Core Banking
Core banking is a general 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 member branch offices. 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. 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.
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 An overall service-oriented-architecture (SOA) helps banks reduce the risk that can result from manual data entry and out-of-date information, increases management information and review, and avoids the potential disruption to business caused by replacing entire systems.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.
Core Banking Application Package Vendors
Many banks implement custom applications for core banking. Others implement/customize commercial ISV packages.
Overview of core banking solutions and their providers
Package Provider
FLEXTERA
Diasoft
Avaloq Banking System
Avaloq Group
BankFusion Universal Banking
Misys
Overview of core banking solutions and their providers
Package Provider
CSB
Natech
Misys Equation
Misys
Misys Midas Plus
Misys
Finacle
Infosys
CFT-Bank
Center of Financial Technologies (CFT)
Alnova Financial Solutions
Accenture / Alnova
TCS BaNCS
Tata Consultancy Services (TCS)
Bankway
Fidelity National Information Services (FIS)
Corebank
Fidelity National Information Services (FIS)
SAP Banking Services
SAP AG
FLEXCUBE
Oracle Financial Services Software
DIGIBANK
Oracle Financial Services Software
Hogan
Computer Sciences Corporation
Overview of core banking solutions and their providers
Package Provider
Insite Banking System
Automated Systems, Inc.
ICBA
Infopro Sdn Bhd
Profile (software) (formerly Sanchez Profile)
Fidelity National Information Services (FIS)
SAB / SAMIC
SAB
SFB / SCB
UNISYS
Signature (software)
Fiserv
Systematics
Fidelity National Information Services (FIS) (formerly Systematics, Inc/ Alltel)
TEMENOS T24
Temenos Group
CoreSoftt, SuVikas
VSoft Corporation
While many banks run core banking in-house, there are some which use outsourced service providers as well. There are several Systems integrators like Accenture, IBM and HP which implement these core banking packages at banks.
Following are the advantages of Core Banking:
Limited Professional Manpower to be utilized more effectively Customer can have anywhere, more convenient and easier banking ATM, Internet Banking, Mobile Banking, Payment Gateways, Referral Business More Strong and economical way for MIS Reduction in Branch Manpower by 15-20% Additional Manpower available for Marketing, Recovery and Personalized banking Instant Information availability for decision support Quick and Accurate Implementation of Policies Improved Recovery Process causing reduction on recovery costs, NPA Provisions Innovative, redefined or improved processes (e.g. Inter Branch Reconciliation) causing reduction in Manpower at Head Office Reduction in Software maintenance at Branch and Head Office
Centralized Printing and Backup resulting in reduction in capital and revenue expenditure on printing and backup devices and media at branches
Electronic Transactions with Other Financial Institutions Increased Speed in working resulting in more business opportunities and reduction in penalties, legal expenses etc
Finacle universal banking products are designed to address the core banking, e-banking, Islamic banking, treasury, wealth management and CRM requirements of retail, corporate and universal banks. It is developed by Infosys, and is one of the major players in the arena of core banking in Indian and Asian banking domains.T.V. Mohandas Pai was closely associated with it.
Services
Providing support & services is typical in such huge software implementations. Services provided by Infosys for the maintenance of the application include.
Application development and maintenance Application management Independent validation Migration services Performance tuning Software performance engineering System integration Value mining
Awards
Judges Special Achievement Award : Banking Technology Awards 2008 Highly Commended in the Best Core Banking Product category for the Banking Technology Readers Choice Award : Banking Technology Awards 2008
CII - EXIM Bank Award For Business Excellence 2008 Asian Banker award for best core banking implementation - 2008 Asian Bankers 2007 IT Implementation awards Commended in the Back-office Retail Banking Project category by the Banker Technology Awards 2007
Asian Bankers Awards 2006 for large and mid size core banking implementations Winner in CRm Category - The Banker Technology Awards 2005
Recognitions
Positioned in the Leaders Quadrant in the Gartner Magic Quadrant for International Retail Core Banking Solution - 2010
Positioned in the Leaders Quadrant in the Gartner Magic Quadrant for International Retail Core Banking Solution - 2009 Leader in the January 2009 report, The Forrester Wave: Global Banking Platforms, Q1 2009 Positioned in the Leaders Quadrant in the Gartner Magic Quadrant for International Retail Core Banking Solution - 2008
Positioned in the Leaders Quadrant in the Gartner Magic Quadrant for International Retail Core Banking Solution - 2006
Finacle from Infosys emerges as a leader in retail banking platform study
TCS BNCS is a market ready universal financial platform for banking, capital markets and insurance, offered by TCS FS (TCS Financial Solutions), the strategic business unit of Tata Consultancy Services Limited (BSE: 532540, NSE: TCS).
Banking is a scale business that thrives on customer acquisition and retention. As such, banking solutions must satisfy the needs of multiple customer segments, geographies and service levels, efficiently and effectively. The Core Banking solution from TCS BaNCS is an integrated solution that automates all aspects of core banking operations across entities, languages and currencies. The solution helps financial institutions to quickly introduce new products and efficiently manage changes in existing products. The solution supports a variety of products including savings accounts, checking accounts, overdraft accounts term deposit accounts and a variety of lending products including personal loans, corporate loans, mortgages, along with a full
complement of transactional services incorporating remittances, foreign exchange, drafts, bankers cheques, cards and trade finance. These capabilities are accessible through multiple channels, from branch to call center to mobile banking and web. The solution integrates front, middle and back-office processes in real-time, providing bankers throughout the organization with complete timely and actionable information about customer relationships and providing a single view of the bank to the customer. Developed around advanced message oriented architecture, the solution also integrates seamlessly with other TCS BaNCS solutions for trade finance, brokerage, Treasury, CRM, Payments and compliance as well as with thirdparty applications, under a SOA framework. The Core Banking solution from TCS BaNCS is an easy-to-integrate, scalable, enterprise-wide solution that handles large transaction volumes on a 24x7 basis. It automates banking processes and provides best-in-class customer service at reasonable cost, thereby maximizing operational efficiency and minimizing risks. With world class implementation and support expertise, the solution has been successfully deployed in two of the three banks with the largest branch networks in the world along with other market-leading banks around the world.
