Investment bank gives away product for free

Dresdner Kleinwort Wasserstein promotes open source movement with release of code for its openadaptor framework.

Investment banks usually aren’t associated with charity – except perhaps when outbidding each other for donations at awards dinners. So when Dresdner Kleinwort Wasserstein (DrKW) gave away the source code for a project that’s been three years and about $5 million in the making, the initial reaction of many was "what’s the catch?"

openadaptor, the fruit of that labour, is a software toolkit, an adaptor framework, written in Java. The intent of the framework is to simplify integration among different systems that would otherwise find it difficult to share data. It began its life as a simple solution to connecting the various legacy systems, such as those used for equity and derivatives trading, in use at DrKW.

But thanks in part to a cultural shift in the bank’s IT community, the project is now open source – meaning that anyone can download the source code for free, and use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies. The goal is to encourage a community of developers all working on improving the code for their own needs, and then contributing these improvements for free back to the community.

Linux is the most high profile project to come out of the open source movement. The success of this free operating system kernel, which has the support of such IT heavyweights as IBM, Sun and Hewlett Packard, has gone some way to reassuring conservative management at traditional companies that free software developed by a diverse community of IT engineers can be a viable and reliable product.

The decision to release openadaptor’s source code to the global IT community evolved gradually throughout last year, says Deepak Jain, chief information officer for Asia ex-Japan at DrKW.

“We had expressions of interest and approaches from other companies even when openadaptor was just being used internally. In Asia, for example, we were being approached by clients and other financial institutions who had been referred to us by vendors that we had built connections to using this framework,” he says.

With their open source release, DrKW says it is trying to develop a model of "co-opetition" in the financial technology industry that will benefit not only it and its clients, but also competing banks and software vendors.

Clients can easily connect directly to DrKW with no proprietary risk of being locked into a particular vendor. With the various components already developed for openadaptor, a connection between two systems can be quickly achieved with a minimum of coding.

By releasing the code to the world, DrKW can also benefit from a larger number of programmers improving and expanding the functionality of the framework. Other banks can benefit too, and if its use becomes widespread enough, software vendors selling everything from trading systems to back-office accounting packages will also support the openadaptor interface standard, meaning that programmers at banks will need far less time to integrate new software purchases.

Since the source code was made available at on February 5, Jain says the response has been favourable and he expects the number of developers in the community to start growing rapidly. All the US banks in Asia and some of the European ones have expressed an interest in the product, and most have either downloaded the source code from the web site for evaluation or received it on CD at DrKW’s launch events.

“The timing was good in Asia because there has been no real lock-in to particular types of architecture, and things like retail online trading and direct connections to multiple exchanges are only just beginning to take off,” he says.

Culture shock

The open source philosophy of software development is often associated with scruffy hackers with an anarchist or libertarian bent. That such an approach could take hold at an investment bank – one of society’s more conservative establishments – has surprised some observers, but also given a boost to the open source movement’s claims that this methodology results in the most efficient and stable software, developed in the fastest possible timeframe.

“I certainly think individual personalities played a large part in the development of an open source culture at Dresdner,” says Jain. “Al-Noor Ramji, the global head of IT at DrKW had a lot to do with that.”

The bank realized that it couldn’t compete in scale with other large investment banks in every area of its business and so came to the realization that one way to differentiate itself was through technology.

The culture at DrKW is in many ways an enabler for IT innovation, says Jain, pointing to the very flat management structure where it is not at all unusual for a regular software engineer to be able to make serious suggestions to Ramji. “But if you make a suggestion you had better be able to stand behind it and action it,” he says.

Fred Perry and Gary Casey, based in London, are the two main architects of openadaptor, and although they dreamed up the architecture and the project three years ago, development moved to a global scale quite early on. Since then it has evolved gradually into the open source release, influencing the way other projects are developed in the bank and promoting collaboration among all of the bank’s IT staff worldwide. “This was the first project to really take that approach,” says Jain. “It’s not the usual mode of development at investment banks.”

Other investment banks also have their own internal standards for middleware and publish/subscribe models. But unlike openadaptor, they are often not implemented globally or across all divisions. One system might be used in front-office environments while other are used in the back-office.

“I think we’ll find that a lot of banks will use openadaptor in certain areas where it is convenient, but not necessarily across the board, internally and externally,” says Jain. External use is more likely, particularly if clients and vendors become more involved.

DrKW has a core architecture team looking after openadaptor, but because it interfaces with around 70 applications in use at the bank, these application teams also have an interest and participation in the development of the framework.

Future open source projects at DrKW are being evaluated, but it’s more likely these will, like openadaptor, be connectivity software rather than particular applications, says Jain. “openadaptor is a glue that everyone can use to integrate their disparate applications, so the market for it is as large as the number of financial institutions.”