Globally, banks invest billions and billions of dollars in their banking software. These banks are always striving for the smoothest, most secure, and most adaptable banking solution possible. As a result, we’ve seen many major advancements in banking technology over the years, mostly related to the coding systems that are used. We want to take you through the evolution of banking software technology. 

While we wish we could take you on a full journey through the evolution of banking software technology (it really is fascinating), this is something that would take a lot of time, and probably a book totaling thousands of pages. Instead, we want to give you some of the highlights over the years. We want to point out the top programming languages, and some of the frameworks used by banking software developers.

COBOL 

Back in 1959, Common Business-Oriented Language, or COBOL for short, was launched. It was part of a push by the US Department of Defense to create a programming language that could deal with data processing incredibly well. While COBOL was only meant to be a temporary programming language (it was due for replacement shortly after), it managed to stick around as it came at just the right time for the boon in the banking software industry.

COBOL has gone through many iterations over the years, and even to this day, it is responsible for powering most of the banking software industry. In fact, it is estimated that around 43% of all banking software uses COBOL to some degree, so it is going to be sticking around for a while.

Unfortunately, the number of programmers learning COBOL has plummeted. Old COBOL programmers are retiring, and others aren’t entering the industry to replace them. Because of this, some banking software companies have had to move over to other solutions, although this is still quite hard since their current systems are based on COBOL tech. 

C++

Appearing at the tail end of the 1970s, the launch of C++ was one of the first times that banking software developers made a major push away from using COBOL. And, once again, many banking systems still rely heavily on C++.

Obviously, outside of banking software, C++ is one of the most popular programming languages in the world. This meant that banking software companies had no issues reeling in the top developers. Although, this isn’t the only reason why companies decided to make the transition to C++.

C++ is incredibly fast. In fact, it is the fastest programming language in the world. As the 70s wore on, speed was imperative, as was scaleability. Banking institutions were processing more transactions than ever before…and they needed them done quickly.

C++, at the time, was also a lot more flexible than COBOL was. COBOL wasn’t an object-orientated programming language until 2002, and it was incredibly cumbersome to use back in the 70s. C++ appeared and allowed programmers to create far more complicated applications with ease. It also meant that those programs were easier to understand, improving scalability. 

Python

Python is not a programming language that you’ll find used often in core banking systems. It isn’t really great for that. What it is used for is data analysis, and when it appeared in 1991, many banks started to use Python for their trading software. In fact, to this day, Fintech companies have leaned heavily on Python to help them develop proper trading strategies.

Those getting into banking software development are often asked to have knowledge of Python for this reason. Although, thankfully, it is one of the easier languages to grasp. 

Java

In 1995, Java arrived. However, it wasn’t extensively used by the banking industry for their software until the Spring framework was released in 2003. The Spring framework is used by several banking institutions due to the lightweight nature of the framework, producing nice and smooth code.

Of course, Java isn’t used as often as some of the other programming languages here. However, it is famed for its overall security and portability. Java code can be run pretty much anywhere. You just need to get a virtual machine set up. This made deployment for banks simple. 

The Modern Age: The Move Toward Golang and Modular Architecture

In the modern age, we have seen two major shifts in banking software technology. The first is towards a programming language known as Golang (sometimes called Go), and a greater focus on modular architecture in software.

Many larger banking institutions rely heavily on Golang for their banking core platform. For example, PayPal and American Express. This is because Golang offers several distinct advantages that make it ideal for use in banking software. This includes:

• Can easily handle high-load services.
• Simple to use. It is incredibly easy to teach newer programmers the ins and outs of Golang. Not to mention the fact that it has a lot of similarities to past banking technologies such as Java and C++.
• Golang offers superior security in comparison to competing programming languages. In fact, it offers 3 different encryption packages. 
• It offers superior performance. Using Golang puts a far lower strain on hardware, particularly on system memory. Golang also offers much more flexibility due to app concurrency. It enables multiple apps to be run simultaneously, all thanks to goroutines, which are essentially very small executable threads. 
• It is a very scaleable programming language, which is essential in the banking software sector. 

We’re also seeing a greater push toward modular architecture. Modular software architecture allows individual software modules to be linked together easily. This allows new features to be added and removed from the banking software incredibly easily. There is no need to play about with a huge code base.

This is a stark contrast to the monolithic software architecture of the past where pretty much every single line of code was included in a single codebase, which made changes incredibly cumbersome and difficult to make. Modular architecture limits any issues with adding new features to the software, something which is incredibly important with banking software where security and efficiency are on the line.

Conclusion 

Even in this brief overview of the evolution of banking software technology, you can see how much has changed. You can see how developers are always looking for the fastest, most secure system possible. Even old tech, like COBOL, has had to adapt to the changing times of banking technology. It is this shift in banking technology that has led to the introduction of Golang, and modular architecture. It’ll be interesting to see how banking software tech improves from here on out. After all, companies are always looking to produce the latest and greatest software.