Big Ideas 2024: The Rise of the Developer as a Buyer in Financial Services with Angela Strange

Strategic Shift in Financial Services Buying Decisions

• The "developer" has emerged as a third, increasingly influential constituent in financial services purchasing decisions, joining traditional economic buyers (ROI-focused) and business leads (use-case focused).
• This shift is evidenced by the rise of communities like Moob's fintech developer conference, which has attracted a community of 4,000+ participants.
• Historically, decisions were driven by infrastructure stability; now, the developer's preference for "great developer experience" favors new fintech entrants over legacy incumbents.
• Fintechs are responding by prioritizing developer sandboxes for "try-before-you-buy" scenarios and open-sourcing parts of their solutions.
• Legacy institutions are being compelled to improve product architecture, including documentation, to appeal to developer buyers.

Evolution of the Financial Stack: From "Marble" to "Code"

• The industry is transitioning from a "marble" era (physical banks focused on safekeeping cash) to a "code" era (digital focus on moving money).
• While 99% of US dollars are still settled on mainframes, the market is shifting toward "as-a-service" layers that allow non-banks (e.g., Lyft, Procore) to issue bank accounts and payments.
• Developers are automating the "stitching" of disparate as-a-service layers, creating composable "Lego-like" blocks that function similarly to open-source libraries.
• This composable architecture allows for faster product development, attracting top engineering talent previously focused on other software sectors.

Specific Use Cases and Infrastructure Impact

• In payments, the shift enables providers to offer composable blocks rather than monolithic systems, allowing engineers to build seamless, revenue-driving user experiences.
• Product-first thinking is becoming dominant; developers can now engineer optimal user flows that were previously impossible due to rigid legacy stitching.
• Open-source libraries are solving complex edge cases (e.g., an open-source ACH library handling trillions of dollars) that were once esoteric or proprietary problems.

Legacy Infrastructure and the COBOL Challenge

• Approximately 40% of bank code remains in COBOL, a language with a shrinking talent pool and limited modern teaching.
• Traditional narratives suggested legacy infrastructure was too risky to replace; however, the advent of Generative AI is challenging this status quo.
• Generative AI offers a 10x improvement in specific workflows (e.g., automated SAR report generation), making replacement economics more viable than previous incremental tech upgrades.
• Tools like GitHub Copilot are reported to increase engineer productivity by 30–100%, potentially accelerating the rewriting of legacy systems or using LLMs to translate COBOL into modern languages.

Regulatory and Global Context

• Open banking mandates (e.g., in the UK and Brazil) differ from the US, creating opportunities for broader open-source standards and APIs to replace fragmented, bank-specific development efforts.
• Regulatory sandboxes are facilitating new entrants to test infrastructure models more rapidly.

Future Outlook and Consumer Impact

• Lower maintenance costs enabled by open-source cores could reduce the cost of banking infrastructure, potentially serving the 2 billion people currently underserved by traditional banking models.
• Improved software quality from community-tested libraries will lead to more robust financial products with fewer edge-case failures.
• A16Z's 2024 "Big Ideas" list includes 40+ predictions spanning smart energy grids, AI from "black box" to "clear box," and democratized healthcare (GLP-1s).
• A16Z partners note that while Gen AI presents risks, the risk of failing to adopt it quickly enough is becoming a primary strategic concern for C-suite leaders in finance and insurance.