COBOL – fuelling the FinTech explosion

FinTech investments more than doubled in 2015 and there are currently around 5000 to 6000 FinTech companies competing for market share – and billions of venture capital funding. Financial Technology is also a hypercompetitive, B2C marketplace set in a difficult, highly-regulated landscape with zero room for error.

Sensibly, most start-ups delegate managing the complex IT back-end to a more experienced partner in the banking sector. They concentrate on finding customers – and funding – while utilizing the power of their partner’s COBOL applications for the ‘heavy lifting’ of back-end IT.

Examples include Number26, who partner with Wirecard, while Fairr.de rely on Sutor Bank for IT support. So what’s in it for the more established banks? Plenty. Because unlike the unruly intrusion of challenger banks, this partnership enables older banks to become stakeholders in the disruptive innovation sweeping their marketplace.

But to meet their end of the bargain – to deliver the services FinTech start-ups need – banks must up their IT game. Arguably the definition of ‘fit for purpose’ banking technology must now include modern functionality, such as APIs for mobile and web applications, as standard.

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The challenge

This article predicts bank spending on new technologies in North America to reach $19.9 billion in 2017. Current IT must evolve. But ‘older’ COBOL is ubiquitous in this sector; the simple ‘00’ syntax was created for number crunching and COBOL has been the language of banking for 50 years.

COBOL is here for good. As recently as February of last year, COBOL’s durability, prevalence and reliability established it in the top 20 of the TIOBE Index and it continues to grow. But banks and other FS clients don’t need graphs. They want real-world answers to the business challenges their customers are giving them.

Some currently host their COBOL applications on mainframes, a technology never created for this level of flexibility. Others use distributed platforms. Few have a great appetite for the risks of rewrite or replacement. So how can the behemoths of banking offer the innovation that the more nimble FinTech start-ups demand?

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The solutions

Micro Focus enabling technologies regularly achieve modern flexibility for our financial services (FS) customers and other owners of mature COBOL and PL/I applications.

Mainframe clients exploit the contemporary Eclipse or Visual Studio technology of Enterprise Developer, a powerful integrated development environment (IDE) while Visual COBOL offers the same benefits on distributed platforms.

Visual COBOL, Enterprise Developer – and the Micro Focus Enterprise suite of application modernization tools – enable FS customers to realise a corporate FinTech strategy. They protect their IT infrastructure investments while improving application development to create the products their end-users – the bank customers – and partners demand.

Because as we noted in our recent blog on challenger banks. “Customers are trusting banks who possess good technology. And IT could well be the next major battlefield between established and challenger banks in a rapidly changing market.”

So whether banks are start-ups or just looking to keep going, a failure to innovate means being left behind…….

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