Core Banking

Since we have learnt about what an application is and the significance of a database, I think this is the right time when I explain you what a Core system is.

Every BFSI would have a CORE application in the enterprise which is in the middle or in the center of the entire enterprise and each and every product / solution in the company would be connecting to this core solution. For the purpose of explanation, I am explaining the "Core Banking System" as this is easier to imagine and understand as everyone does banking and has Bank accounts. You can correlate this explanation with other core systems of other financial entities as well

So, to understand Core banking lets create a scene by looking at the services which a Bank provides, naming a few:

1. Current Accounts / Savings accounts, Corporate Accounts

v Account creation / deletion

v Managing the Accounts

v Managing Deposits

v Managing Withdrawals

v Payments

o Cheque

o NEFT / RTGS

o IMPS

o UPI

v Interest Calculations

2. Loans

v Account creation / Deletion

v Investigations

v Disbursements

v Collections

v Interest calculations

The list may go on and on, all these services and functionalities although have their own (System of records) databases but the ultimate transaction commitment (Debit/Credit) and change is happening in the Core banking system, although many of the services have a peripheral front end which initiates or accepts the requests but the ultimate change in the transaction always happens at the CBS, for e.g. UPI transaction would be hitting and processed in a UPI system but the final ledger entry (Credit/Debit) would be done in the CBS

A Major advantage of Core Banking system is that you can do your transactions from any Branch in the system since your CBS is deployed in the central datacenter where all branches can connect and update the transactions in real time, so you don’t need to visit your own branch or wait for days for your transaction to be reflected in your account and nowadays you can do transactions via "Web and Mobile App"; all these is only possible because everything gets processed in a central system which is also accessible from anywhere over internet.

Just to remind you this was not the case 10 years back where Branches had individual local servers where transactions were committed and to reflect in another branch it used to take days and you had to visit your own branch to do transactions in your account

After all this explanation on "Core Banking System" you may be thinking that it is some kind of unique technology which is highly complex to understand, don’t worry my job is to convert all the complexes into Simplexes, This core banking is nothing but an Application which has a database which I think I already explained in the previous sections, so again "Core Banking System" is just an Application (App servers and DB Servers) which is central to the bank and which contains all the customer accounts and all the transactions done in the entire Bank whether it is from Branch, ATMs, Internet Banking, Mobile Banking, corporate Banking, etc. it would finally be landing in the CBS

Oh, I forgot to mention nowadays even the branches are getting less and less operational as there is hardly any service which is not available via ATMs, internet Banking (Web Browser) or Mobile Banking (Mobile App)

Some of the major core banking solutions are Finacle, Flexcube and Bancs