Good morning.
I think the consensus is it’s time for Wall Street to have a tech upgrade as “Cobol Cowboys” can't always come to the rescue.
To process tens of trillions of dollars worth of transactions annually, Wall Street and the federal government rely on Cobol—a programming language created in 1959. I talked recently with Steve Bisgay, the new CFO at Clear Street, an independent prime broker valued at $2 billion, that wants to replace decades-old infrastructure across capital markets. To do so, the startup built a cloud-native prime brokerage and clearing system from scratch to provide real-time data to make quicker decisions.
Along with Clear Street, two tech giants—IBM and Microsoft—may throw their hats in the ring to give Wall Street an upgrade. “Can AI fix Wall Street’s ‘spaghetti code’ crisis? Microsoft and IBM are betting that it can,” is a new Fortune feature by Ben Weiss that delves into the Cobol calamity.
As Cobol gets older, it's been challenging for Wall Street to find people who can update their legacy systems. “When something does go wrong, many firms turn to 82-year-old Bill Hinshaw, the ‘Cobol Cowboy,’” Weiss writes. “Hinshaw works out of his home office in northern Texas, where he oversees a remote team of some 600 aging Cobol engineers—some of whom cut their teeth as programmers in the ‘60s and ‘70s. Every week, the cowboys respond to emergency calls—including one in 2021 from Superior Welding Supply, a 93-year-old Iowa firm whose only in-house Cobol expert died just before the company’s software crashed.”
But government agencies and large banks have actually raised alarm over their aging technical infrastructure, according to Weiss. “The vast majority of major banks, when you get down to the actual core banking systems, you get down to Cobol,” Michael Abbott, the global banking lead at Accenture, told him.
Ruchir Puri, chief scientist at IBM Research, told Weiss that “through generative AI, or the same technology that powers OpenAI’s ChatGPT, IBM can turn poorly documented Cobol into structured, easy-to-parse Java,” he writes.
And, according to Thomas Dohmke, the CEO of GitHub, the Microsoft-owned software platform for developers, its generative AI–powered assistant, GitHub Copilot, can help modernize the legacy infrastructure.
You can read more here about Weiss’s deep dive into the history of Cobol—and how generative AI may be riding to the rescue.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
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