Banking glitches are no surprise: the tech is 60 years old


Marion Dakers Financial services editor

September 2, 2015

Companies are in no rush to untangle themselves from six decades of Cobol programming

In case my landlord is reading this, I’m sorry if my rent is late this week. After I left it until the last day of the month to transfer the money, Natwest has given me the last push I needed into arrears by allowing its internet banking system to collapse.

The online portal fell over for several hours and while I’ve now lined up the transfer, it all depends on the IT infrastructure working as planned on Tuesday morning. Luckily, my landlord is a patient man, and there have been enough banking outages in the pastfewyears that it’s a reasonable excuse for the money not moving as expected. Fingers crossed.

Technology problems in financial firms are hardly new. It’s just that as we shift our money online and onto mobile phones, we expect instant and uninterrupted access to our cash. The days of posting off a cheque and assuming it’ll take a week or so to process are thankfully almost gone – and with those days go any chance of banks getting away with short-term glitches in their IT systems.

The enormous advances in payments in the last decade, despite the occasional foul-up, are made all the more remarkable by the fact that most of the big banks, insurance firms and asset managers have built their main transaction-processing systems on a programming language invented in the 1950s.

The Common Business Oriented Language, or Cobol, is the plumbing upon which banks have built ATM programmes, cheque-clearing services and the bedrock of their online applications that operate on mainframes. The last time Cobol really hit the headlines was when programmers warned that the language might not be able to handle a major change in date formats. For those who don’t recall, the Y2K bug didn’t bring the world’s computers crashing down around our ears, in the end.

Once the systems were seen to be coping with the new millennium, Cobol faded back into the background. For a firm starting a new way to process transactions from scratch, it’s definitely not the first choice – but for a company that’s stuck with it, there’s ample space to make do and mend.

“While it doesn’t grab much attention, it’s still the silent majority for the banking industry. It’s as prevalent now as it ever was and few organisations have opted to move away,” said Derek Britton, director of product marketing at Micro Focus, which builds and sells technology to help organisations build Cobol applications. “Like a Porsche 911 it has still got the badge on the back but the other parts of it have changed.”

Software company CAST recently found that Cobol is used in a third of financial services applications, second only to the much-newer language Java as a tool to offer customers new ways to bank, buy insurance, or play around with their portfolio.

Its position in the bedrock of the financial system comes with drawbacks. Cobol tools are large and sometimes unwieldy, from decades of being patched up and expanded to deal with the advent of credit cards, the internet and mobile phones. The average module size in Cobol is 600 lines of code, compared to just 30 for Java.

The Institute of Electrical and Electronics Engineers said last month that Cobol was just the 42nd most popular programming language in the world, down from 36th last year. Programmers have been wondering for several years when we will reach the point when everyone who still knows how to fix Cobol has retired.

One City recruiter said the banks “tend to have a couple of old guys to answer these questions when they come in. They are very reluctant to let these guys retire”.

Lev Lesokhin at CAST agreed, saying that “a lot of the more experienced guys who know how to programme Cobol are absolutely in demand “. While young developers and university courses focus on Java and games platforms, the “boring, back office garden variety” Cobol experts hold onto what are possibly the safest jobs in finance .

Is it a problem that the world’s financial systems are based on a clunky, Cold War-era software language? The programmers don’t seem to think so. In some ways its age is an attribute, with less cloud-based and online features that have left other languages vulnerable to hacking.

And it doesn’t mean that the biggest financial firms are living in the technological past. Accountancy groups have been acquiring companies that specialise in big data in order to better harness a deluge of online information, while KPMG has gone a step further by setting up its own venture capital unit to buy into technology start-ups. Many banks have signed up to support Apple Pay as it rolls out contactless spending via phones.

However, when companies report costly upgrades and difficulties linked to “legacy IT issues”, there’s a chance that back office servers brimming with ancient Cobol programming are involved somewhere. When board members feel like they’re running a software company that masquerades as a bank, this is part of the reason why.

Meanwhile, enterprising souls are keeping Cobol up to date. Since almost no British universities teach Cobol, RBS is advertising for experts to join its tech development centre in Chennai.

This article was written by Marion Dakers Financial services editor from The Daily Telegraph and was legally licensed through the NewsCred publisher network.

Comment this article

Great ! Thanks for your subscription !

You will soon receive the first Content Loop Newsletter