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Despite it being more than 60 years old, it is thought that around 70% of large corporations – including those in the government, banking, finance, insurance, and automotive industries – still rely on the programming language COBOL for much of their mission critical work.
COBOL – a ticking time bomb
There is also a long running joke in the city of London that one particular high street bank is still running the software and had to re-hire the original team of developers who had all retired to continue managing it – all of them on salaries that they chose!
From the outside, it looks as though the payments industry is one that has enjoyed plenty of modernisation and innovation.
“To some extent, this is true: in the past decade or so disruptors like Square, Stripe and PayPal have made huge technological improvements to the front end,” says Anne-Willem de Vries, co-founder and CEO of Silverflow.
“This has resulted in easy-to-use, sophisticated solutions that enable merchants to leverage the latest payments options on the market.
However, very little has been done to improve the backend payment processing, which has been running on technology that is older than most millennials.
The global financial system hums on an unlikely engine: COBOL, a programming language that is a relic of the 1960s.
It powers everything from ATM transactions to stock trades.
While it has served us well over the years, handling trillions of dollars in transactions without major system failures, its ongoing prevalence has begun to pose a serious threat to our financial future.
COBOL is an innovation dead-end.
Combining Integrating it with new technologies like Open Banking, blockchain or AI is near impossible.
This stifles creativity and makes it difficult for financial institutions to implement modern features that would help to meet rapidly changing customer demands.
Its age also makes it a security risk. Vulnerabilities discovered decades ago remain ripe for exploitation. Modern languages offer robust anti-fraud and security features that COBOL simply can’t match.
Compounding these issues, there is a dwindling pool of programmers able to maintain these aging systems.
Universities rarely teach COBOL anymore, and younger generations understandably tend to gravitate towards more in-demand and modern languages.
This growing skills shortage is a significant risk to the stability and security of financial systems.
The COBOL crutch we lean on is starting to wobble, and ignoring the issue won’t make it disappear.
While there have been calls for an upskilling drive, this is not a sustainable, long-term solution. We need a coordinated, industry-wide effort to migrate critical financial systems away from outdated technologies.
As technology providers, we have a duty to show people that there is no need to rely on legacy systems anymore by creating accessible, functional alternatives that are genuinely fit for the future.
Tellingly, one of our biggest challenges since launching our cloud-based payment processing platform has been getting customers to believe this technology is real.
They often tell us it’s too good to be true, as it’s hard to fathom that – after utilising the same technology for 30-40 years – someone has actually taken the time to build something better that solves these complex issues for them,” de Vries concludes.
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