- Banks and hedge funds have to battle with each other as well as Silicon Valley for top talent. But there's been something of a truce, with developers from different firms working together on solving shared problems.
- Once-secretive firms have started opening their code up to outsiders, including the Fintech Open Source Foundation, which held a forum in New York on Wednesday.
- "Software is a new world. You have to be both in it and consuming it," Neema Raphael, Goldman Sachs' chief data officer, said at the event.
- "The war for talent is over — all the talent is working on open source," said Donald Raab, a managing director at BNY Mellon.
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Gabriele Columbro, the founder of the open-source code non-profit known as FINOS, sees a future where all financial services firms open up their code to outside developers.
"In 10 years, the core of the global financial engine will be open source," he told an audience packed with Wall Street players just after showing a cartoon of JPMorgan CEO Jamie Dimon arm-wrestling Amazon founder and CEO Jeff Bezos.
In the hypercompetitive world of Wall Street, hedge funds, and other financial firms, the battle for tech talent has been a key front as more and more day-to-day business is handled almost entirely by technology.
But that could soon change, execs said, as banks start to embrace the open-source vision.
Open-source projects and programs, like the many run by the Fintech Open Source Foundation, allow banks to build tools and platforms internally using publicly available code from peers, vendors, and other developers — a drastic shift for an industry that usually close-guards every part of its organization.
A BNY Mellon executive even went so far as to declare a truce in the much-hyped fight between firms for tech talent.
"The war for talent is over — all the talent is working on open source," said Donald Raab, a managing director at BNY Mellon who was previously at Goldman Sachs, at the FINOS Open Source Strategy Forum in New York Wednesday.
"You don't need to fight for talent, you need to collaborate for talent," he said.
Developers, Raab said, don't want to work on a project that's only going to be used internally at one bank — they want to be a part of a community.
"If your developers aren't using open source, that's a nightmare situation for you," said Columbro. If a bank's tech talent isn't learning from others in the community, they are at risk at falling behind, he said.
According to Aite Group, every big bank uses open source code in their systems, though to different extents. One big bank chief technology officer said 85% of the code at the firm is from the open source community, said Spencer Mindlin, an analyst for the consultancy.
"Contribution could be a competitive differentiator in the future," Mindlin said, adding that Github, a subsidiary of Microsoft that hosts millions of software creators, "is the Instagram for developers."
But big banks shouldn't just consume public code — they should be contributing as well, execs said.
Goldman Sachs chief data officer Neema Raphael used the FINOS event to announce that the bank's internal data management and delivery platform, Alloy, is going to have its code publicly released and hosted on FINOS' cloud next year.
One of JPMorgan's data tools, Perspective, has been available in open source forums since 2017 and recently shifted to FINOS as well.
Some hedge funds have been also been releasing home-built tools. Quant hedge fund Two Sigma last week announced its portfolio analytics platform Venn is now available to outsiders. Brevan Howard and Winton Group sell data collection and artificial intelligence offerings.
Hedge funds have also been using external developers and quants to help them sort through their massive amounts of data through platforms like QuantConnect and Quantopian.
"Software is a new world, you have to be both in it and consuming it," Goldman's Raphael said.
The increased openness of banks has forced them to pick what they do best and focus on it, said Dov Katz, a managing director at Morgan Stanley and vice chair of FINOS.
The thought process around risk management, for example, has changed from viewing everything as a potential risk to asking "where is the actual risk," he said. Morgan Stanley and its rivals are all trying to solve the same problem, and it can make more sense to collaborate than build separate technologies that will require constant maintenance.
"There are problems all of us face that we want to solve. We now understand how to do it safely, we've come up with a way to measure and manage risk," Katz said in an interview with Business Insider at the conference.
This will free up tech teams to work "on competitive advantages instead of the underpinnings and underlying parts of competitive advantages," he said.
All of the biggest Wall Street firms have joined FINOS over the past 18 months. The conference on Wednesday, held at a Hell's Kitchen Off-Broadway theater house that is currently hosting Avenue Q, had more than 600 registrants, conference organizers said.
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