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How Gen AI Is Transforming Software Development

Gen AI is far more than a tool for writing business emails or conducting research. In software development, tools like GitHub Copilot are already transforming the way developers approach programming tasks. As it stands, Gen AI acts much like a very smart auto-suggest tool that enables developers to write and debug code much faster — twice as fast, according to a study by McKinsey. But this is just the beginning. We will see even greater productivity as the technology improves and new use cases arise.

Developers are embracing Gen AI

While some developers are still working with less modern text editors like Vi or Emacs that poorly support integrations, Gen AI usage is soaring among those working with more agile IDEs like VSCode or IntelliJ. Applause’s 2024 Gen AI Survey found that 42% of respondents have used Gen AI to build apps, up from just 4% in 2023. The majority are using Copilot (41%) followed by Codex by Open AI (24%). Others have experimented with apps like TabNine, AskCodi, CodiumAI, Kite, Amazon CodeWhisperer, AI21 Labs Studio and DeepCode.

Research suggests there are differences in how developers leverage Gen AI depending on their level of experience. For junior developers, Gen AI seems to be most helpful for suggesting code, saving time they would usually spend looking up solutions online. For senior developers, Gen AI is most helpful in the design and structuring of systems. As Gen AI output often largely depends on the quality of prompts, senior engineers also tend to get more value because they are better able to describe the problem they need to solve.

Use cases are in their infancy, but expanding

Gen AI does more than simply predict the next line of code in the way Siri suggests the next word users are going to type in a text. It suggests whole blocks of code based on both recent blocks and the context of the wider project, taking into account language syntax, coding styles and standards, etc. This is a game changer for developer productivity. However, this is just one use case for Gen AI in software development. Other common use cases include:

  • Writing requirements
  • Writing test instructions
  • Writing test cases
  • Writing code (code/function completion)
  • Checking code
  • Fixing code
  • Writing unit tests
  • Writing functional tests
  • Writing test cases
  • Writing automated tests

Gen AI is especially helpful for quality assurance efforts, from suggesting improvements to test cases and detecting potential issues early. The most common use cases cited by respondents to Applause’s Gen AI survey were: test case generation (19%), text generation for test data (17%), test reporting (16%) and chatbot testing (15%). 

While Gen AI is currently used for these more repetitive, tedious coding tasks, it is still a nascent space and its value for developers will only increase further. In the future, Gen AI could be used for anything from creating HTML, CSS or Javascript from a screenshot to pointing out programs and carrying out automatic refactoring. It is going to completely change the industry.

Putting guardrails in place is essential

Just like code written by developers, AI-generated code needs to be thoroughly checked. Issues can run the gamut from choosing the wrong variable names to creating code that looks convincingly real but does not run at all. Gen AI tools often need spoon feeding to tackle a challenge. They can generate erroneous code and sometimes make assumptions in order to complete a task. Developers must understand that they still own the end result and go through code or test cases line by line. If you plan to integrate the technology into your workflows, it is worth investing in lint tools and unit tests that can catch errors introduced by Gen AI. 

Managers also need to plan how to roll out Gen AI to their teams. Before advocating for Gen AI use in the corporate environment, managers need to put guidelines in place to avoid data privacy breaches and other legal concerns. They should also make sure developers have selected the correct controls around copyright to attribute open-source licenses properly.

Gen AI skills are important for employers

Understanding how to leverage Gen AI is not just nice to have. It is already influencing the job market. Developers with AI expertise are likely to make for more attractive candidates and could earn greater salaries. A report from Amazon Web Services found that employers are willing to pay an average of 47% more for IT workers with AI skills. 

When I am hiring developers for my team, I look for the A-players. That doesn’t necessarily only mean the people with the best qualifications or even skillset. Today, it also means those who are experimenting with new technologies like Gen AI. Ideal candidates will have already integrated Gen AI into their workflows in a way that increases productivity without sacrificing quality, understand the technology’s limitations and take organizational context into account when reviewing off-the-shelf code.

The industry is changing

To be clear: Gen AI is not here to replace developers, it is here to enhance their work. Developers using Gen AI don’t just get the chance to accelerate code development — they also get to witness the evolution of a technology that is going to transform their industry. It’s a great time to be working in software development.

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Apps targeting young people

Naturally, banks and online brokers are also increasingly offering mobile solutions for stock trading. However, this new group of fintech startups has a different structure than traditional providers. As international apps with social media appeal, they are aimed at a particularly young target group of 25- to 35-year-olds who want not only access to stock trading but also a new kind of user experience. It has become clear that accessibility and user-friendliness are key selling points for these new investment apps. For example, according to Bitkom’s Digital Finance Report 2020, 40% of respondents expressed the expectation that “smartphone apps’ ease of use for stock and securities transactions will enable more people to benefit from companies’ performances.”

In a nutshell, the easy access via smartphones makes these “neobrokers” so appealing. Clear design, community integration, and ease of entry has turned UI/UX into an actual product.

Special opportunities – special risks?

Many apps have little to no limit on how small a trade can be, making it possible to buy fractional shares. As mentioned, they charge very low fees — or none at all — and are available outside of regular trading hours. The apps clearly aim to lower the entry threshold for stock trading, and sometimes lure new users with free shares. On the flip side, the apps offer no or minimal investing advice, unlike traditional brokers. Consequently, purchasers must do their own research outside of the app, using articles, forums and social media. This aspect has raised suspicions in the German market. In the survey undertaken for the Bitkom Digital Finance Report referenced above, 69% of respondents stated that “an advisor’s input is absolutely key to making good investment decisions.” As a result, the separation of professional advisory services and the gamification of trading stocks carries certain risks, especially for inexperienced users.

Too much power?

The potential dynamics unleashed by direct market access were demonstrated in an interesting case study in January. Small investors coordinated a purchase of GameStop stock via Reddit to prevent a decline in the company’s value, on which hedge funds had speculated. In fact, the Reddit community’s actions were so successful that U.S. authorities are now investigating the possibility of market manipulation. Outrage erupted, however, when Robinhood simply suspended trading in GameStop shares at the height of the buying frenzy.

Ultimately, the neobroker did have a good reason for halting trading. The security it had deposited with clearinghouse DTCC was insufficient to match increased trading volume. However, this episode illustrates that some luster has fallen from the new market power of small investors: Even trading apps do not eliminate the intermediary function; they only replace it, sometimes with even more opaque conditions than before.

The outlook is promising

And yet, neobrokers are attracting young investors by reinventing the process of investing and stock trading. With pleasing designs and customer experiences geared toward millennials, these apps will be able to gain many users in the next few years. At that point, they will have to show that they can keep up with the momentum that they created. Users expect apps, acting as financial service providers and managers of highly sensitive data, to be error-free at all times and in all places – and rightly so. User trust and compliance with financial rules will play a crucial role in determining whether neobrokers will remain competitive as market penetration continues.

However, the new investment apps’ penetration of the DACH market is still at an early stage. Established providers, especially banking apps, may leverage the trend by incorporating a more attractive UX and simplified investment features into their existing apps. For example, a whitepaper from the Sparkassen Innovation Hub on the topic of changing values recommends “opening up products to small investment amounts” as well as “using a clear, appealing interface (UI), playful elements for data entry and maintenance, [and] the use of status and progress indicators to guide users through processes” to attract a new group of potential investors.

One thing is certain: The phenomenal growth of investment and trading apps, especially in Germany, could be a precursor to interesting developments in the coming years.

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Rob Mason
Rob Mason
Technology Leader & Expert | Former Chief Technology Officer
Published On: April 22, 2024
Reading Time: 5 min

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