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replacement costs exceed $80 billion globally
webCredibility Rating
4/5
High(4)High quality. Established institution or organization with editorial oversight and accountability.
Rating inherited from publication venue: Reuters
Used as an analogy in AI safety discussions about path dependence and irreversibility: early architectural choices in critical systems can become prohibitively costly to reverse, a concern relevant to AI deployment in high-stakes infrastructure.
Metadata
Importance: 28/100news articlenews
Summary
A Reuters investigation into the critical dependency of major financial institutions on decades-old COBOL systems, with replacement costs estimated to exceed $80 billion globally. The piece highlights how aging infrastructure maintained by a dwindling pool of experts creates systemic risk, illustrating the dangers of irreversible technological lock-in and path dependence in critical systems.
Key Points
- •Global banking infrastructure heavily relies on COBOL code written decades ago, with replacement costs estimated at over $80 billion worldwide.
- •The pool of COBOL-literate developers is aging and retiring, creating a growing knowledge gap and single points of failure in critical financial systems.
- •Legacy system lock-in demonstrates how early technical decisions compound over time, making migration increasingly costly and risky.
- •Financial institutions face a dilemma: expensive modernization efforts carry high failure risk, while maintaining old systems creates growing fragility.
- •Serves as a real-world analogy for AI safety concerns about irreversibility and path dependence in critical infrastructure decisions.
Cited by 1 page
| Page | Type | Quality |
|---|---|---|
| AI Value Lock-in | Risk | 64.0 |
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Item 1 of 6 IBM engineers work with a System 360 mainframe computer using business programs written in an early version of the COBOL language in this undated handout photo obtained by Reuters March 31, 2017. IBM/Handout via REUTERS
**\[1/6\]** IBM engineers work with a System 360 mainframe computer using business programs written in an early version of the COBOL language in this undated handout photo obtained by Reuters March 31, 2017. ... [Purchase Licensing Rights, opens new tab](https://www.reutersagency.com/en/licensereuterscontent/?utm_medium=rcom-article-media&utm_campaign=rcom-rcp-lead)Read more
NEW YORK (Reuters) - Bill Hinshaw is not a typical 75-year-old. He divides his time between his family – he has 32 grandchildren and great-grandchildren – and helping U.S. companies avert crippling computer meltdowns.
Hinshaw, who got into programming in the 1960s when computers took up entire rooms and programmers used punch cards, is a member of a dwindling community of IT veterans who specialize in a vintage programming language called COBOL.
The Common Business-Oriented Language was developed nearly 60 years ago and has been gradually replaced by newer, more versatile languages such as Java, C and Python. Although few universities still offer COBOL courses, the language remains crucial to businesses and institutions around the world.
In the United States, the financial sector, major corporations and parts of the federal government still largely rely on it because it underpins powerful systems that were built in the 70s or 80s and never fully replaced. (GRAPHIC: [tmsnrt.rs/2nMf18G](http://tmsnrt.rs/2nMf18G))
And here lies the problem: if something goes wrong, few people know how to fix it.
The stakes are especially high for the financial industry, where an estimated $3 trillion in daily commerce flows through COBOL systems. The language underpins deposit accounts, check-clearing services, card networks, ATMs, mortgage servicing, loan ledgers and other services.
The industry's aggressive push into digital banking makes it even more important to solve the COBOL dilemma. Mobile apps and other new tools are written in modern languages that need to work seamlessly with old underlying systems.
That is where Hinshaw and fellow COBOL specialists come in.
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