Imagine the financial institutions in the 70s. The long waiting period, long queues, and the customers could do transactions only on a particular branch and not the parent bank.
However, with the introduction of core banking platforms, the financial institutions have created a centralized online real-time environment (CORE) for managing their day-to-day operations.
The core banking system (CBS) since its inception has benefited the public sector banks in managing their operations. It was stated that the public sector bank branches in India with core banking implementation went from 78% in April 2009 to 90+ in April 2010. And this number has increased percent by percent all over the world.
According to Gartner, a US-based research and advisory firm, core Banking Software is typically a back-end system that performs the daily banking operations like updating the accounts, financial records, and performs banking transactions.
In other words, CBS is the nervous system of the financial institutions that if affected, can drastically alter its operations. CBS is the central point of connection for a wide range of services and products that financial institutions provide.
- DR services, co-location, and Data Center
- Mobile and Internet banking
- Point of sale systems (POS) and Automatic Teller Machines (ATMs)
- Fund Transfer immediately and remotely (RTGS, NEFT, IMPS, etc)
- And numerous other services such as agency banking application, QR code merchant payment, etc
What are the things to consider while selecting the right core banking platforms?
1. Agility: Agility is the distinct quality that allows the financial institution to respond quickly to the changes in its external and internal environment without losing focus.
2. Scalability: When the transactions are processed in vast numbers on a daily basis, the organization should be able to sustain or improve its performance in terms of efficiency or profitability.
3. Cost-effectiveness: CBS should not only deliver customer satisfaction but should also benefit the financial institution by saving a lot when it comes to using man-hours and maintenance.
4.Flexibility: Flexibility has grown enormously in every industry in the past 2-3 years. Banking systems have numerous modules with flexible solutions that allow the banks to configure the perfect blend of IT resources.
5. Functionality: CBS should be able to map the current business processes to the functionality of potential applications. This helps the financial institution in implementing new business initiatives and future marketing.
6. Viability: Selecting a suitable CBS is completely strategic. It means that using a particular CBS, the financial institution should be able to continuously fulfill its missions and achieve its operating objectives for long-term.
7.Program Management: Failing to perform due diligence when it comes to vendor project management capabilities can undoubtedly increase the implementation costs. A well-organized CBS will make sure to provide a standard project plan.
8.Operational Performance: It means that the CBS platform understands the technical requirements of the bank’s core operations.
9.Regulatory Compliance Requirements: The vendors should be able to make recommendations when it comes to managing the software and hardware to meet regulatory expectations.
10.Customer References: It is necessary to talk with the customers of the vendor regarding its products and services seeking ‘real world’ experience.