Why Open Source Technologies are a Smart Choice for Utilities - Part 2

 

By Mark Cowan and Cara May-Cole

In Part 1, we discussed how industries like finance have embraced open-source software to overcome the limitations of proprietary systems, improve agility, and drive innovation. Utilities, though traditionally more risk-averse, can learn a great deal from these shifts. Financial institutions are increasingly adopting open source to not only enhance services but also reduce operating costs.

So, what’s behind this trend? According to a recent study by McKinsey & Company, the next decade in financial services will be driven by emerging technologies like Artificial Intelligence (AI), machine learning (ML), blockchain, and hyper-personalisation. Open-source platforms are poised to support these innovations, offering the scalability and flexibility needed to bring these technologies to life.

For utilities, adopting open-source solutions is no longer just about cost savings—it’s about tapping into the full potential of these groundbreaking technologies to stay competitive, efficient, and ready for whatever the future holds.

In Part 2, we’ll explore how open-source technologies can empower utilities to utilise these same innovations, drive efficiencies, and stay ahead of industry disruptions.

AI and fintech innovation

Open-source AI frameworks such as TensorFlow, PyTorch, and Scikit-learn are reshaping industry landscapes by making artificial intelligence and machine learning (AI/ML) both accessible and cost-effective. These tools allow startups to rapidly prototype, deploy, and scale AI models with greater flexibility, giving smaller firms the ability to compete with larger, more established players. This democratisation of AI levels the playing field, enabling innovation that was previously out of reach for many organisations.

A key area where open-source AI is making a significant impact is in fraud detection and personalisation. Companies like Stripe and PayPal are already using open-source AI libraries to analyse transaction patterns and detect fraudulent activity in real-time. Also, AI is enabling dynamic pricing models, custom loan offers, and highly personalised financial services based on individual user behaviour. These capabilities are central to the continued changes in utilities that empower businesses to deliver smarter, more tailored services.

Beyond customer-facing applications, AI is streamlining back-office operations, creating efficiencies through automation, knowledge graphs, and natural language processing (NLP). These tools not only enhance fraud detection but also optimise operational workflows, driving significant improvements across the business.

As privacy and data security concerns become increasingly critical, open-source AI technologies are evolving to address these challenges. Innovations such as federated learning and advanced encryption tools allow companies to leverage AI for rapid innovation while ensuring data remains secure and compliant with privacy regulations. This balance of agility and security is key to building trust and maintaining compliance in an increasingly regulated industry. 

Blockchain and fintech 

Open-source blockchain platforms allow fintech startups to innovate without the hefty cost of proprietary systems:

• Open-source blockchain platforms: Platforms like Ethereum, Bitcoin Core, and Hyperledger are decentralising finance, providing transparency, reducing reliance on intermediaries, and reshaping financial services.
• Decentralised finance (DeFi):  DeFi is projected to see an impressive rise, with P2P lending growing from $43.16 billion in 2018 to an estimated $567.3 billion by 2026. Platforms like Uniswap and Aave, built on Ethereum, are pioneering decentralised lending and asset management, offering an alternative to traditional banking. By 2023, Ethereum alone locked $23 billion in DeFi assets, proving its growing influence in the fintech space. Enterprise blockchain solutions: Open source frameworks like Hyperledger Fabric and Corda are enabling enterprises to develop private, permissioned blockchain solutions, enhancing security and scalability across industries, including finance.
• Cost-effective innovation: Startups leveraging open-source blockchain technologies can build innovative financial services while keeping costs low, helping them compete effectively with traditional financial institutions.

Hyper-personalisation

Hyper-personalisation is another key trend in fintech, with AI and open-source technologies enabling companies to create highly tailored financial products. This shift moves away from the traditional "one-size-fits-all" model, helping fintechs solve niche customer challenges and deliver more precise services.

Consumer demand for personalisation 

A Salesforce survey found that 65% of consumers expect businesses to personalise their services, while 86% are willing to share data to receive more customised experiences.

source- State of the connected customer

The expectation for personalised services is shaping how financial institutions approach customer engagement and product development.

Real-world examples

Companies like Robinhood and Chime leverage open-source tools to analyse user data and create personalised financial recommendations. These platforms use technologies like Apache Kafka and Apache Spark to process real-time data, improving the accuracy and relevance of their personalised offerings-from customised investment options to tailored loan products.

Implementing hyper-personalisation lets fintech companies strengthen customer relationships, boost retention, and increase deposits. By leveraging real-time, data-driven technologies, they can offer highly relevant products that foster customer loyalty and maximise value throughout the customer lifecycle. With the scalability and flexibility of open-source solutions, companies can provide precise, cost-effective personalised services, positioning themselves for success in a competitive market.

Erlang and Elixir: Open Source solutions 

Released by Ericsson Telecom as open-source in 1998, the Erlang programming language has become essential for telco’s companies that need scalable, high-concurrency, and fault-tolerant systems. Its open-source nature, combined with the capabilities of Elixir (which builds on Erlang's robust architecture), enables businesses to innovate without relying on proprietary software, providing the flexibility to develop custom and efficient solutions.

Both Erlang and Elixir’s architecture are designed to ensure potentially zero downtime, making them well-suited for real-time Utility operations.

Why Erlang and Elixir are ideal for Utilities:

• Reliability: Erlang’s and Elixir’s design ensures that applications continue to function smoothly even during hardware or network failures, crucial for services that operate 24/7, guaranteeing uninterrupted service / supply. Elixir inherits Erlang’s reliability while providing a more modern syntax for development.
• Scalability: Erlang and Elixir can handle thousands of concurrent processes, making them perfect for Utilities looking to scale quickly, especially when dealing with growing data volumes and transactions. Elixir enhances Erlang’s scalability with modern tooling and enhanced performance for certain types of workloads.
• Fault tolerance: Built-in error detection and recovery features ensure that unexpected failures are managed with minimal disruption. This is vital for Utility applications, where downtime can lead to significant financial losses. Erlang’s auto restoration philosophy and Elixir’s features enable 100% availability and no transaction is lost.
• Concurrency & distribution: Both Erlang and Elixir excel at managing multiple concurrent processes across distributed systems. This makes them ideal for Utility operations that require real-time data processing across multiple locations.

To conclude

Businesses are navigating an increasingly complex and competitive landscape where traditional solutions no longer provide a competitive edge. If you’re still reliant on proprietary software, ask yourself: Is your system equipped to expect the unexpected? Can your existing solutions keep up with market demands? 

Open-source technologies offer a solution to these challenges. Utilities can reduce costs, improve security, and, most importantly, innovate and scale according to their needs. Whether by reducing vendor lock-ins, tapping into a vibrant developer community, or leveraging customisation, open-source software is set to transform Utilities, providing the tools necessary to stay ahead in a digital-first world.

If you're interested in exploring how open-source solutions like Erlang or Elixir can help future-proof your systems, contact me directly or the Erlang Solutions team.