A very interesting article from the Wall Street Journal confirmed to me what I had always suspected, in terms of the technology all banking is still based on, COBOL (at least on the banking side of things).
The world of banking is very risk averse when it comes to technology. There are backups to all systems, multiple power sources every system must live up to “5 9’s” availability. This means the system is up 99.99999 % of the time. As the Canadian Feds found out changing out an old system and replacing it with new code and technology is problematic (aka Phoenix), thus most Banks are reluctant to do whole sale changes just to update technology. Old systems get replaced typically if they are broken, not if they are still working.
At the core of the banking system in terms of technology is a language older than me (and I am old). COBOL (COmmon Business-Oriented Language) was written in 1959 based on the works of Admiral Grace Hopper. I worked in it, at school and on the job as well (at school I used WATBOL), so I have a passing understanding of the language. It does, what it does, well.
FinTech continues to crow about it being new and exciting, and parts of it might be (the user interface is my guess), however the heavy lifting (i.e. account creation, asset moves, etc.,) is all still being done capably by COBOL.
Fear and Loathing
Is it time to fear FinTech? You should be skeptical of all the claims, but if the system works (for you), that is the major decision point. If someone tells you how it is the future of banking, ask them about how they interface to the banking COBOL interface (see if they have an answer for you).
I am glad to see that old technology still keeps the world humming.