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What is Core Banking?

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The Core Banking Solution (CBS) is the network of branches of banks that allows users to handle their bank accounts and utilize various banking facilities anywhere in the globe.

Simple as that, there’s no requirement to visit your local branch to conduct bank transactions. You can access it from any place, anytime. You can use banking services at all branches of the institution that is part of the CBS network, regardless of which branch that you have established your account with.

If a bank adopts CBS the customer will become the bank’s customer , not the client of a specific branch.

Execution of the Core banking system across all branches allows you to accelerate most routine transactions between the bank as well as customer. With Core Banking, every branch have access to banking applications through a central server, which is hosted in a secure datacenter.

Banking software/applications perform basic tasks such as managing transactions as well as the balance of cash withdrawal and payment as well as interest calculations on loans and deposits, and so on. This application for banking is hosted on a central server and is accessible via an internet connection from any device.

Why do we need Core Banking Technology ?

Nowadays, the application technology such as Information Technology (IT) is essential for the growth and survival of any company and that is true for the banking sector as well. With the use of IT in all industries banks can reduce the operational costs, and they are able to offer services and products to their customers at competitive prices.

CBS is a must

To keep up with the constantly changing demand of customers and the market.
To simplify and improve the bank’s processes so that employees can concentrate on marketing and sales.
Customer convenience and banks.
to speed up banking transactions.
To increase the presence in remote and rural regions.

The fundamental components of CBS that help customers are

Internet Banking
Mobile Banking
ATM
POS Systems for kiosks and POS
Fund Transfers – NEFT, RTGS

Benefits of Core Banking

Core banking solutions are advantageous for banks and customers.

A) Benefits for Customers

More efficient services at counters of banks for routine transactions such as cash deposits, withdrawals and passbooks, statement of accounts demand drafts, etc.
Banking anywhere, eliminating branch banking.
Services offered by banks All hours of the day, every day.
Quick payment processing using Internet banking and mobile banking.
Banking at any time, anywhere via ATMs.
Each branch has access to applications via central servers or datacenters, therefore the deposits made at any branch are immediately reflected and customers are able to take money from any branch anywhere in the world.
CBS can be extremely beneficial to rural residents. Farmers can get e-payments for subsidy, and other benefits. on their bank accounts directly. Transfer of funds directly from cities to villages and vice versa can be made easily.

B] Benefits for Banks

Standardization of the process within banks and branches.
Customer retention through improved customer service.
Accuracy in transactions and minimization of mistakes.
Better management of documentation and records by having central databases enables quick collection of reports and data.
Facilitate the submission of diverse reports to Government & Regulatory boards like RBI.
It is easy to open accounts as well as processing cash and servicing loans in calculating interest, and making modifications to policies, such as changing interest rates, etc.

The majority of commercial banks in the private sector have adopted Core banking, but the majority of cooperative banking institutions, Regional Rural Banks are left out of the benefits of CBS.

With the aid of core banking and modern technology the private sector is able to provide an uphill battle to urban cooperative banks(UCBs) as well as other government-owned banks.