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Traditional banks should turn to open source to save themselves, argues expert

Toine Van Beusekom, Head of Payments at Icon Solutions

Open source technology can save traditional banks from obsolescence and loss of market share to challengers, a leading IT consultant has suggested.
Toine Van Beusekom, Head of Payments at consulting firm Icon Solutions, has compared the situation faced by banks today to that of tech giant IBM, as described by former IBM CEO Lou Gerstner in his book ‘Who Says Elephants Can Dance’. In the book, Gerstner describes how he transformed IBM in the 1990s and argued that veteran companies can adapt and prosper. Van Beusekom contends that banks are at a similar fork in the road today.
“In 2017, 92 of the world’s top 100 banks still relied on IBM mainframes from the mid-1960s,” he told IBS Intelligence. “This legacy architecture is no longer fit for purpose. In 2019, we expect a number of global tier one banks to break away from the elephant herd and build distributed, interlinked-services on cloud-based open source systems that work in real time. Centred around payments as the primary consumer touch-point, this will be banks’ first and biggest step in defending their industry from disruption.”
Open source technology, he argued, is second nature to big tech and challenger upstarts who are looking to build ecosystems around their platforms: “In 2019, to meet the resiliency and scalability demands of an open, data driven, real-time market, banks will increasingly adopt open source technology,” he concluded. “The use of a DevOps approach to deployment, utilising open source tools, will enable greater use of the cloud, public and private, and help banks to provide the flexibility needed to serve customers, partner with fintechs, and leverage the opportunities of platform banking in an open world.”
Van Beusekom said that the banking market will increasingly be distinguished between those who are innovators and those who are not: “Payment transformation will be a pivotal point for those wanting to go further than glossy exteriors to deep and lasting transformation,” he added. “Those that embrace new technology models will lead the market. Those that continue to lean on legacy systems will become laggards and fall behind. It’s a simple choice, but it couldn’t be more important to the future of our industry.”

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