Page 232 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 14: Core Banking Solution

technology are merged to suit core needs of banking is referred as Core Banking Solutions. Notes
Here, computer software is developed to perform core operations of banking like entering of
transactions, passbook maintenance, interest calculations on loans and deposits, customer records,
balance of payments and withdrawal are done. This software is set up at different branches of
bank and then interlinked by means of communication lines like telephones, internet, satellite,
etc. It allows the user, i.e. the customers to operate accounts from any branch if it has installed
core banking solutions. This new platform has modified the way banks are working. Most of the
nationalized banks in India today support core banking, for example: State Bank of India, Punjab
National Bank, Allahabad Bank, HDFC and ICICI Bank.

14.1 Core Banking

Core banking is a term used to describe the services offered by a group of interconnected bank
branches. Bank customers may access their funds and other transactions from any of the member
branch offices. Core Banking Solutions (CBS) is a procedure which is realized in a centralized
environment, i.e. under which the data pertaining to the customer’s account, i.e. financial
dealings, profession, family members, income, etc. is stored in the central server of the bank
instead of the branch server. This task is accomplished through advanced software by using the
services provided by specialized agencies.
Core banking is the nerve centre of any banking operation. In core banking, customer of a
specified branch of a particular area is a customer of the entire bank spreading its branch
network across the world.
Due to its benefits, a number of banks in India in recent years have taken steps to implement the
core banking solutions with a view of building cordial relationship with the customer based on
the information available and according to their need offers customized financial products to
the customer.
Advantages: The CBS process is beneficial both to the customers and the banks in the following
ways:
Customer:
Transaction of business from any branch.

Less number of errors, therefore higher accuracy in transactions.
Better funds management due to immediate availability of funds.
Banks:
Standardization of process in the bank.

Better customer service which leads to customer retention and increased customer dealings.
Availability of exact and precise data & better use of available infrastructure.
Better MIS and reporting to external agencies such as Govt., RBI, etc.
Increased business volume with better asset liability management.

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Caution In December 2011, RBI selected Bangalore based financial software testing firm
Thinksoft Global Services for its Core Banking Solutions.

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