In 1997 Eric S. Raymond wrote The Cathedral and the Bazaar which stands as a definitive analysis of the differences between a closed approach to software development (the cathedral) and an open approach (the bazaar). It’s difficult to believe that almost fifteen years have passed and years later looking at how things have transpired since the open source movement began.
Open source has proven to be an effective model, and one that has created fundamental and robust technologies. In 1997 the open model seemed to be a direct challenge to traditional software development but now it is clear that the two models can coexist very effectively and that the two models can play off each other very well.
Risk is a common challenge for banks, and one that is generally considered non-differentiating. Banks want to manage risk. Much effort has gone into the Basel efforts, and new regulatory requirements emerge annually. Risk models need to be developed, evolved and tuned. Many organizations that consider these consistent problems come up with inventive ways to solve them.
A community based approach to risk would help reduce the burden of invention and create more efficiency. Contributors from many organizations can build a model together and provide an unprecedented level of efficiency and consistency.
Don Tapscott has identified transparency and embracing the commons as key principles to restore trust in financial markets. The Bazaar approach is open, transparent, and this visibility helps to instill confidence. People are concerned about the security of Linux; anyone that has concerns can open up the kernel source code and review it for themselves. If they think it can be improved, they can improve it. If they have questions, people are available to provide answers.