Credit Suisse is launching a new marketplace to enable banks to buy and sell source code, aiming to help save on software development costs.
The investment bank will provide seed funding to start-up Eco Financial Technology, which will be launched in January by head of e-commerce for fixed income, currencies and commodities, Ian Green. The online service will match up firms wishing to trade in-house developed source code that can be reused by other financial institutions.
Many banks currently spend large amounts of money creating software functionality that is repeatable across others platforms, opening up the possibility of passing on common code to save others time and money. Demand for system development has also accelerated in the face of a wave of new regulations affecting the financial sector, such as MiFID II and Basel III.
The Eco marketplace will offer a range of financial firms the opportunity to trade code by ranking software for applicability to certain tasks, and providing “independent quality and interoperability analysis” to help enable successful deployment.
In return, Eco will gain a percentage of the transaction fee paid between buyer and seller.
Software and services companies will also be brought in to provide support contracts for implementation and potential further development of code.
Eco, which will operate independently to Credit Suisse, claims to have a number of parties interested in the service ahead of launch, both in terms of financial institutions and service providers.
According to Ovum senior analyst for financial services technology, Rik Turner, the creation of a marketplace to sell reusable code could gain the interest of banks as they come under pressure to decrease spending on IT.
“The timing is suitable, as banks’ IT spending is still under the cosh thanks to the need to spend on compliance - and budget tightening generally - while they improve their balance sheets,” said Turner.
“If there is some functionality that you really want to keep on-premise but don’t particularly want to make the subject of a complete DIY project, why not go to something like Eco to get the less commercially sensitive, more repeatable bits of the process?”
However he added that firms using the marketplace will have to find a balance between providing code that is both useful to other firms, but without compromising competitive advantage.
“I think the real trick for Eco and the banks that decide to sell code through it will be to make what they are selling useful enough to be of interest to buyers, yet generic enough not to be specific to the vendor’s particular IT environment,” he said.
“Of course it also needs to be sufficiently vanilla so as not to be giving away any of the vendor’s crown jewels.”