems.
- bob1029 5y ago
  > and make a PPT telling a room full of engineers and developers how they should be building complex systems. This is unfortunately not an experience I am unfamiliar with. I have to pretend to eat a big plate of humble pie on the first technical call with a lot of our clients. Once you learn their first reaction is going to be to reject your proposal on arbitrary grounds (i.e. a new security theater show), you start to present simpler proposals purely for the sake of tripping their initial response. Once you get them to fire their objections across the way, it is really easy to review the impact and build the real proposal that meticulously deals with each point that was raised.

cynusx 5y ago

It's always helpful to make the distinction between problems and solutions; it's true that traditional finance providers are horribly stuck in legacy systems, however their main problem is not so much that they are unable to rebuild. Their main problem is that decision power is so federated across the organization that it's impossible to even decide to rebuild their stack in a vertically-integrated way. The only way an organization can revamp this is by actually owning the technology entirely in-house and building up a completely independent product and engineering division. At the end of the day, changing code is orders of magnitude cheaper than a change management project with 12 managers and mandated retraining of 400 internal personnel. In my humble opinion, this type of change in the financial services industry can not come from incumbents.

m-i-l 5y ago

Another Strange article from A16Z. Open banking (PSD2 etc.) is primarily about open data and open APIs, not necessarily open source.

twelve40 5y ago
yeah it really read like the author is mistaking open APIs for open source.
- rmesters 5y ago
  Actually, the article uses "open banking" correctly in this case. The author believes that if all banks used open sourced tools for exposing their data via APIs (as opposed to building everything from scratch), we'd have more connectivity - which is true. In Europe, for example, there's 6,000 banks and there's at least thousand different interpretations of what is a PSD2-compliant API, which makes connectivity hard - you have to use an API aggregator to connect to all these APIs (unless you want to connect to each API separately). If they all just used open source libraries, we'd have less APIs to connect to, which means better connectivity.

monkeydust 5y ago

Man the a16z marketing machine is working hard unfortunately at cost of quality. For those interested in FS and open source today, especially through a capital markets lens check out: https://www.finos.org https://www.finos.org Lots of great projects, one I used recently and a favourite was this: https://github.com/finos/perspective https://github.com/finos/perspective

texodus 5y ago
I work on perspective, glad you dig it! We just released 1.0 this week after 4+ years of open-source-first development. Perspective was, in a previous life, a proprietary internal engine for Python/desktop applications at JPMC, that was ported and open-sourced to FINOS as a web assembly based browser component. Open sourcing perspective had a huge impact on the project, not just from the awesome community contributions and engagement and support from FINOS itself, but (as a huge surprise to me) the perspective project's visibility within our company.
- lifeisstillgood 5y ago
  >>> runtime mode allows ludicrously-sized datasets I think I am in love :-) This is what WebAssembly is supposed to for! Could it easily find the "how to contribute" if there is one please point me at it :-)
hn_throwaway_99 5y ago
I went to the finos website and looked at their list of repositories, and literally none of them looked like things I'd be interested in from a financial services/banking perspective. I saw a lot of very "high level infrastructure" repos for things like processing JSON, standardizing models, etc. The example you gave, Perspective, honestly looks like the most interesting of the ones I saw, but it's still a generic data visualization component. I contrast that with the Moov.io repos (full disclosure, I'm familiar with them though I haven't contributed), and they're actually nitty gritty details of dealing with the banking system (at least in the US), things like processing ACH files, wires, ISO 8583 (card network) messages, Image Cash Letter, watchlists needed for KYC and OFAC checks, etc.: https://github.com/moov-io https://github.com/moov-io TBH it just sounds like a very apples-to-oranges comparison.

joshuaissac 5y ago

> While fintech has traditionally been default local — most banks are driven by country-specific regulations, infrastructure, and consumer payment preferences — many global companies are now adding financial services. This is not true at all. Regulations that span multiple countries like the EU's MIFID I (2007) have been around for a long time. Even institutions in countries outside these markets would need to comply when they want to participate in the market. One of the companies I worked for previously has been licensing financial software (including those implementing national and international regulations) for decades to financial institutions across world, and they were not alone in their market. Going global is nothing new in this industry. Neither is open source. QuickFIX, for example, is two decades old.

villasv 5y ago
Americans are very comfortable in extrapolating the US experience as a global reality. Here they’re talking about the Wild West of small banks that they have.
- fakedang 5y ago
  That was precisely my thought when reading this article. Literally how many startups spawn in America for simple financial tasks that are easily handled by banks in the UKEU? In some cases, there are banks in India and most of the developing world that have more advanced services for consumer banking than the US. China has obviously already raced ahead far more than the US.

zz865 5y ago

This is just fluff. Financial services and banks are not the same thing. The biggest problem with banks in the US is no free accounts, we need banks with physical branches to offer accounts for poor people to have. There is no money in this so a16z would not be interested. Everyone else is looked after already.

reaperducer 5y ago
we need banks with physical branches to offer accounts for poor people to have. Coming soon to a USPS near you. It'll be like 1965 again.
molsongolden 5y ago
There are free bank accounts at many banks? Also, lots of neobanks are offering free accounts and features because their revenue comes from interchange on spending + interest + future cross-sells or lending.
- zz865 5y ago
  Not with branches, which is what half the population wants.
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fijiaarone 5y ago
Why do people without money need to have bank accounts? If you answer is: To be able to make payments Then maybe a better question is -- Why should people need bank accounts to make payments. Note: Banks are not likely to ask this question
- hakfoo 5y ago
  As much as anything, people need bank accounts to receive payments to be part of a modern economy. Many retirees would fall well into the "people without money" category, but they still need to get their Social Security payment direct deposited. Many employers, especially in low-wage "people without money" sectors, aggressively push extortionate-fee prepaid-debit products on their workers if they can't accept a conventional direct deposit. Putting everyone on a single network, at the very least for this use case, reduces cost and complexity. Can you imagine the guaranteed confusion and error in a system where 40% of your employer's payroll was paid over ACH, 25% via crypto transfers split among a dozen blockchains, and the rest via paper cheques or prepaid debit cards mailed out? Yes, it's not the only possible solution to a payments ecosystem, but it's the closest thing to a universal one we have. People understand how it works and there are well-established risk and mitigation models for it. This is part of the reason I'm a bit hesitant about things like the "self banking" paradigm via cryptocurrency. Even once we solve the nuts-and-bolts problems of risk mitigation and seamless user experiences, it's likely to be a sharded market for the short term. I can easily imagine incurring fees and delays because my money is in a Dogecoin wallet but the water company only wants Monero to settle their bill.

rexreed 5y ago

What is the agenda pushing here? This is clearly not a push for change in the actual financial services or banking sector. Is there an attempt to shift power away from "traditional" banks to "untraditional" financial services institutions. The idea of Lyft being a financial services provider has me more concerned than optimistic. I don't want a service intermediary controlling the financial future of the person providing the service. Scary.

lordnacho 5y ago

Hedge fund guy in me thinks this is all marketing. The whole XaaS picture thing looks like a nice OSI stack type of thing, but it's not how the systems work together (funnily enough networks don't work that way either lol). They're more like a graph, maybe a bowl of spaghetti. For instance the compliance part reaches into everywhere. You can't just write an API layer and do .complies() -> bool. Some of it even requires you to implement PTP timestamps. And it certainly reaches into reporting, where you have all sorts of strange requirements. I recently looked at a file with over 100 columns to be populated. Having said that there's plenty of use of OSS. I've rarely been anywhere that doesn't use Linux or git or various other common software. I haven't seen a lot of proprietary languages either (Delphi/Slang/Matlab).

reggieband 5y ago

I don't like to be too negative, but this article feels like a senior partner or committee brainstormed article topics and assigned it to someone else. It's almost like someone started with an outline of the headers of each article section and the contents were filled in with the most obvious possible content. It feels like the kind of topic/article that GPT-4 or later will pump out en masse in the not too distant future. It's as if someone at a16z said "we need more blog content and we want an article on open source finance" and this was the result. On the other side, I appreciate that VCs like a16z are pushing forward these ideas. I don't necessarily think this article is a reflection of the current reality but it does suggest a future. It signals that a16z is looking for startups to invest in to move this space forward.

ericmay 5y ago

A16 should remember that they also provide financial services and this same thing is coming for them too and might come for them more quickly than traditional banks.

darcys22 5y ago

This has also been my opinion for the accounting industry. Just like c compilers before gcc were proprietary and poor performing the accounting software that exists has many limitations. That means there is a huge opportunity for an open source system to blow them out of the water. Ive been building one myself but i know there are many more coming for this industry :) https://github.com/darcys22/godbledger https://github.com/darcys22/godbledger

jkhdigital 5y ago
Is it okay to pronounce it “God Bledger”? Sounds way cooler
- darcys22 5y ago
  Of course :)

Ericson2314 5y ago

I dunno, all I want is Federal Reserve accounts at the post office, thank you. Develop the code in-house, and it will be guaranteed open source for!

reaperducer 5y ago
I dunno, all I want is Federal Reserve accounts at the post office, thank you. It's coming. Already being tested in Baltimore, The Bronx and a few other places.
- Ericson2314 5y ago
  I am stoked, but it will be a fraught process. Right now it's being rolled out as "a payday loan alternative"---i.e, it's for poor people. Historically, trying to avoid political battles by making services poor-only (whether means testing or otherwise) has been loosing strategy as the Republicans let it through (battle win!) but the service becomes shitty and paternalistic without a strong broad electoral mandate. The key is making something just about everyone will want to use, letting people vote with their feat, and then it becomes untouchable. We need the accounts to make UBI stick, but perhaps we should think about it the other way too. Next crises, don't bother with people's existing accounts and instead say "there's a check waiting for you with your already-existing PO account". Just like Facebook getting people to make shadow account for their friends and spamming you to claim in the olden days!

fijiaarone 5y ago

Buzzwords are coming to venture capital marketing hype.

lsiebert 5y ago

Wonderful. One of the things I'm most concerned about is how credit card payment processors and banks basically define what you can easily buy online. Something can be perfectly legal, but if there's no way to pay for it, it won't be available.

brighton36 5y ago

Why isn't there a more robust commercial space around plaintextaccounting.com? I would have thought text/journal would at least be a mime type by now...

hn_throwaway_99 5y ago

I feel like a lot of comments are missing the point of this blog post. In the past 5 years or so, there has been an explosion of "XaaS" API companies that many of the new fintechs or "challenger banks" build on top of. For example: 1. There are lots of Banking as a Service platforms for fintechs that want to essentially be the end-user facing platform, but then funds are held at a chartered, FDIC-insured bank. Companies like Q2 and Treasury Prime. 2. There are then a slew of companies for things like Card Issuing as a Service, KYC as a Service, Fraud Monitoring as a Service. Companies like Stripe, Marqeta and Lithic on the card issuing side; Alloy, Socure, Unit21 on the KYC side; Sift on the fraud monitoring side, etc. This post is basically arguing about open source companies providing "lower level primitives" in the form of libraries that people can build on top of, i.e. libraries for creating and processing ACH files, sending and receiving wire transfers, financial ledgers, syncing for required OFAC checks, etc. Building these things from scratch today is extremely difficult, not just because it takes time, but because (at least to me), it feels like so much stuff in the financial industry is poorly documented, or perhaps its better to say that the documentation is only half the story - what is required in practice and by what regulators really care about just takes "tribal knowledge" from banking experience. Not saying one way or the other whether I think the author's thesis is correct, but I think it's a good topic for discussion, and is orthogonal to things like Open Banking APIs.

shireboy 5y ago

I’m looking for bank import tools (ala Plaid) for customers, and it occurs to me that it is absolutely ridiculous in this day and age that there is no universal API for securely delegating read only access to bank transactions. My personal banks managed to finally work with Mint, but even then, some will break if two factor authentication is enabled. This should be a standard.

helsinkiandrew 5y ago

Worked in Financial Services for a couple of decades and I don't buy this it sounds like a sales talk from a consultancy company. Banks do use (and sometimes contribute) to Open Source libraries - but usually non financial lower level technical things - Apache Commons, front end libraries, FinLib, Messaging systems etc. Many public/commercial APIs/feeds have SDKs available by the provider and even when not most of the the work involved goes in getting the data/messages to and from the banks system/data format/language. Most code for things like entity matching, fraud detection is highly tied to the data the bank has which often - due to the various other banks the bank has purchased and has partnerships with - may be a huge mass of data. An open source library would probably help with 5% of the work. Great if its being pushed by consultancy that can do the glue work for a fee. In the area where I've mostly worked in - the trading side of investment banking, the computing systems - trade handling, pricing is seen as a competitive advantage, that you don't share with competitors. I made some fixes to a low level communication/transaction library for a vendor library we used (giving them the code meant we wouldn't have to patch it every release) that took nearly 9 months to get approval. I could see Banking services as a Service would be more appealing to the banks i've been in.

simonswords82 5y ago
If you are referring to retail banking I totally agree. In asset and also in wealth management but to a lesser degree it is a total disaster zone. Technical debt is being hidden to keep shareholders happy but it is not sustainable. Open source is not being used - at least not in the areas of systems we come in to contact with at Fundipedia.

nix23 5y ago

>More than 40 percent of banks’ code is built in COBOL, a 60-year-old programming language. More then 95% of operating-systems-kernels are build with C a 49 year-old programming language. I really can't hear that stupid sentence anymore.