Vice President has legal meaning as a title. Only a vice president or above can make some loans. Since banks make those loans all the time they need a lot of vice presidents to do it. In a small town bank with at most 10 people it makes sense, but for a large banks with branches all over the country you end up with a ton of vice presidents just for that need, but they don't really get any other authority.

Interesting. I always wondered why Senior level engineers at banks got the VP title. It seemed odd for someone formerly an IC to suddenly step into a VP level role, but this makes sense now.

My Father-in-law is a VP at a banking firm, he's just a senior engineer, but he does handle plenty of financials. Makes total sense why he's a VP.

but does it? are these software engineers actually making loans?

No, but there are people at that level in the company who need to sign those contracts (I don't think it's loans specifically), and it's easiest to use a consistent title for everyone at that level.