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Lucrative market for a 50 year old programming language

One of the important tasks for a software developer is to get familiar with emerging technologies. The developers that stubbornly hold on to the same technologies that were popular at the start of their career tend to find themselves being made redundant when these technologies become obsolete. However, there are situation where keeping fresh your experience with an old technology is a wise decision.

One noteworthy example of an old computer technology that is still highly relevant today is COBOL, a programming language that was developed for business applications in 1960s, when computers still occupied entire rooms and were nowhere near as powerful as modern-day calculators. Most of the information systems used by well-established banks were originally written in COBOL. As there is always a significant risk involved in replacing a backbone of banking software, these systems have evolved by building on top of the existing infrastructure rather than replacing it. Therefore, many financial institutions still run the most critical parts of transaction-processing systems in COBOL. This is one of the reasons why, quite often, strong passwords that contain special characters are not allowed in online banking, but multi-factor authentication is used instead. Older languages were not built to handle non-alphanumeric characters without assigning special meaning to them.

Reliance on COBOL within banking infrastructure is extremely high, especially as around 80% of in-person transactions and almost 100% of ATM operations are performed by software written in the language. Despite this, there are relatively few educational institutions that still offer courses in this language and there is a huge skill shortage in it among software developers. Therefore the banking industry is largely forced to depend on ever-decreasing pool of older developers who have started their careers several decades ago and now are nearing the retirement.

As the demand for COBOL skills is high and the pool of competent professionals is small, the programmers familiar with the language and capable of solving critical problems within banking IT attract high salaries. However, for the banks, these cost are substantially smaller than the costs associated with replacing their entire infrastructure.

Despite COBOL being such a lucrative market, there is no guarantee that the thing will stay this way. Commonwealth Bank of Australia, for example, has opted to make a long-term investment in its infrastructure and replace its entire COBOL-based backbone with modern software. However, even if this is to happen to all other major global banks, the modernisation process will occupy COBOL experts for quite some time. Due to the complexity of banking infrastructure, replacing it requires several years to accomplish, even where a large workforce is employed.

Despite this, as a software developer, you should be cautious. Even if you are an expert in a well-established and widely used technology, you should still keep yourself up to date with modern technologies. The global financial crisis of 2008 saw many COBOL specialists working in financial industry being made redundant, only to be re-hired by the same institutions shortly afterwards. Therefore, if you are just starting out as a software professional, learning COBOL would probably not be a wise idea. However, if you are already familiar with a modern software technologies used in the financial industry, adding COBOL to your arsenal of skills could take you well above your competition in the job market.



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Posted on 19 Apr 2017


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