What is a Core Banking Solution (CBS)?

Core Banking Solution (CBS) is centralized Banking Application software. The Customers can access their accounts and perform certain transactions from any of the bank’s branches through the network. It has several components that support a database, application server, web server, and firewall to protect the system from outside attacks.

Core banking systems are used by financial institutions, including banks, digital banks, e-money institutions, and payment service providers. The software resides in a main application server which is located in the Central Office Data Centre of the Bank. The application software is not available at the branch but can be accessed from the branches. Along with Database servers and other servers, the application server is located at the Central Data Centre.

Features: Core banking systems characteristically include:

Deposit processing

Loan and credit processing

Daily banking transactions

Mobile banking

Account management

Account onboarding

Customer relationship management (CRM)

Reporting

Risk management

The CBS model is implemented by Banks in India in stages. Initially, the Savings Account, Current Account, and Fixed Deposits, model was implemented in many banks. Next, Bills & Remittances, Loans, and advances models were implemented. Subsequently, alternate delivery channels like ATM, Internet banking, RTGS/ NEFT, Mobile Banking, and Treasury, Government Business, etc. were added. CORE banking servers are on all 24 hours on all days, therefore, banking can be done any time and also from anywhere. The database of customers is updated online, e.g., the amount withdrawn at the ATM is deducted from the customer’s balance almost instantly.

The major benefits of Core banking service are it reduces operational costs, increases the completion rate of operations, and reduces the chances of errors in documentation.

There are different vendors in the market providing CBS. The software, (CBS) is developed by different software development companies like Infosys, TCS, Iflex Solutions, etc., Each of the software has a different name:

Apart from the above, some institutions have developed the software in-house. For example; ‘CROWN’-CBS was the in-house core banking solution (CBS) software used by the Indian Overseas Bank (IOB). However, IOB migrated all of its domestic branches and other offices to the Finacle software of Infosys in 2017.

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