Wall Street has traditionally been skeptical of open source software. This is software that anyone can access and modify. However, that attitude is changing. Financial firms are now embracing open source more than ever.
At Morgan Stanley, developers often face challenges when suggesting new projects. Dov Katz, a managing director at the bank, advises them to consider whether their project offers a competitive edge. If not, perhaps they should look at existing open-source options to improve upon or use instead.
Katz’s approach highlights a shift away from the secretive, competitive mindset historically seen on Wall Street. Increasingly, banks and hedge funds are recognizing the benefits of collaboration through open-source development. This is evident as more financial institutions contribute to open source, rather than just consuming it.
In 2024, finance professionals made over 750,000 contributions (or commits) to GitHub, a leading platform for open-source projects. This is a significant increase from previous years. Companies such as JPMorgan and BlackRock are also sharing their internal tools with the open-source community.
The rise of open source comes at a time when global banking technology spending reached around $650 billion in 2023. With this increase comes pressure from shareholders for better returns on technology investments. Open-source software can help by reducing costs and allowing developers to focus on high-impact tasks instead of reinventing the wheel.
As Katz points out, building everything in-house can lead to tech debt. Open source allows banks to share development responsibilities and streamline their efforts. Goldman Sachs’ data chief, Neema Raphael, notes a shift from secrecy to a more open mindset. Banks now want to be active participants in the open-source community.
Many financial firms have taken steps to adopt cloud technology, which has opened the door to using tools like Kubernetes and Docker. These tools support the open-source model and allow for quicker innovations in software development.
Examples of success stories in this space include JPMorgan’s Salt and Morgan Stanley’s Morphir platform. These contributions enhance the industry’s collective capabilities and set standards that companies can rally around.
Even private equity firms, like Blackstone, are jumping on board. They’re building open-source libraries to assist their portfolio companies, helping streamline operations as they tackle data management and AI projects.
Despite the benefits, open source does come with risks, including licensing compliance and the potential for malicious code to be introduced. Goldman is diligent in managing these concerns, ensuring they track the software they use carefully.
The open-source movement is now reaching into the area of artificial intelligence as well. With companies like DeepSeek offering competitive AI solutions, financial firms are looking to collaborate in developing better frameworks for managing AI. Initiatives like the AI readiness group launched by FINOS focus on tackling industry-wide issues, such as bias in AI models.
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