I really enjoyed this article, “Open source is finally coming to financial services”, and the corresponding 25-minute lecture by Angela Strange of Andreessen Horowitz on the future of banking services, in which she predicts a scenario that is very much in line with what I have been envisioning for quite a few years: banks where software developers will have more influence than lawyers, and in which the increasingly ubiquitous use of open source leads to companies becoming APIs connected to all kinds of services.
Such a model offers many possibilities for companies capable of developing truly competitive service delivery models. For example, a company able to deliver an outstanding investment management service would not only need to have to open its code and allow it to be improved thanks to the contributions of the entire community, but also to bundle it and offer it to other entities, which could connect it like a Lego piece, and then offer it to their clients. In fact, this is also the future scenario that the regulator is ultimately drawing with regulations such as PSD2: the obligation for banks to open up the possibility for any service provider to offer them to their customers if the customer so requests.
In such a scenario, the incentive for constant improvement is clear, because the market would be willing to dispense with some services and incorporate others in a much more liquid manner, depending on specific efficiency indicators or many other possible factors. This is a vision that coincides with another that is becoming more and more established: the adoption of open source software by companies is simply a question of maturity, and fundamentally, a one-way street, one that marks the supremacy of this development model: if your company has not yet incorporated enough open source software, it is not yet mature enough.
In other words, a future in which large banks no longer have an advantage based on the supposed value of their brand, their reputation or the security they allegedly offer, but on their efficiency and ability to offer their customers the best services. A credit card, a loan, a mortgage, an investment portfolio management or a customer service, offered as a service, as autonomous services in which the management is entrusted to a third party that simply connects with customers through the bank acting as an interface. Layers of services that can also be offered by companies that do not necessarily have to be banks: a university can offer loans to its students, or current accounts, or a debit card, or many other companies depending on their interests or the relationship they have with certain groups, whether users, suppliers or others.
I said it almost two years ago, based on another article by the same author: we are witnessing the commoditization of banking. All businesses will be able to offer banking services. If we add to this model the power of open source software and the possibility of this type of services becoming better and better thanks to the contribution of developer communities, the idea makes even more sense.
