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What is Core Banking Solution?

Core Banking Solutions is new jargon frequently used in banking circles. The advancement
in technology especially internet and information technology has led to new way of doing
business in banking. The technologies have cut down time, working simultaneously on
different issues and increased efficiency. The platform where communication technology and
information technology are merged to suit core needs of banking is known as Core Banking
Solutions. Here computer software is developed to perform core operations of banking like
recording of transactions, passbook maintenance, interest calculations on loans and deposits,
customer records, balance of payments and withdrawal are done. This software is installed at
different branches of bank and then interconnected by means of communication lines like
telephones, satellite, internet etc. It allows the user (customers) to operate accounts from any
branch if it has installed core banking solutions. This new platform has changed the way
banks are working. Now many advanced features like regulatory requirements and other
specialized services like share (stock) trading are being provided. Core banking solutions are
very helpful to SME industries.
Core Banking Solution (CBS) is networking of branches, which enables customers to operate
their accounts, and avail banking services from any branch of the Bank on CBS network,
regardless of where he maintains his account. The customer is no more the customer of a
Branch. He becomes the Bank’s Customer. Thus CBS is a step towards enhancing customer
convenience through Anywhere and Anytime Banking.
. The advancement in technology especially internet and information technology has led to
new way of doing business in banking. The technologies have cut down time, working
simultaneously on different issues and increased efficiency. The platform where
communication technology and information technology are merged to suit core needs of
banking is known as Core Banking Solutions. Here computer software is developed to
perform core operations of banking like recording of transactions, passbook maintenance,
interest calculations on loans and deposits, customer records, balance of payments and
withdrawal are done. This software is installed at different branches of bank and then
interconnected by means of communication lines like telephones, satellite, internet etc. It
allows the user (customers) to operate accounts from any branch if it has installed core
banking solutions. This new platform has changed the way banks are working.

Concepts regarding Core Banking Solutions


➢ Is the concept a novel one?
No this concept came into existence somewhere in 1980’s but till recently it was in its
budding ages, but with technological advancements in all fields this concept is also grooming
and adding more and more features to itself.

➢ Why the inception in INDIA so late?


There are many reasons for the late inception of CBS in INDIA, some of them being
✔ Indian banks were not interested in going for it.
✔ Required technology for adopting CBS was absent.
✔ The competition prior globalization was not that of present level.

➢ What are the application areas of core banking?

Required computer software is developed to perform core operations of banking like

✔ Balance of payments and withdrawal are done.


✔ Mobile banking
✔ Internet banking
✔ ATM’s
✔ Recording of transactions
✔ Passbook maintenance
✔ Interest calculations on loans and deposits
✔ Customer records
This software is installed at different branches of bank and then interconnected by means of
communication lines like telephones, satellite, internet etc. It allows the user (customers) to
operate accounts from any branch if it has installed core banking solutions. This new
platform has changed the way banks are working. Now many advanced features like
regulatory requirements and other specialised services like share (stock) trading are being
provided. Core banking solutions are very helpful to SME industries.
➢ What all banks are using it?
Most of the nationalized banks in India for example: State Bank of India, Punjab National
Bank, Allahabad Bank, HDFC, ICICI Bank today supports core banking. As of 2007, many
Cooperative banks in India such as REPCO Bank, Jain Urban Cooperative Bank, Kangra
Central Cooperative Bank, Udaipur Urban Cooperative Bank, Kollam District Cooperative
Bank, Kerala State Cooperative and Panchsheel Mercantile Cooperative Bank have started to
use and offer centralized Core Banking too.
Some of the Cooperative banks and RRBs are yet not having CBS, but they are on their way
to go for CBS and very soon they will also be under the roof of the umbrella of Core Banking
Solution.
➢ What are the Standard Software tools?
Some of the standard software tools that many banks are using these days are
✔ Intellect Suite from POLARIS
✔ Flexcube from iFlex Solutions
✔ Finacle from Infosys
✔ B@ncs from TATA Consultancy Services

What is the need of Core Banking Solutions?


The need for such a solution does not arise just because of one reason or the other but it
requires a combination of driving forces to come into existence. Some of these forces being-
• To meet the intense competition and changing market dynamics in an over banked
environment.
• To meet the regulations and compliance requirements (example in order to meet the
Basel ll norms banks must enhance there IT infrastructure).
• To meet the demands of customers who are better informed, more demanding and less
loyal than ever.
• To enhance efficiency and effectiveness.
• Increasing customer satisfaction and convenience
• Freeing up time for branch staff to focus on sales and marketing
• Simplifying process for employees
• Enhancing bank’s competitiveness in the market
• Improved process efficiency
Shrinking margins. Slow growth…. The challenges that confront today’s banker are as
intense as they are varied. And technology, the banker’s trusted friend in the past few
decades, has lately become an obstacle in the quest for market leadership. Stakeholders’
expectations continue to be whetted by their positive experience in other industries like retail
and travel, of how technology can make a difference. Satisfying such expectations requires
that banks make their vital systems customer-centric, cross-channel capable, multilingual and
process-oriented. Not doing so in the near term could prove to be a costly gamble.