Wall Street’s ‘Cobol Cowboys’ are spread thin fixing legacy tech—but AI may soon ride to the rescue

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

Upcoming event: Fortune‘s Emerging CFO virtual event, in partnership with Workday, “Finance and IT as co-innovation partners,” will take place on Oct. 25, 11 a.m.-12 p.m. ET.

Join us for a conversation where we will explore strategies to shift the Finance-IT relationship from its traditional support model to a partnership focused on co-innovation, from breaking down data silos to improving cross-functional skills. Confirmed speakers will include: Eric Kutcher, CFO, McKinsey & Company; Zane Rowe, CFO, Workday; and Sindy Wilson, CFO, Kickstarter. 

Click here for more information and to register.

Leaderboard

Some notable moves this week:

Brenda Lovcik was named SVP and CFO at Trex Company, Inc. (NYSE:TREX), a manufacturer of wood-alternative decking and railing. effective Oct. 23. Most recently, Lovcik served as CFO of global products, global supply chain and global FP&A at Johnson Controls, Inc. Before that, she had a 20-year career and held multiple senior financial roles at Medtronic, Inc., including SVP of finance and global FP&A. Before this role, Lovcik was CFO of several Medtronic business units. 

Kavita Suthar was named CFO at SpotHero, a parking reservation marketplace. Before SpotHero, Suthar was the CFO at Redbox for more than seven years. She held several roles at Redbox across financial planning and analysis and strategy. Before Redbox, Suthar spent over 10 years at US Cellular.

Michael R. Kirby was promoted to CFO and Operating Officer at International Materials LLC, (IMI) effective immediately. In his expanded role, Kirby will continue to oversee IMI's financial and accounting functions while taking on a broader range of responsibilities. Kirby joined IMI in October 2022 as CFO.

Hon Man Yun, CFO at Hudson Acquisition I Corp. (Nasdaq: HUDA), unexpectedly passed away on Oct. 3, the company announced on Monday. Yun served as CFO since 2022. "He will be missed not only as a business colleague, but also as a friend," Jiang Hui, the company’s CEO, said in a statement. 

Salman Rashid was named CFO at Woolpert, an architecture, engineering, geospatial consulting firm. Most recently, Rashid was CFO and COO for Edgile, a cybersecurity consulting company, He was also CFO and COO at QuickStart Technologies, and CFO for Dell Services' Global BPO business. 

Eladio Gil was named Interim CFO at Cano Health, Inc. (NYSE: CANO). Gil, who previously served as Cano Health's VP of medicare advantage finance, succeeds Brian Koppy, who has stepped down to accept an opportunity outside the organization. Before joining Cano Health, he served as the CFO of Total Health. He was also CFO of CarePlus Health and VP of Care Delivery with Humana.

Nathan Cook was appointed interim CFO at Presto Automation Inc.(Nasdaq: PRST), an AI and automation solutions provider, effective Oct. 10. Cook was a senior managing director at Teneo Capital LLC, a global advisory firm. Before that, he held the position of senior managing director at EY-Parthenon and managing director at AlixPartners.

Big deal

Realizing a cloud-enabled economy, a global report by Accenture and AWS, examines how cloud drives economic and societal impact through micro, small, and medium enterprises (MSMEs, businesses, and startups with between 1 and 250 employees). The key results find MSMEs in healthcare, education, finance technology, and agriculture sectors are expected to drive $161 billion in annual productivity gains and support 95.8 million jobs by 2030, according to AWS. This is equivalent to about 8% of the total employment across the 12 countries studied.

Regarding financial technology or fintechs, the most common areas for these MSMEs to be active were in providing digital banking (25%) and budgeting or financial management tools (17%), according to the report. 

Going deeper

Here are a few Fortune weekend reads:

"The inflation report just wasn’t very dramatic. Cue a range of wildly varying takes on Wall Street" by Will Daniel

"Disney isn’t just hiking the price of streaming—the happiest place on earth will cost you more too" by Chris Morris

"Prize-winning real-estate economist says the office market won’t improve for years: ‘This is a trainwreck in slow motion’" by Sydney Lake

"Waking up before your alarm? Falling back to sleep can make you more exhausted—here’s the cut off time when you should just stay awake" by Erin Prater

Overheard

“‘Funflation,’ Taylor Swift…those experiences are really where people are willing to pay."

—Best Buy CEO Corie Barry said this week at Fortune’s Most Powerful Women Summit, adding that this “means the bigger ticket items in electronics are not right now where people are interested.”