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FWD goes open source to extend business reach

The insurer is teaming up with Red Hat to become faster and nimbler across markets and products.

Simon Ahn, FWD

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Insurer FWD is embracing open-source technology in order to boost its competitiveness.

Simon Ahn, group I.T. enterprise architect, joined the firm in October, 2018. His first big move is to begin reconfiguring the insurer’s mainframe-based legacy systems to a platform that can be as agile as a fintech and ready to share data with potential partners.

This is about putting DevOps and agile development at the heart of the insurer’s operations. (DevOps is about creating collaborative environments to constantly test software – see this article for an explainer.)

This represents a break from relying on proprietary systems and dependence upon a single vendor per system. Going open source has been the trend among financial institutions for about five years, Ahn says, with insurance companies playing catch-up to banks.

“This is about time to market,” Ahn said. “By being open source, we can plug into multiple vendors, instead of relying on just one provider’s solution. That will help us pursue open APIs, enter new distribution channels, and provide new products and services.”

Partnering with Red Hat

FWD has partnered with Red Hat, an open-source I.T. company, to support its move. Red Hat, which was acquired last year by IBM, supports open source for enterprises, with a special focus on security.

Clients of Red Hat can outsource tech support, as they would with a proprietary vendor, which is important because developer expertise is in short supply. Moreover, FWD has nine operating entities active in eight markets, each with its own regulation. This requires a diverse set of solutions and vendors.

The traditional approach by a financial institution – to build and control everything in-house, or rely on a handful of global vendors to do everything – is costly and cumbersome. Such legacy setups are one reason why it takes six months or more for an insurer like FWD to design, test, and deploy a new product.

This is about time to market

Simon Ahn, FWD

Ahn says cutting this time down to two or three months will be one of his performance hurdles for 2020.

“This year [2019] has been about designing the foundations; 2020 is about implementation,” Ahn said. “DevOps is about a new environment. We’re not changing our apps, but as products go digital and mobile, we want to use DevOps to develop new products.”

The tech details: containerization

The technical heart of enterprise open source is “containerization” using Linux. Linux is an open-source operating system – think of it as iOS but instead of a logic developed by one company like Apple for its own products, it’s an operating system that is constantly being modified by hundreds of thousands of independent developers worldwide.

A Linux container is a set of processes or rules that are independent of the rest of a system or environment. For example, when someone develops an app, she does so within the confines of specific hardware, rules, and files. But what if she wants to run that same app for a different company, or in a different jurisdiction? Traditionally such extensions are difficult to achieve without messing up the app. But an app that is “containerized” is one that can port seamlessly among platforms. This portability makes containers especially useful for I.T. security, as well as for things like payment gateways.

But there are millions of apps out there, and porting them from one place to another has remained a manual process. Google developed a platform called Kubernetes that automates the movement of containers, including across different types of cloud platforms.

Red Hat is the second largest contributor to Kubernetes programs (after Google), says Peter Man, general manager at Red Hat for Hong Kong, Macau and Taiwan. It is also the biggest contributor to Linux, and the first vendor to commercialize Kubernetes for enterprises.

A driver of the vendor’s sales is demand by enterprises to shift containers easily from on-prem servers to hybrid or public clouds, and from cloud to firms’ own data centers.

FWD’s Ahn says going open source doesn’t mean the insurer can or will jettison its core legacy system. As with many financial institutions, FWD remains dependent on old mainframes with programs written in old computer languages: its main policy system speaks COBOL, a US military language that was first commercialized in 1959. But, says Ahn, other systems are being updated in modern computer languages such as Java, which was designed in the 1990s to work in many environments.

All this I.T. stuff is the basis for how an insurer like FWD can compete in the 2020s. “DevOps is about working together to allow faster time to market,” Ahn said. “It’s about being more efficient and productive. And we need it for open APIs to open the doors to partners.”

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FWD goes open source to extend business reach