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Open-source technology has had a profound impact on fintech technologies. Research and Markets have found that open-source technology is expected to increase by 24% by 2025. This will be aided by larger institutions adopting the technology. Despite the rapid growth, financial services have not been able to realize their full potential.
This is a missed chance. Banks can benefit from open-source platforms such as artificial intelligence (AI), blockchain, and container-based architectures.
This will allow them to integrate these technologies within their business. Financial services businesses must deal with the technical issues that open-source technology presents, including compliance, costs, security, as well as compliance, to transform their business.
Open-source applications can bring many benefits to everyone once they are addressed.
These challenges require professionals to take concrete steps to ensure the industry’s future. Now is the time to take advantage of the open-source promise, including improved security and the framework for trading cryptocurrency. Fintech will continue to thrive if it is implemented correctly.
Open-source benefits for the banking industry
Open-source is a good option for the banking and financial services sectors, despite the hesitation. Open-source’s collaborative spirit, which allows it to be modified and shared by the community, results in faster innovation and a lower cost of development.
It also speeds up a time to market. This is crucial as the financial institution’s long-term success and competitiveness will depend on its ability to be more flexible, responsive, and scalable.
Financial institutions must create a technology platform that allows them to rapidly recover from any future events. Cloud technology is an integral part of digital transformation.
Enterprises need to be able to use cloud computing seamlessly as they move towards digital transformation.
To be successful, they will need to use the right mix of cloud services – a hybrid multi-cloud that offers a consistent experience across multiple clouds and provides unified management across all clouds.
Embracing open cloud
The open hybrid cloud is a new trend in cloud computing. It is built on an open-source platform and allows for the flexibility, portability, and interoperability that control professionals need to deploy and manage cloud workloads and applications.
This approach allows companies to manage their existing public and private cloud as well as future ones. For greater consistency and efficiency, an open hybrid cloud will allow app deployment and scaling across public and private clouds.
Open, standard-based cloud-agnostic services can raise the bar for cloud proficiency and give companies greater control over their cloud solutions. Reusing software components, libraries, and software stacks will create more interoperability between applications.
Open Hybrid Cloud’s key component is its private cloud that uses open-source technologies. OpenStack, the most widely used open-source private cloud platform, provides an ecosystem for creating private clouds. OpenStack is a modular platform that was built from several sub-projects. It allows enterprises to create a flexible private cloud architecture (or hybrid) that’s based on open standards.
An open-source cloud is a key tool for innovation in the financial sector. The rise of standardized open-source platforms like Kubernetes has helped to facilitate the development.
It provides developers with a platform to develop software applications for AI/blockchain, and the platforms that financial businesses will eventually use to execute those results. This allows professionals to innovate faster and more effectively, ensuring that their services are at the forefront of safety and innovation.
Machine Learning and Artificial Intelligence
Together, these two sectors have a strong desire to prioritize open-source cloud platforms to support the development of emerging technologies. According to Canonical’s recent survey, Multi-Cloud Fundamental for Financial Services Transformation, financial service firms outperformed other sectors in prioritizing AI and Machine Learning (ML), by 36% and containers and container administration by 29% respectively.
Financial firms surveyed blockchain as a lower priority than other technologies at 24 percent, compared to 12 percent. It was the technology with which financial service businesses had the greatest affinity, compared to other industries’ priorities. Many financial technology startups are working in AI and blockchain. Large financial institutions have also invested heavily in these areas.
Numerous successful use cases have led to AI and ML being positioned as top priorities by financial service businesses. This includes the use of AI to reduce labor costs and automate manual or time-consuming processes. By removing manual processes and associated costs, there is a clear path to ROI in automating compliance with Know-Your-Customer (KYC) onboarding standards, risk analytics, credit scoring, customer segmentation, anti-fraud and anti-money-laundering work.
Customer service is a major area. These are just a few of the many areas where AI is being used. Others include automated advice, service customization, and chatbots. AI-powered infrastructures and open-source cloud management have many other potential uses that can impact IT’s cost-effectiveness and efficiency. AI can automate manual processes and improve cost-effectiveness and efficiency. It also reduces the complexity of large open-source cloud deployments.
Cryptocurrencies are the true innovation
Financial services, however, are more experimental than AI and machine learning.
Although blockchain technology is what allows for the existence of cryptocurrency, banks are hesitant to adopt it as they believe the risks outweigh any potential benefits. Banks tend to be cautious about cryptocurrency’s volatility, decentralized nature, and KYC onboarding issues.
Financial services companies recognize the potential of blockchain technology being disruptive or transformative to cryptocurrency transactions or how financial institutions interact. Other than cryptocurrency, there are other emerging uses of blockchain technology that are relevant for the banking and financial services sector.
These include cross-border micropayments, trade finance, money lending, loan trading, gold trading, and cross-border loans trading. These new use cases and greater industry recognition of blockchain technology’s potential will help to mitigate many of the risks faced by financial service firms. This will allow for further adoption of the technology and advancement of cryptocurrency.
In many countries, payments in dollars are difficult, but there are no problems with cryptocurrencies. And if you live in one of these countries, then, receiving payment in cryptocurrency for your services, you can easily exchange it on p2p exchanges for the currency of your country.
With a concrete example, we will show how the Quasa Connect blockchain service works, setting up transactions between freelancers and clients using new crypto settlement tools.
By connecting your crypto-wallet, a freelancer or customer instantly settles among themselves using the Quasacoin (QUA) cryptocurrency.
The new crypto-settlement tools in QUASA democratize access to services traditionally tied to fiat money and banks, and open up opportunities for hundreds of millions of people. You are not tied to the currency of any country, and you can easily hire any specialist from anywhere in the world and calmly pay for his work.
There is no need for conversion and complexities with banking operations. No need to know the laws of different countries.
Enhancing security and payment process
Security is a core part of financial services and their work. Open-source software’s low security can be a barrier to growth, especially when banks warn about the risks associated with emerging technologies like blockchain.
Open-source software can be made more secure by collaborating. To help mitigate security concerns and bolster security, banks could offer custody services. This method allows for easy onboarding and expert support. It also uses smart contracts to increase trust between parties and to use blockchain technology to accelerate their payments.
We.trade is an industry-specific platform that allows banks from eleven European countries to create a secure and transparent environment to track and manage trade transactions between SMBs.
To improve trust and collaboration, the platform records transactions and guarantees payments between buyers, sellers, and banks.
Finastra’s Fusion LenderComm provides enhanced security because it allows banks to work together across a secure platform for loan trading and syndicated lending. These case studies show how blockchain projects require better collaboration among financial institutions. This is another reason why the sector is being prioritized in the adoption of multi-cloud open source and hybrid IT architectures.
Next steps for financial service businesses
Financial services have a unique opportunity to benefit from open-source technology. The next few years will be a crucial stage in the transformation of financial services companies to move the industry forward. This technology-driven innovation signals a shift to an open-source cloud platform as the primary venue for performing workloads and improving processes.
While AI and blockchain technologies are still being used in a limited way by many industries, such as the banking sector, they are rapidly being applied to real business results through credible industry use cases.
However, the low security and regulatory compliance associated with open-source software will limit the market’s growth. This creates a skills gap in many organizations and requires the cloud expertise that many financial service firms lack. There is no central authority available to oversee quality and maintain open-source software. Kubernetes and hybrid cloud IT could be used to solve this problem. Third-party managed services providers may also be an option.
Financial services companies face many technology challenges. How they respond to them and how effectively they overcome them will impact their ability to take advantage of the open-source cloud. Financial services are rapidly changing. Organizations that don’t take advantage of these cloud-driven opportunities in the future will be left behind. Innovation is the time.
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