The role of COBOL in banking infrastructure

July 28, 2025

COBOL (Common Business-Oriented Language) emerged in the late 1950s and early 1960s due to an initiative to standardize a programming language focused on commercial and administrative applications. During this period, different companies and government organizations developed their systems, leading to incompatibilities that made information exchange and software maintenance difficult.

To create a universal solution, in 1959, the United States Department of Defense convened a committee of computing experts, known as CODASYL (Conference on Data Systems Languages), to design an accessible language, independent of manufacturers, and focused on business data processing. Among the members of this committee was Grace Hopper, one of the most influential figures in programming history and a pioneer of concepts used in COBOL.

The primary purpose of COBOL was to enable public and private organizations to develop applications for financial transaction management, payroll processing, inventory control, and other administrative processes. To achieve this, the language was designed with a syntax close to the English language, making it easier to understand and maintain for both business professionals and programmers.

Since then, COBOL has become one of the most widely used languages in the corporate world, being essential for the operation of banks, insurance companies, governments, and large corporations. Even with the advancement of new technologies, many systems still rely on COBOL due to its stability, reliability, and extensive accumulated code base over the decades.

COBOL as a pillar of banking systems

There are several reasons why banks continue to use COBOL. Banking systems require high reliability, and this programming language has a proven track record of stable operation without critical failures. Many banks have decades of accumulated COBOL code, and rewriting these systems would be costly. COBOL was designed to process large volumes of transactions efficiently, making it ideal for banks and insurance companies. Globally recognized financial institutions such as JPMorgan Chase, Citigroup, Wells Fargo, HSBC and ABN AMRO still use this technology.

The importance of COBOL in banks

Banks primarily use COBOL on the backend, as the language was designed for large-scale data processing and transactional operations. This means that critical systems, such as payment processing, account movements, loans, and transaction control, still depend on this technology.

However, the frontends of these banks generally use modern technologies such as Java, JavaScript, Python, Angular, and React to create user-friendly and responsive interfaces for their customers. Thus, COBOL operates "behind the scenes" of these systems, processing the data that modern platforms display to customers and employees.

Challenges and considerations of COBOL today

As an old language, few young programmers specialize in it. With experienced specialists retiring, it becomes difficult to find qualified professionals to maintain and update existing systems.

System maintenance

COBOL systems present some complexity and high maintenance costs. Additionally, many were written decades ago, with difficult-to-understand code and little documentation, making any changes a real challenge.

Integration with new technologies

COBOL systems need to connect to APIs, web applications, and cloud services. This adaptation can be complex and requires intermediary solutions such as middleware to facilitate communication between old and modern technologies.

Dependence on legacy infrastructure

Many COBOL systems still operate on mainframes, which are robust but expensive to maintain. Migrating to modern environments, such as the cloud, requires significant investment and specialists with deep knowledge of both COBOL and new technologies.

Modernization and the future of COBOL in banking infrastructure

Modernizing COBOL in banks is a strategic challenge; however, there are different approaches to addressing the process without compromising system stability. Some viable solutions include:

Reengineering and gradual refactoring

Improving existing COBOL code without completely rewriting it. Applying best programming practices to facilitate maintenance and documentation. Additionally, increasing integration with modern APIs to connect legacy systems with new technologies.

Gradual conversion to other languages

Creating interfaces (REST APIs, SOAP, JSON) that allow modern systems to communicate with COBOL without directly modifying its source code. This approach enables the connection between COBOL and web, mobile, or cloud services.

Maintaining COBOL code while migrating its execution to a hybrid cloud or modern mainframes, such as IBM Z, which offer greater scalability and integration with new technologies. Tools such as Micro Focus Enterprise Server and IBM Cloud for COBOL allow COBOL to run in more modern environments.

Gradually converting COBOL to other languages in a controlled and progressive manner. Additionally, investing in training new programmers to maintain and modernize COBOL systems ensures the continuity and evolution of these applications.

Modernizing COBOL in banks is an essential process to ensure the continuity and efficiency of systems that still play a critical role in the financial sector. While completely replacing these applications is a complex and risky challenge, some strategies allow balancing innovation and stability.

Furthermore, investing in the training of new professionals is crucial for maintaining and evolving systems in the long term. The future of COBOL in banks does not depend solely on technology but also on the adaptation of financial institutions to new market challenges, ensuring that these systems remain relevant and integrated into the digital ecosystem.