One can almost feel it in the bones: the excitement to come in the world of payments in 2020, as innovation sparks new business models and disruption.
Part of that future seems likely to involve open-source software, and that’s why PYMNTS recently caught up with Arvind Swami, director of FSI for Asia-Pacific at Red Hat. The company made news over summer when IBM closed its $34 billion acquisition of the open-source software firm. IBM had agreed to purchase the software company in October, marking the largest acquisition in the company’s history of more than 100 years, Reuters reported.
Red Hat, which launched in 1993, specializes in Linux operating systems — an alternative to Microsoft’s proprietary software.
As Swami told PYMNTS, open source could spark more payments innovation in the coming decade, as more players involved in payments look to affordable, interoperable and collaborative solutions that are relatively easy to scale — in this case, helped along by cloud computing technology and the work of developers to improve payments technology.
“Most of the people who contribute to [open-source software] are users, and that’s the key for open source,” he said. “It’s easy to consume, and highly usable.”
Those are not the only factors driving the use of open-source software in the payments environment. The heart of the embrace and appeal of open-source technology is the need for speed, and to evolve use cases for end users (consumers and enterprises) in a more robust and secure fashion. Furthermore, the lines between financial services, FinTech firms, payment providers and even open-source communities continue to blur as collaboration takes shape.
Such cloud-based initiatives can include mobile-enabled ATMs, where authentication takes place before the user even gets to the machine itself, and speeds up transactions (while, of course, reducing the steps needed to get cash in hand). Indeed, Red Hat has been working with KAL ATM Software, which leverages a process known as virtualization, using technology to uncouple hardware from the ATM’s operating environment.
That’s just one example of how the open-source movement could help change payments in the coming years. Real-time payments — among the other big trends for the new decade — also promise to be a focal point of this ongoing work.
As Swami described, other areas of innovation that open-source software could help develop in the coming years include removing more friction from the payments experience, making the overall customer experience deeper and more satisfying, and promoting easier, more efficient integrations among disparate systems. “There will be more focus on operational efficiencies, too,” he said, as companies generally work to modernize their payment systems, and replace or upgrade legacy systems.
Contactless payments also stand as another area of focus, especially in the U.S.
Security, of course, will be a big focus and challenge for the further growth and popularity of open-source software in the payments realm, Swami said. As documented in previous reports, the seeming ubiquity of open-source tech also comes with openings for hackers and fraudsters. In fact, financial services and FinTech are most at risk, Black Duck found. According to its analysis, financial services apps contained an average of 52 vulnerabilities per app, with 60 percent of them considered to be high-risk vulnerabilities.
Machine learning and artificial intelligence also promise to boost open-source software efforts in the payments space, he told PYMNTS. That holds especially true when it comes to fraud prevention and customer experience efforts — both of which heavily depend not only on sophisticated data analysis models, but — of course — more data being fed into those systems.
“This requires that [businesses] subscribe to more data sources to build these applications and work flows,” Swami told PYMNTS.
The future may not be written yet, but the coming decade of payments could very well be written more often via open-source software.