Financial services firms are being held back by the usual suspects – security and legacy systems – as they try to benefit from AI, open-source software, and machine learning.

This is according to the 2024 State of Open Source in Financial Services, which was created in conjunction with the Fintech Open Source Foundation (FINOS), the Linus Foundation, and Scott Logic, which found that 84% of financial services businesses agree that OSS delivers substantial business value.

The report also revealed that AI and ML are of growing value to the sector, with nearly half (45%) of those surveyed indicating their importance for the future of financial services, up by 10% from last year.

However, concerns over security continue to hinder progress in the adoption of these emerging technologies, as well as the ability to see returns on investment. Nearly half (47%) of those in financial services claim that investing in secure software development practices and legal compliance would increase their organisations open source software (OSS) usage.

Further, selecting the appropriate OSS can be problematic for companies due to legacy technologies and interoperability issues.

Confidence is mixed on the ability to control (30% extremely confident, 54% somewhat confident), and maintain (37% extremely confident and 47% somewhat confident) up to date versions of open source components used in development.

Still, the amount of time respondents report spending on contributing to open source projects has increased, which may be in part to the conscious focus on automating processes to reduce the amount of manual steps required for tasks.

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“It’s clear that the Financial Services industry can benefit from innovative technology such as Open-Source Software, AI and Machine Learning and it is certainly encouraging to see this increasingly recognised by leaders in the sector,” Colin Eberhardt, CTO at Scott Logic and report co-author, said.

“However, given the highly regulated nature of Financial Services and the understandable concerns around data security, many firms aren’t yet reaping the rewards.

“A careful approach to ensure any new tools are compliant with industry regulations and standards is certainly needed.

“However, one critical point that is also hindering businesses in the sector from truly benefitting from the potential of OSS and other tools is the issue of legacy IT systems which simply can’t accommodate the changes required.

“Replacing these tech stacks is a monumental job for many, particularly those firms that have had systems in place for decades. It will require brave and bold leadership, but it is, without doubt, a necessity.”