Core banking chapter 4, benefits of core banking, essential requirements of core banking, suggestions for the co-operative banks to implement core banking system

1. CORE BANKING
• SDJ International college
• Vaghela Nayan K

2. MEANING
• Core banking or centralized banking means a banking process which is
completed in a centralized environment i.e. under which the information
relating to the customer’s account is stored in a Central Server of the bank
instead of the branch server.
• The capacity of the memory depends upon the size and needs of a bank, it
could be for all operations or for the limited operations.
• This task is carried through an advance software by making use of service
provided by specialized agencies. This whole system is called Core
Banking Solution (CBS) or Centralized Banking Solution.

3. WHY CORE BANKING?
• A business men would like that outstation cheques given to the bank
should be collected immediately. He wants fast service and is also cost
conscious.
• The payment required to be made to his outstation customers are
normally done through drafts/cheques. If he makes the payment through
draft, he is required to go to the bank and apply for the draft, pay the
exchange, collect the draft from the bank and mail it to his customer. It
costs time and money.
• Even after the dispatch of draft, the money will be credited to the account
after 1 day. So the money will be in transit for at least 3 days without any
use.
• Here, the core banking system can do the same task in less time and can
help the businessmen to flaunt their business easily and fast.

4. CORE BANKING BUSINESS AND BUSINESS
COMPONENTS
1. Banking service module for customers having savings accounts.
2. Banking service module for different types of accounts such as deposits, loans, bills,
remittances, clearing, etc.
3. Corporate banking services and branch service modules.
4. To have enhanced MIS modules.
5. Financial Business.
6. Module for business intelligence.
7. E-governance tools
8. Integration service module for branch banking, internet banking and call Centre.
9. To integrate with existing modern systems such as ATM, tele-banking, debit card, etc.
10.Interface with systems like NDS(Negotiated Dealing System), SFMS, RTGS, CFMS,
etc.

5. ADVANTAGES/BENEFITS OF CORE
BANKING
1. It enables establishment of a reliable data repository for the bank.
2. It facilitates data warehousing and mining technology for business intelligence.
3. It provides integrated customer centric service like ATM, Tele-banking, branch
banking, etc.
4. Core banking enables centralized management information, decision support and
executive information system.
5. Core banking provides effective and efficient MIS(Management Information System),
ALM(APPLICATION LIFECYCLE MANAGEMENT), risk- management using
central data pool.
6. It enables centralized management and control with centralized data.
7. It also helps in standardization of branch automation software using single version.
8. It provides quick adoption of software changes. Change is done only at central site.
9. It facilitates ‘business process re-engineering’ (BPR) to streamline the existing
process.

6. 10.It facilitates the bank branches to relieve from the jobs like data backup, MIS
generation, etc.
11.It requires infrastructure at central location, backup location and at branches.
12.In core banking, servers are not mandatory at branch locations.
13.The cost of implementation of additional branches and delivery channels are
cheaper.
14.Core infrastructure can be used for future expansions.
15.No extra cost for implementation of SFMS(Structured Financial Messaging
System), RTGS,CFMS(Centralized Funds Management System), etc.
16.It attracts higher investment in the beginning.

7. ESSENTIAL REQUIREMENTS OF CORE
BANKING1. Creation of Primary Data Center:
i. For housing the general server for internet transactions.
ii. Customer centric distribution channels integrating with core banking for the bank’s various
corporate business necessities.
iii. For proving 24x7 services to the customers.
iv. For data backup, call attendance , trouble shooting and customization skilled personnel
activities are necessary.
v. For security of database the data center is kept at a safe center at CBD(Central Business
District) Belapur, which is bank premise.
2. Disaster Recovery Site (DRS):
i. To avoid disruptions in the business activities.
ii. To provide non stop functioning of various channels integrated with core banking solution.
iii. To act a backup for providing reliable non-stop continuous processing environment.
iv. For ensuring the security of core banking solution from any natural or humanly disaster.

8. 3. Business Process Reengineering (BPR):
i. To help the bank in utilizing existing business processes by using the latest technologies.
ii. To help the bank to provide more efficient service on this new technology platform.
iii. To give full satisfaction to the customers and expand the field of customers upon the
national and international levels. More customers will get the bank more profits.
4. Specialized Consultancy:
i. As it is costly and involves many complexities, it is advisable to establish a specialized
consultancy for the bank.
ii. The experts having the experience of implementing CBS to other banks in future.
iii. The knowledge of the consultancy will be helpful in designing, implementing and
functioning of the channel distribution and it is necessary for drafting strategies.
iv. The advice to the bank of these consultants may prove useful at the CBS requirements.
v. For the future advancement, the consultancy is must.

9. SUGGESTION FOR PLANNING CORE
BANKING SYSTEM IN CO-OPERATIVE
BANKS:1. Core banking software, suitable to the pattern of functioning of the RBI should be
purchased.
2. Valued computer servers and full fledged data Centre for 24x7 type should be established.
3. Operating System License for Server Supervision.
4. Database license for Oracle, MS-SQL, DB2.
5. Necessary annual fees for the updating of the above licenses.
6. Necessary routers for WAN (Wide Area Network)
7. Necessary fees leased or RF(Radio Frequency) lines communication.
8. Annual maintenance fee for the above tools.
9. An operating DRS in case of disaster.
10.UPS and Acs for prevention of Data Centre and DRS.
11.Routing backup liability.
12.Capable and expert staff to carry out the above functions with due responsibilities.

10. THANK YOU