00:00Precision delivery of medicine
00:02entertainment franchise games absolutely
00:05exploding small modul reactors and the
00:07nuclear Renaissance plus AI moving into
00:11very complex workflows now these were
00:14just a few of the major Tech innovations
00:16that Partners at a16z predicted last
00:19year and our partners are back we just
00:21dropped our list of over 40 plus big
00:24ideas for 2024 a compilation of critical
00:27advancements across all our verticals
00:30from Smart energy grids to Crime
00:31detecting computer vision to
00:33democratizing Miracle drugs like gp1s or
00:36even AI moving from blackbox to clearbox
00:40you can find the full list of 40 plus
00:43Builder worthy Pursuits at
00:46az.com Big Ideas 2024 or you can click
00:50the link in our description below but on
00:53Deck today you will hear directly from
00:55one of our partners as we dive even more
00:57deeply into their big idea what what's
01:00the why now what opportunities and what
01:02challenges are on the horizon and how
01:04can you get involved let's dive
01:07in as a reminder the content here is for
01:10informational purposes only should not
01:12be taken as legal business tax or
01:14investment advice or be used to evaluate
01:16any investment or security and is not
01:18directed at any investors or potential
01:20investors in any a6c fund please note
01:24that a6z and its Affiliates may also
01:26maintain investments in the companies
01:27discussed in this podcast for more
01:30details including a link to our
01:31investments please see
01:38disclosures I'm Angela strange a general
01:41partner on the a16z fintech team and I
01:44think in 2024 will be a significant rise
01:47of the developer as the buyer in
01:49financial services historically
01:52Financial Services infrastructure
01:53purchases were mostly driven by the
01:55economic buyer what's my Roi or the
01:58business lead does this solve my use
02:00but there is now a third increasingly
02:02influential constituent the developer
02:05look no further than moves growing
02:07fintech developer conference and
02:08Associated 4,000 strong community in
02:12tandem developers at larger financial
02:14institutions and insurance companies are
02:16becoming more influential in buying
02:17decisions the rise of a developer as
02:19buyer in financial services companies of
02:21all sizes favors new entrance for
02:24fintech companies that Pride themselves
02:26on a great developer experience this
02:28will play to their advantage fexs are
02:30already prioritizing the creation of
02:32developer sandboxes to let customers try
02:35before you buy and are even open-
02:37sourcing parts of their
02:38Solutions the developer buyer would of
02:41course prefer to get a sense of how the
02:43product works prior to
02:44implementation but isn't that strategy
02:47also better for everyone for larger
02:49financial institutions selling their
02:51infrastructure appealing to the
02:52developer will be a new muscle that may
02:54require improvements in product
02:56architecture including upto-date
02:58documentation still it's clear these
03:01institutions are recognizing the need to
03:02influence the developer as well all
03:04right Angela I watched your talk from
03:07fintech Devcon a few years ago that
03:09documented this shift this
03:10multigenerational shift from Marble to
03:12code I love that line and the ability
03:14also for almost any company to
03:16participate in this financial ecosystem
03:19not just Banks I think it'd be great if
03:21you could touch on that history to
03:23really set the stage for this important
03:24new buyer being the developer yeah if
03:27you ask most people who has influence in
03:30the $25 trillion Financial Services
03:33industry it'd probably say the finance
03:35leads or the lines of business leads and
03:38what's happening now is there's a third
03:41very influential constituent which is
03:43the developer and this has dramatic
03:46implications not only on how financial
03:48services are built but then also like
03:50the services that we receive as
03:52consumers and businesses and I think
03:55anytime you you talk about a big shift
03:57like this it's sometimes helpful to walk
03:59through super briefly like what have
04:01been the big eras just just to
04:03underscore the importance um and and
04:06this is where the the marble the code um
04:08sort of framing came from and so you
04:11think not that long ago uh Banks were
04:14built out of marble and they were only
04:16concerned with keeping physical money
04:19safe fast forward to to recent history
04:21the main frame arrives you know Banks
04:23obviously have to keep virtual money
04:24safe those main frames are still where
04:26you know 99% of dollars in the US are
04:29are settled so the trend that we've been
04:32talking about over the last uh over the
04:34last several years has been the shift to
04:36as a service and so that's taking some
04:38of the elements of the banking stack and
04:41making them such that Financial Services
04:43moves from something that traditionally
04:45only banks could do to now something
04:47that any company can do examples Lyft
04:50can add bank accounts for its drivers or
04:52procore can add you know payments in
04:54bank accounts for their
04:56plumbers and what has happened is any
04:58developer at one of these companies and
05:00even at the banks has discovered that
05:02even though we have these as a service
05:04layers there's still a lot of stitching
05:08that needs to go on to to put these
05:10things together um you know and then to
05:12State the obvious developers are very
05:13smart so anytime they find themselves
05:15building something over and over again
05:17they will find a way to to automate that
05:20and oftentimes open- Source it and so
05:23we're starting to see all of these like
05:26very well-used prolific open source
05:29libraries that are solving what used to
05:31be esoteric problems but that are used
05:34by you know millions of developers um
05:36all around the world and so this this
05:38fores shift is taking the as a service
05:41layer and exploding it even further such
05:43you can think about it is almost having
05:45Lego for banking so these different
05:48composable blocks that all fit together
05:50in different kinds of ways and then the
05:52added bonuses many of those are open
05:54source and so the smartest people from
05:56all around the world can contribute to
05:58these making them even even stronger and
06:00even better amazing so what does that do
06:03you can build way better products much
06:06faster and it's starting to attract some
06:09of the smartest Engineers are now
06:10working on Financial Services products I
06:13love that and I I think maybe it would
06:15be helpful for the listeners if you
06:16could give a couple examples of those
06:19financial services infrastructure
06:21products that you say were previously
06:23driven by the economic buyer or the
06:25business lead that now you think are
06:27really being influenced by these develop
06:30let's use the example of payments if
06:32you're providing a um operating system
06:35for any type of business it's a very
06:37natural extension that you might want to
06:39add payments and traditionally you know
06:43payments will uh expand the dollars that
06:46you are able to get from your customers
06:48it's going to give you more margin it's
06:49going to make people stickier it was a
06:51very economic decision that this is the
06:53right thing to do and so let's pick the
06:55infrastructure and I think what has
06:58happened is company compan that have
06:59done this historically have then ended
07:01up with well now we have one system that
07:04helps us accept the money we have
07:06another system that helps us store the
07:07money we have a different system that
07:09helps us disperse the money now when
07:11we're trying to create these good user
07:12experiences again we're we're stitching
07:14these things together so to use an
07:16example of you know move which is the
07:18company that has started this large
07:20conference if you can provide composable
07:24blocks of all the different things that
07:25you want to do in payments without any
07:27of these middle layers together
07:30Engineers are able to build much better
07:33product and much um more seamless
07:35experiences and then as a result they
07:38are becoming very influential in the
07:41buying decision because it's going to
07:43drive the revenue and the product
07:45experiences that these companies are
07:46able to do absolutely and anytime we see
07:49a shift in who the buyer is that
07:52naturally also influences the way
07:54products are built and so maybe you
07:56could speak to that right if if we now
07:57see this buyer how does that ultimately
08:00influence how these products are
08:02expected to be built and maybe also how
08:04they're expected to be sold I I used to
08:06work with this great um VP of
08:08engineering and I was on the product
08:10side and what I loved the most is
08:13anytime I could come up with the best
08:15product experience you know versus some
08:17of my counterparts would be like well
08:19yeah this is hard to build this is not
08:21his expression was always like well it's
08:22just software we can build anything and
08:25in financial services and payments like
08:27that hasn't always been the case because
08:30you've just been limited by how things
08:32are stitched together um what systems
08:35you can tap into but if you can imagine
08:38come up with the absolute best product
08:40experience and there's some really
08:41unique different ways to integrate
08:44Financial Services into software
08:46platforms and if you could have the most
08:48composable bricks of how to do that then
08:51you can drive the best user experiences
08:53and and so I think the product first
08:55thinking that's happening in financial
08:57services is very much coming to the
08:59Forefront both on the consumer side and
09:01on the business side because now we have
09:04this just great composable architecture
09:07so where do larger financial
09:09institutions come into this because
09:11they're not necessarily known as being
09:13the most technically Savvy or the most
09:15composable code I mean I think something
09:17that you mentioned in your talk that we
09:19referenced at the beginning is that 40%
09:21of Bank code is still in Cobalt which is
09:24pretty Legacy I think you even said that
09:26it's not really being taught very widely
09:28anymore more and so how does how does
09:31that fit together how do we square that
09:33Circle of these larger financial
09:35institutions and this walk towards
09:38something a little more technologically
09:40driven and with developers at the center
09:42of that yeah so the most off sighted
09:45statistic uh which I think has stayed
09:48very constant is just the the level of
09:50uh you know banking infrastructure has
09:52been around for a long time Cobalt is an
09:54old language there's a lot of code
09:55written in Cobalt it is very hard to
09:57find Cobalt developers right now um
10:00there's also a lot of Legacy software
10:03much of financial services is built on
10:06Enterprise software that has been around
10:08since the 60s 70s and 80s and the
10:11narrative has been that banks are never
10:14going to rip a lot of this out like it's
10:15just way too risky and I think that is
10:19starting to change like I did this talk
10:22in in 2021 and there was already a ton
10:24of momentum towards developers it's now
10:27you know almost 202 for and there's an
10:30entirely new platform shift that's
10:32driving even faster change which is
10:35Ai and there's a lot of talk in
10:38financial services around the risks that
10:40are posed by generative AI there should
10:42be more talk around what are the risks
10:45of not moving quickly enough towards
10:48this s and I think we're already seeing
10:51that a lot in um financial services and
10:54in Insurance CEOs from top down are
10:56really rethinking their strategy um you
10:59know how can they how can they leverage
11:00this platform shift and how does that so
11:02how does that impact Financial Services
11:04infrastructure I think it's challenging
11:06this notion that some of this
11:08infrastructure will never be replaced
11:10because I think what we're seeing is
11:11like take a loan origination system for
11:13instance there's been new loan
11:15origination systems and it's been very
11:17hard to get that new tech in but I think
11:19one of the reasons was the new tech was
11:21better but probably not 10x better right
11:25whereas now with geni it's like great
11:27we've reimagined the workflow it's going
11:29to take you oneth as many people because
11:32you know if you take a you know an AML
11:34system for instance like we're going to
11:35automatically write the SAR reports for
11:38you and so the products that are able to
11:40come along are so much better that it's
11:41challenging the notion that some of this
11:42old software is just never going to go
11:45um so I think that's point one point two
11:49on cobal right like does it make sense
11:51to you know entirely rewrite systems in
11:55days past probably not but if you look
11:59depending on the engineer that's 30 to
12:02100% increased productivity so one
12:05school of thought is like well now you
12:07could just rewrite it faster but you can
12:09imagine a world where llms get so good
12:11that you could feed in large portions of
12:13code written in coall and they would
12:16spit out the same amount of code um or
12:18the same functionality of said code in a
12:20different language you know and we're
12:22not there yet but the space is moving so
12:24quickly that this change in this shift
12:26is is very much going to change some of
12:28these like that have been around for a
12:29very long time totally it's a very
12:31foundational shift and maybe one other
12:33shift I'd love for you to touch on are
12:35the regulatory shifts happening at the
12:37same time you know we did an episode
12:39recently where we talked about how
12:41different jurisdictions are implementing
12:43open banking or sandboxing and I'm
12:45curious to know how you think those also
12:47fit into this trend of the increasing
12:50involvement of the developer yeah I
12:52think the well the open banking Trend in
12:56particular is pretty interesting um and
12:58you know the US is a little bit
13:00different than some other countries like
13:02the UK and even Brazil that have a an
13:04open banking mandate from the government
13:06that banks have to share their data and
13:09so you can think like okay does it make
13:11sense for every Bank by themselves to
13:14independently develop and maintain and
13:16and do all of these different types of
13:18apis or is that an opportunity for
13:22broader Open Source Products projects
13:24broader standards such that it becomes a
13:26lot easier for financial institutions to
13:30maintain some of these uh some of these
13:32open connections and a lot easier for
13:34other companies other software companies
13:36to connect into them I think just to
13:38round things out um I think it's very
13:40exciting that the developer is playing a
13:42greater role but maybe the question that
13:44listeners are asking themselves is how
13:46does this ultimately impact me right how
13:48does the customer ultimately see
13:51different kinds of financial services
13:53with this developer role becoming more
13:56prominent what do you think this does is
13:59really to the kinds of products that can
14:00be created yeah I think this is the most
14:03exciting part right like you can talk
14:04about infrastructure but really what is
14:06better infrastructure do it enables
14:08better consumer and Better Business
14:10experiences yeah so I can think I can
14:12think of a couple examples right like
14:14there's still two billion people that
14:17are underserved from a financial
14:19services point of view around the world
14:21and there there's many reasons for that
14:24um but one of the reasons is that if you
14:27want to stand up Bank in infrastructure
14:29with all the software and you know
14:31especially in the US it's going to cost
14:32you you1 to $30 a month just to keep the
14:37lights on and and that makes sense if
14:39you're going to get a mortgage and
14:40you're going to get all these different
14:41types of products but it doesn't if
14:43you're going to have a low balance
14:44account and so if you now have and there
14:46are several examples open- Source cores
14:49where you can just grab the software for
14:51free and build around it you can imagine
14:54a very low maintenance cost of financial
14:57services which will open access to to
14:59many more people um and so that's that's
15:01one theme I'm excited about and then the
15:04second is like Financial Services might
15:06have more edge cases than any other
15:09industry around right like the number of
15:11different ways that you can pay in
15:12different payment types and different
15:13like it's just it's huge pain right and
15:16so if you take there's now an open-
15:18Source um ACH library and Engineers from
15:21banks are running trillions of dollars
15:23through this library and catching all of
15:25these edge cases and fixing it and so
15:27like just stuff is going to work better
15:30right if everyone incorp this hardened
15:32library that um the best people against
15:35the world are testing against um all of
15:37us are going to have better products
15:38over time all right I hope you enjoyed
15:40this big idea we do have a lot more on
15:42the way including a new age of Maritime
15:45exploration that takes advantage of AI
15:47and computer vision plus aiers games
15:50that never end and whether voice first
15:52apps May finally be having their Moment
15:55by the way if you want to see our full
15:56list of 40 plus big ideas today you can
16:00head on over to az.com slig ideas
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