Is Open Source Innovation the New Growth Pillar for Fintech?

By Ravi Kant Mittal, Engineering Leader, slice

India, home to more than 4,800 fintech startups as per the Inc42 report of 2022, has established a diverse and dynamic fintech ecosystem that is setting a global benchmark for the industry.

The country’s fintech landscape offers a wide range of services, thriving lending innovations, digitally advanced banks, open-banking frameworks, and hyper-scale payment infrastructure, contributing to an impressive adoption rate of 87% as per the Economic Survey 2023, whereas the global average stands at 64%. The survey also highlights India as the third largest payments market following the United States and China.

With untapped opportunities and a supportive regulatory environment, Indian fintech possesses tremendous potential for growth. It serves as a shining example of innovation, market penetration, adoption, and robust regulatory practices all while aiming to build a $1 trillion digital economy by 2025-26.

Open Source: Gaining Traction

In the technology world, the phrase “sharing is caring” takes on a new meaning, particularly in the realm of open-source tech. Open source technology, freely available to the public, allows users to view, modify, and share the software’s underlying source code. It is usually created by a community of developers who work together, bringing their knowledge and innovations to the table. Open source enables customisation, bug fixes, and the development of new features by various individuals or organisations.

Unlike proprietary tech, which benefits only its owners, open source thrives on inclusivity and innovation. With the rise of AI/ML tools, data technologies, and DevOps tools, more organizations are embracing open source. A 2022 survey conducted by OpenLogic and OSI revealed a 77% increase in open-source software adoption in their organisation as compared to the previous year.

India’s adoption of open source has catalysed its journey towards becoming an innovation powerhouse, tapping into the power of cumulative knowledge from open source projects where the best minds work together.

Role of open source in fintech
Open source technology is slowly becoming the cornerstone in the fintech industry, adopting widespread adoption. Its dynamic nature aligns seamlessly with the needs of the fintech ecosystem, making it a robust technological foundation.

Benefits of open source include collective decision-making, cost reduction, increased innovation, marketing advantages, accelerated application development, and improved security.

The 2021 State of Open Source in Financial Services report by the Fintech Open Source Foundation (FINOS) supports these advantages, with 80% of respondents citing innovation, reduced time-to-market, and total cost of ownership as key reasons for fintechs to engage with open source.

An exemplary case is slice, a fintech company that embraces open-source principles to foster community involvement, shared knowledge, and open innovation. Through initiatives like Hackathon and slicelab, slice has cultivated strong customer relations and adapted to the ever-evolving fintech landscape, where open source plays a crucial role in meeting industry demands.

A way to create a collaborative network and handle the fast-paced environment
Fintech, a dynamic industry, thrives on constant innovation to meet diverse consumer needs. Adopting open source fosters collaboration, collective learning, and societal contribution. The involvement of multiple players in open source-based fintech benefits not only the company and its product and services but also the industry and the general public as a whole, driving faster developments, transparency, reliability, integration, and innovation. India showcases fintech innovations using open-source projects like YubiBERT and Zoho Loaner.

The only way forward is to learn from not just our own mistakes but also that of others; this kind of collective learning is only possible through collaborations. The need of the hour is not just for the organisations and the industry, but for all individuals to come together and contribute to this journey of growth and advancement.

In conclusion, Indian fintech is positioned to influence the global scenario. The contribution of open source and AI/MLA tools leads to increased efficiency in fintech, which can be witnessed through different brands with various innovations and unique fintech solutions. Thus, the collaboration of open source and fintech will play a key role in solving complex problems and setting examples at the global table.

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