Black Book

CHAPTER 1
INTRODUCTION TO STUDY
1.1. INTRODUCTION:
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 data centres. 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.
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.
WHAT TS A CORE-BANKING SYSTEM ?
Core banking systems are basically the heart of all systems running in
a bank and it forms the Core of the bank's IT platform. Amongst other
functionalities, it provides the customer information management,
financial information system and the transaction-processing functions,
which by far are the most fundamental processes in a bank. With the
advancement
in technology and with passage of time, core systems now-days tend
to cover more and more functionality giving the bank a join solution
for most of its operations in different business lines. Alongside, it also
provides a central operational database of customers assets and
liabilities giving facility to generate a 360 degree view of the
customers relationship with the bank. Core banking systems reside as
the heart of the data-centre itself.
Core banking solution:

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. 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 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, and 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 supporting technologies that create
extensible.
India post is losing its customers due to lack of modernization in its
customer experience and operations.
At present, India post does not have the services of ATMs, Mobile
banking and demit certificates facility.
Banks have traditionally been in the forefront of harnessing
technology to improve their products, services and efficiency. They
have, over a long time, been using electronic and telecommunication
networks for delivering a wide range of value added products and
services. The delivery channels include private networks, public
networks etc. and the devices include telephone, Personal Computers
including the Automated Teller Machines,
etc. With the popularity of PCs, easy access to Internet and World
Wide Web (WWW), Internet is increasingly used by banks as a
channel for receiving instructions and delivering their products and
services to their customers. This form of banking is generally referred
to as Internet Banking, although the range of products and services
offered by different banks vary widely both in their content and
sophistication.
The core banking system is the central processing unit of a bank. It is
a customer accounting and transaction processing engine for high-
volume back-office transactions. The inflexibility of traditional core
banking systems is hobbling sustainable growth. Banks in most
emerging
markets, as well as traditional markets, are finding core replacement
inevitable. Among the main drivers for core replacement, the most
obvious is the need to provide a more cost-effective and efficient way
to run core processes. Global deployment of core banking systems
offers significant benefits. Yet, less than 5% of the worlds banks
deploy a multi-country
application to service their global customers. There are several
reasons why a bank operating in multiple countries should choose a
single core banking platform, primary among which are cost savings,
having a holistic and single view of the customer, ease of
management information, streamlined and efficient processes and
faster product development and deployment across multiple
geographies. With multi-country deployment of core banking
solutions, banks will be able to leverage IT to the maximum and build
competitive advantage.

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CHAPTER 1

Core banking is a general term used to describe the services provided

Core banking solution:

Core banking solutions is frequently used in banking circles. The

Gartner defines a core banking system as a back-end system that

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