The City of London is a magnet for technology talent from the UK, Europe and beyond. Despite or perhaps because of this, London is not a city synonymous with IT start-ups.

According to Kirk Wylie, founder and CEO of financial analytics supplier OpenGamma, this is beginning to change. He believes that a diverse talent pool, a world-leading financial services industry and growing interest from venture capitalists make London an increasingly attractive base for technology entrepreneurs.

Wylie, who was born in the US and began his career at various Silicon Valley start-ups, moved to the UK capital six years ago. There he found that the “smartest guys” in technology worked for financial services organisations, and he decided to do the same.

But Wylie found that all was not well in the financial services technology industry. “A few years ago, I was working on a big project to build an analytics platform for financial trading information,” he recalls. “It struck me that everything we were doing was completely generic, and that we were solving problems that everybody in the industry was already solving, but we were still about to do it all ourselves.”

“It hit me once when I was working at three in the morning: couldn’t this all be open source?”

When Wylie was later made redundant in the fallout from the credit crunch, he decided to make good on this vision. In 2009, he founded OpenGamma with the aim of building a platform for analytics and risk management for the financial services industry, and selling it on a commercial open source basis, whereby organisations use the software for free and only pay for optional support.

According to Wylie, the various constituents of the City’s IT departments are crying out for open source alternatives to their proprietary software. “From developers, I hear the same story over and over again; if something goes wrong, they need the ability to jump into the source code and fix it there and then, and not have to wait for vendor support to come back to them.”

“IT management, meanwhile, want open source for the business model,” he argues. “They want a situation where their software vendors can’t abuse their relationship. Open source does that, because if the customer is not satisfied with the supplier they are free to stop paying them.”

He acknowledges that in the financial services industry, IT departments rarely hold the purse strings. But the frustration they encountered working with proprietary software has prompted many to rebel, Wylie says.

“Working in banks, I saw IT starting to fight back and say: ‘We would prefer to build software in-house than buy something, not because its cheaper but because its going to be better’,” he says.

The lack of a licence fee certainly does not denote a lack of ambition. “Open source gives us the ability to push into markets that big established vendors that are used to significant upfront licensing fees can’t pursue, such as secondary markets and developing countries,” says Wylie.

He insists, however, that OpenGamma is not just a cheap alternative to proprietary products. The company’s first user, a “very quanty” hedge fund with trading floors in London and Switzerland, was attracted by the breadth of the platform and not the open source model per se, Wylie claims.

Setting up OpenGamma would not have been possible anywhere but London, Wylie claims. “London is an incredibly diverse city, so we have a better talent base to draw from,” he says. “And we’re very close to a lot of the major decision-makers [in the financial services industry].”

One thing that could have been easier elsewhere, however, was raising investment. The company received its first round of funding in August 2009 from global venture capital firm Accel Partners. “It would have been a lot easier for me to raise that money in Silicon Valley,” Wylie says. “There aren’t that many Angels (private individual investors) in London, and there are incredibly few that are willing to look at financial technology, which requires deep pockets.”

But while it may not yet have the depth of funding of Silicon Valley or even New York, Wylie says London is improving. “Even in the last year and a half there have been more Angels and more seed level funding,” he says. “Six and a half years ago London was not a start-up friendly environment, but it’s really changed; now it’s an exciting place to be a start-up.”