CORE BANKING

Core Banking is the term used to describe the services provided by a group of networked bank
branches. Bank Customers may access their funds and other simple transactions from any of the
menber branch offices at REAL TIME.

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 businesses. Larger businesses are managed via the
Corporate Banking division of the institution. Core banking basically is depositing and lending of money.

Nowadays, most banks use core banking applications to support their operations where CORE stands for
"Centralized Online Real-time Exchange". This basically means that all the bank's branches access
applications from centralized datacenters. This means that the deposits made are reflected immediately
on the bank's servers and the customer can withdraw the deposited money from any of the bank's
branches throughout the world. These applications now also have the capability to address the needs of
corporate customers, providing a comprehensive banking solution. A few decades ago it used to take at
least a day for a transaction to reflect in the account because each branch had their local servers, and the
data from the server in each branch was sent in a batch to the servers in the datacenter only at the end of
the day (EoD).

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.

[edit]Core Banking Solutions

Core banking solutions are banking applications on a platform enabling a phased, strategic approach that
is intended to allow banks to improve operations, reduce costs, and be prepared for growth. Implementing
a modular, component-based enterprise solution facilitates integration with a bank's existing technologies.
An overall service-oriented-architecture (SOA) helps banks reduce the risk that can result from manual
data entry and out-of-date information, increases management information and review, and avoids the
potential disruption to business caused by replacing entire systems.

Core Banking Solutions is new jargon frequently used in banking circles. The advancement in technology,
especially internet and information technology has led to new ways of doing business in banking. These
technologies have cut down time, working simultaneously on different issues and increasing 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. 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.

Gartner defines a core banking system as a back-end system that processes daily banking transactions,
and posts updates to accounts and other financial records. Core banking systems typically include
deposit, loan and credit-processing capabilities, with interfaces to general ledger systems and reporting
tools. Strategic spending on these systems is based on a combination of service-oriented architecture
and supporting technologies that create extensible, agile architectures. [1]

[edit]Select Core banking application package vendors (ISVs)

While many Banks implement custom (bespoke) applications for core banking, others
implement/customize commercial ISV packages. Here are a few prominent ones, in alphabetical order
(but sortable)...

Overview of Core Banking Solutions and their providers

Package Provider
BankFusion Universal Banking Misys
Misys Equation Misys
Misys Midas Plus Misys
Finacle Infosys
CFT-Bank Center of Financial Technologies (CFT)
Lending Solutions Indus, a business unit of R Systems International Ltd.
Alnova Financial Solutions Accenture / Alnova
COBIS (Cooperative Open Banking Information
COBISCORP
System)
TCS BaNCS Tata Consultancy Services (TCS)
Bankway Fidelity National Information Services (FIS)
Corebank Fidelity National Information Services (FIS)
SAP Transactional Banking SAP AG
FLEXCUBE Oracle Financial Services Software
Hogan Computer Sciences Corporation
Insite Banking System Automated Systems, Inc.
Intellect Core Polaris Software Lab Limited
ICBA Infopro Sdn Bhd
Profile (software) (formerly Sanchez Profile) Fidelity National Information Services (FIS)
 Signature (software) Fiserv
Fidelity National Information Services (FIS)
Systematics
(formerly Systematics, Inc/ Alltel)
TEMENOS T24 Temenos Group

While many banks run core banking in-house, there are some which use outsourced service providers as
well. There are several Systems integrators like IBM which implement these core banking packages at
banks.
Finacle core banking solution is a comprehensive, integrated yet modular business solution that effectively addresses the
strategic and day-to-day challenges faced by banks. It is highly parameterizable providing that much-needed flexibility to
innovate and adapt to a dynamic environment.

The solution has an integrated CRM module enabling banks to offer a rich and differentiated value proposition to customers.
The layered Service Oriented Architecture (SOA), STP capabilities, Web-enabled technology and 24X7 operations ensure
multi-channel, multi-country and multi-currency implementations. The functionality-rich modules in the solution provide
banks with a varied palette of features to continuously innovate on their product and service offerings. From the services
innovation perspective, Finacle offers a comprehensive and unified customer repository with capabilities to educate and
empower customers. With Finacle core banking solution, banks can meet the challenges of managing change, competition,
compliance and customer demands effectively.

Key Modules
 Enterprise Customer Information
 Consumer Banking
 Wealth Management
 Corporate Banking
 Trade Finance
 Islamic Banking
 Functional Services
 Reusable Business Components
 Accounting Backbone
 Infrastructure

Business Benefits

Differentiated Product Spread

Finacle core banking solution offers an unlimited palette of features for banks to design and deploy products for varying
market segments. The product bundling capabilities of the solution offer a wide range of possibilities for banks to create
products with innovative features. The facilities provided for differential pricing, channel rules and customization through
Finacle Studio – the scripting engine, empower banks to continuously innovate and extend their suite of products, across
segments.

Agile Operations

The Service Oriented Architecture (SOA) enables the IT team at the bank to effect changes without touching the base code,
ensuring lesser vendor dependency and faster adaptability to changing business conditions.

Robust Cross-sell Framework

The CIF and CRM capabilities in Finacle offer a unified view of the customer across the entire solution and across multiple
back-end applications, enabling the bank to view the customer from a completely informed angle. This empowers banks to
effectively manage customer relationships and aggressively explore cross-sell opportunities.

Increased Operational Efficiencies and Productivity

Finacle core banking solution supports business event automation and process orchestration, thus eliminating manual tasks
and reducing process time. The elimination of error and data redundancies also results in increased branch productivity.
Straight Through Processing (STP) abilities enhance reduction in turnaround and processing time, increasing output and
enabling speedy completion of tasks.
n integrated yet modular business solution, with its own CRM module, that addresses the strategic and operational needs of
banks. It is highly scalable and parameterizable, providing that much-needed flexibility for banks to adapt to a dynamic
environment. 

Business Benefits

Differentiated Product Spread

Finacle core banking solution offers an unlimited palette of features for banks to design and deploy products for varying
market segments. The product bundling capabilities of the solution offer a wide range of possibilities for banks to create
products with innovative features. The facilities provided for differential pricing, channel rules and customization through
Finacle Studio – the scripting engine, empower banks to continuously innovate and extend their suite of products, across
segments. 

Agile Operations 

The Service Oriented Architecture (SOA) enables the IT team at the bank to effect changes without touching the base code,
ensuring lesser vendor dependency and faster adaptability to changing business conditions. 

Robust Cross-sell Framework 

The CIF and CRM capabilities in Finacle offer a unified view of the customer across the entire solution and across multiple
back-end applications, enabling the bank to view the customer from a completely informed angle. This empowers banks to
effectively manage customer relationships and aggressively explore cross-sell opportunities. 

Increased Operational Efficiencies 

Finacle core banking solution supports business event automation and process orchestration, thus eliminating manual tasks
and reducing process time. The elimination of error and data redundancies also results in increased branch productivity.
Straight Through Processing (STP) abilities enhance reduction in turnaround and processing time, increasing output and
enabling speedy completion of tasks.
Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and
selling of products or services over electronic systems such as the Internet and other computer networks.
The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage.
The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds
transfer,supply chain management, Internet marketing, online transaction processing, electronic data
interchange(EDI), inventory management systems, and automated data collection systems. Modern
electronic commerce typically uses the World Wide Web at least at some point in the transaction's
lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

A large percentage of electronic commerce is conducted entirely electronically for virtual items such as

access to premium content on a website, but most electronic commerce involves the transportation of
physical items in some way. Online retailers are sometimes known as e-tailers and online retail is
sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World
Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-business or

B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-
qualified participants (private electronic market). Electronic commerce that is conducted between
businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the
type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of
electronic commerce where the buyer is directly online to the seller's computer usually via the internet.
There is no intermediary service. The sale and purchase transaction is completed electronically and
interactively in real-time such as Amazon.com for new books. If an intermediary is present, then the sale
and purchase transaction is called electronic commerce such as eBay.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the
exchange of data to facilitate the financing and payment aspects of the business transactions.

Originally, electronic commerce was identified as the facilitation of commercial transactions electronically,
using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These
were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase
orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines
(ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-
commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK.

From the 1990s onwards, electronic commerce would additionally include enterprise resource
planning systems (ERP), data mining and data warehousing.
In 1990, Tim Berners-Lee invented the WorldWideWeb web browser and transformed an academic
telecommunication network into a worldwide everyman everyday communication system called
internet/www. Commercial enterprise on the Internet was strictly prohibited until 1991.[1] Although the
Internet became popular worldwide around 1994 when the first internet online shopping started, it took
about five years to introduce security protocols and DSL allowing continual connection to the Internet. By
the end of 2000, many European and American business companies offered their services through
the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of
purchasing various goods through the Internet using secure protocols and electronic payment services.

Government regulations
In the United States, some electronic commerce activities are regulated by the Federal Trade
Commission (FTC). These activities include the use of commercial e-mails, online advertising and
consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over
e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising,
and states that advertising must be truthful and non-deceptive. [7] Using its authority under Section 5 of the
FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce
the promises in corporate privacy statements, including promises about the security of consumers’
personal information.[8] As result, any corporate privacy policy related to e-commerce activity may be
subject to enforcement by the FTC.

The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008,
amends the Controlled Substances Actto address online pharmacies.[9]

[edit]Forms

Contemporary electronic commerce involves everything from ordering "digital" content for immediate
online consumption, to ordering conventional goods and services, to "meta" services to facilitate other
types of electronic commerce.

On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual
can go online to purchase anything from books or groceries, to expensive items like real estate. Another
example would be online banking, i.e. online bill payments, buying stocks, transferring funds from one
account to another, and initiating wire payment to another country. All of these activities can be done with
a few strokes of the keyboard.

On the institutional level, big corporations and financial institutions use the internet to exchange financial
data to facilitate domestic and international business. Data integrity and security are very hot and
pressing issues for electronic commerce.
[edit]Impact on markets and retailers

This section requires expansion.

Economists have theorized that e-commerce ought to lead to intensified price competition, as it increases
consumers' ability to gather information about products and prices. Research by four economists at the
University of Chicago has found that the growth of online shopping has also affected industry structure in
two areas that have seen significant growth in e-commerce, bookshops and travel agencies. Generally,
larger firms have grown at the expense of smaller ones, as they are able to use economies of scale and
offer lower prices. The lone exception to this pattern has been the very smallest category of bookseller,
shops with between one and four employees, which appear to have withstood the trend. [10]

The Internet has created a new economic ecosystem, the e-commerce marketplace, and it has become the virtual

main street of the world. Providing a quick and convenient way of exchanging goods and services both regionally and

globally, e-commerce has boomed. Today, e-commerce has grown into a huge industry with US online retail

generating $175B in revenues in 2007,[1] with consumer-driven (B2C) online transactions impacting industries from

travel services to consumer electronics, from books and media distribution to sports & fitness. With more than 70% of

Americans using the Internet on a daily basis for private and/or business use and the rest of the world also beginning

to catch on, e-commerce's global growth curve is not likely to taper off anytime soon. However, the US recession has

taken its toll on online sales. Although early 2008 estimates by Forrester Research were very strong with 2008

revenues upwards of $204B (a 17% growth rate),[2] 2008 holiday sales showed the first decrease in the last 7 years.

Research by ComScore shows sales declining by 1% for the first 49 days of the holiday season.[3]

In the last decade, many startup e-commerce companies have rapidly stolen market share from traditional retailers

and service providers, pressuring these established traditional players to deploy their own commerce websites or to

alter company strategy in retaliation. This effect is most pronounced in travel services and consumer electronics.

According to comScore, online leisure travel bookings reached about $51B in 2005, or 44% of all online sales, which

were around $122B in the same year. Roughly 30% of all travel bookings currently occur online. Consumer

electronics, which includes the purchase of digital cameras, mobile phones, and home PC's, accounted for nearly

$26B of worldwide e-commerce sales occurring in 2006, according to the NPD Group. As traditional brick and mortar

firms continue to lose market share to e-commerce players, they will likely see continued declines in their revenues,

operating margins, and profits. It is important to note that most e-commerce players are at a competitive advantage to

retailers. They have lower operating expenses and better inventory management due to operating in a virtual

commerce environment. For example,Amazon.com (AMZN) has revenue per employee of nearly $850k while its retail

counterpart, Best Buy (BBY), generates revenue per employee of only $270k. Clearly, e-commerce vendors will have

the most to gain if they successfully disrupt retail customer acquisition, disintermediate distributors/resellers, and
under-price retail establishments. As a consequence of e-commerce vendor gains, financial transaction processors

and parcel shipping companies are among ancillary vendors who will gain.

etail spending
At a macro level, overall economic activity ,total retail spending and change in consumer life style are in general are

key drivers to the growth of e-commerce. At a micro level, for instance, rising oil prices and gasoline costs could

benefit e-commerce players, e.g., it is more expensive driving to the offline retail store than shopping online. The

recession beginning in 2008 has slowed e-commerce, but overall sales are still growing. US online retail sales grew

11% in Q1 2008 compared to a growth of 16.9% in Q1 2007.

Online Taxation
Several proposals have been made at the U.S. state and local level that would impose additional taxes on the sale of

goods and services through the Internet. These proposals, if adopted, could substantially impair the growth of e-

commerce. The U.S. federal government's moratorium on states and other local authorities imposing access or

discriminatory taxes on the Internet expired in November 2007. The taxation situation is a dynamic one, and one

which is carefully being watched by many stakeholders.

Differentiation vs. Click-and-Mortars

Many e-commerce websites have established their leadership positions through low prices, high customer

satisfaction, and convenient interfaces--but that position is becoming less and less unique. The largest retailers, such

as Wal-Mart, Target, and Best Buy are pressing harder to gain market share online. The inroads the click-and-mortar

retailers have been making is evident in recent comScore data, which shows the unique user traffic at the

aforementioned sites increasing at greater year-over-year rates vs. pure e-commerce players. Those pure play e-

tailers that develop and deploy the most unique web technologies to enhance consumer experiences and keep prices

competitive will be in the best position to ward off the click-and-mortar convoy.

Internet Penetration and Emerging Markets

Global Internet penetration rates have an enormous impact on e-commerce growth rates. Currently, more than 90%

of the world does not have access to the internet, and hence, e-commerce. Reduced Internet surfing charges,

Internet technology development covering expanded bandwidth, and increased speeds & reliability could make e-

commerce available to a large pool of emerging market consumers. In India, only about 60 million (or 5.2%) of a total

1 billion person population currently have access to the internet. In China, the internet penetration rate is now at 19%

as of June 2008. The companies that are able to gain significant traction first in emerging markets will be at great

advantage to competitors.

Who Stands to Gain?

Online Travel Services
Expedia (EXPE) and Hotels.com are among many successful online travel service providers who stand to gain the

most from recent growth trends. These players focus on travel-related transactions for airline seats, hotel rooms, car

rentals, cruises, tours, and a host of other services. Travelzoo is a smaller player that has taken a novel approach to

selling travel packages.

Online Retail
Overstock.com (OSTK) and Amazon.com (AMZN), two of the more successful online retailers, should continue to do

well because of their consumer electronics focus.

Consumer Electronics
Sony (SNE) and Philips Electronics are among the leading consumer electronics manufacturers benefiting from an

increase in e-commerce consumer electronics sales. For these companies, internet presence increases the visibility,

easy availability and volume sales of their consumer electronics products.

Financial Transaction Services

EBay/PayPal and Authorize.net are examples of two leading financial transaction processors that get a cut every time

you make a online purchase using their processing platform. More than 175 thousand merchants use Authorize.net

(ANET) to help consumers accept credit cards and electronic check payments online. As more merchants move

online, these types of companies could see their fortunes accelerate.

Travel Industry
Travel service companies, such as airlines, hotels, cruise ships, and rental car companies, also benefit from e-

commerce intermediaries selling their products more quickly and easily than was previously possible and to a wider

consumer base.

Shipping
FedEx (FDX) and United Parcel Service (UPS), two of the major shipping company players, are responsible for

shipping the majority of products that are purchased online by consumers. As consumers continue to buy more

online, these companies will see demand for their shipping services rise.

E-commerce Software
Many companies interested in selling products and services through the Internet choose to contract the construction

and operation of their e-commerce platforms to third-party vendors. Some of these companies, such as Volusion

eCommerce, GSI Commerce (GSIC) and Digital River (DRIV) offer comprehensive, integrated packages that include

software, web-hosting, order fulfillment and distribution and online marketing. Other firms offer more limited services

such as Ariba (ARBA) and Akamai Technologies (AKAM). These two companies are e-commerce software vendors
that make money selling software for e-commerce applications. All of these e-commerce service providers stand to

gain as e-commerce traffic accelerates.

Traditional retailers like Gap are scrambling to keep up with the e-commerce trend, offering online catalog shopping in
addition to traditional stores.

User Interface 

E-commerce software are in the early phases of carving our core feature areas, either integrated within the software

or via partnership with third parties. Such features as marketing (SEO), fulfillment (shipping) and as mentioned earlier

web-hosting are becoming as much as part of the software as its ability to simply provide order management.

Additionally, firms such as aitendantare focusing on interface design to deliver a more robust e-commerce

experience. Emerging technologies includes natural language instruction.

Web Analytics

One interesting niche of e-commerce services is the area of "web-analytics". These tools provide the management of

online shops and all kind of e-commerce platforms a great inside of what happens on their websites. In particular they

allow them to run real-time experiments with their advertising and marketing, to allow them to rapidly optimise
their sales pipeline. Not only can they tell when sales improve, but they can also see which adverts brought those

sales, and the routes the customers took through the e-commerce site to get there.

Two major players are Omniture (OMTR) and Visual Sciences (VSCN) (former WebSideStory). One question for the

future is how such niche players will compete with business analytic/intelligence solutions like SAS. They will also

need to keep an eye on Google (GOOG), who have their own Google Analytics software, which they provide for free

to customers of their advertising products.

Who Stands to Lose?

Traditional Retail
Circuit City Stores (CC) and Best Buy (BBY) are prime examples of traditional retailers that have been losing market
share to e-commerce startups over the last decade. These firms are now working aggressively to create an online

presence for themselves in an attempt to halt earlier losses. In fact, with the added pressure of the recession, Circuit

City filed for bankruptcy and is closing all of its stores. Specialty retailers like Zale (ZLC) have also faced increased

competition from internet company sites.

Traditional Travel Agencies

American Express Company (AXP) is an example of a major travel agency that has seen demand for their travel-

related services decrease as more consumers and businesses rely on online travel portals.

Direct Retail Marketing

CDW (CDWC) and Systemax (SYX) are direct marketers of consumer electronics. Both will see business decline if

the revenue distribution of consumer electronics sales continues to shift to online vendors. As more businesses buy

from online intermediaries, the direct marketers' services are increasingly being bypassed.

 E-commerce can apply to purchases made through the Web or to business-to-business activities such as
inventory transfers. A customer can order items from a vendor's Web site, paying with a credit card (the
customer enters account information via the computer) or with a previously established "cybercash"
account. The transaction information is transmitted (usually by modem) to a financial institution for
payment clearance and to the vendor for order fulfillment. Personal and account information is kept
confidential through the use of "secured transactions" that use encryption technology (see data
encryption).

In an effort to further the development of e-commerce, the federal Electronic Signatures Act (2000)
established uniform national standards for determining the circumstances under which contracts and
notifications in electronic form are legally valid. Legal standards were also specified regarding the use of
an electronic signature ("an electronic sound, symbol, or process, attached to or logically associated with
a contract or other record and executed or adopted by a person with the intent to sign the record"), but
the law did not specify technological standards for implementing the act. The act gave electronic
signatures a legal standing similar to that of paper signatures, allowing contracts and other agreements,
such as those establishing a loan or brokerage account, to be signed on line.
Once consumers' worries eased about on-line credit card purchases, e-commerce grew rapidly in the late
1990s. In 1998 on-line retail ("e-tail") sales were $7.2 billion, double the amount in 1997. On-line retail
ordering represented 15% of nonstore sales (which included catalogs, television sales, and direct sales)
in 1998, but this constituted only 1% of total retail revenues that year. Books are the most popular on-line
product order—with over half of Web shoppers ordering books (one on-line bookseller, Amazon.com,
which started in 1995, had revenues of $610 million in 1998)—followed by software, audio compact discs,
and personal computers. Other on-line commerce includes trading of stocks, purchases of airline tickets
and groceries, and participation in auctions.

The Columbia Electronic Encyclopedia® Copyright © 2007, Columbia University Press. Licensed from Columbia University Press. All rights
reserved. www.cc.columbia.edu/cu/cup/

e-commerce
 in full electronic commerce

business-to-consumer and business-to-business commerce conducted by way of the Internet or other

electronic networks. E-commerce originated in a standard for the exchange of documents during the
1948–49 Berlin blockade and airlift. Various industries elaborated upon the system until the first general
standard was published in 1975. The electronic data interchange (EDI) standard is unambiguous,
independent of any particular machine, and flexible enough to handle most simple electronic transactions.
In addition to standard forms for business-to-business transactions, e-commerce encompasses much
wider activity—for example, the deployment of secure private networks (intranets) for sharing information
within a company, as well as selective extensions of a company's intranet to collaborating business
networks (extranets). A new form of cooperation known as a virtual company, actually a network of firms,
each performing some of the processes needed to manufacture a product or deliver a service, has
flourished.

For more information on e-commerce, visit Britannica.com. Britannica Concise Encyclopedia. Copyright © 1994-2008 Encyclopædia
Britannica, Inc.

e-commerce
(Electronic-COMMERCE) Doing business online, typically via the Web. It is also called "e-business," "e-
tailing" and "I-commerce." Although in most cases e-commerce and e-business are synonymous, e-
commerce implies that goods and services can be purchased online, whereas e-business might be used
as more of an umbrella term for a total presence on the Web, which would naturally include the e-
commerce (shopping) component.

E-commerce may also refer to electronic data interchange (EDI), in which one company's computer
queries and transmits purchase orders to another company's computer. See m-
commerce, microcommerce and clicks and mortar.

The First E-Commerce?

In 1886, a telegraph operator was able to obtain a shipment of watches that was refused by the local
jeweler. Using the telegraph, he sold all the watches to fellow operators and railroad employees. Within a
few months, he made enough money to quit his job and start his own store. The young man's name was
Richard Sears. His company later became Sears, Roebuck.