Core Banking – Introduction, Features
and Advantages
Core banking is normally defined as
the business conducted by a banking institution with its retail and small
business customers. Many banks treat the retail customers as their core banking
customers and have a separate line of business to manage small business. Larger
business is handled by the corporate banking division of the institution. Core
banking basically is depositing and lending of money.
Now a days, most banks use core
banking applications to support their operations where ‘CORE’ stands for
“Centralized Online Real-time Environment”. This basically means that all the
bank’s branches access applications from centralized data centres. It means
that the deposits made are reflected immediately on the servers of bank and the
customer can withdraw the deposited money from any of the branches of bank
throughout the world. These applications now also have the capability to
address the needs of corporate customers providing a comprehensive banking
solution. Normal core banking functions will include deposit accounts, loans,
mortgages and payments. Banks make these services available across multiple
channels like ATMs, internet banking and branches.
Features
of Core Banking
1. Customer
relationship management features including a 360 degree customer view.
2. The
ability to originate new products and customers.
3. Banking
analytics including risk analysis, profitability analysis and provisions for
capital reserve allocation and collateral management.
4. Banking
finance including general ledger and reporting.
5. Banking
channels such as teller systems, side counter applications, mobile banking and
online banking solutions.
6. Best
practice workflow process.
7. Content
management facilities.
8. Governance
and compliance capabilities such as internal controls management and auditing.
9. Security
control and audit capabilities.
10. Core
banking solutions to help maximize growth, increase productivity and mitigate
risk.
Advantages
of Core Banking
1. Limited
Professional Manpower to be utilized more effectively.
2. Customer
can have anywhere, more convenient and easier banking.
3. ATM,
Interest Banking, Mobile Banking, Payment Gateways etc. are available.
4. More
strong and economical way of management information system.
5. Reduction
in branch manpower.
6. Additional
manpower can be available for marketing, recovery and personalized banking.
7. Instant
information available for decision support.
8. Quick and
accurate implementation of policies.
9. Improved
Recovery Process causing reduction on recovery costs, NPA provisions.
10. Innovative,
redefined or improved processes i.e. Inter Branch Reconciliation causing
reduction in manpower at Head Office.
11. Reduction
in software maintenance at branch and Head office.
12. Centralized
printing and backup resulting in reduction in capital and revenue expenditure
on printing and backup devices and media at branches.
13. Electronic
Transactions with other Financial Institutions.
14. Increased
speed in working resulting in more business opportunities and reduction in
penalties and legal expenses.