With each passing day, the banking industry is evolving rapidly. The previous decade had witnessed several transformations, especially in services such as loan disbursements and collection of deposits. While such conventional services are still demanded, the entire gamut of banking services has evolved around core banking.
Core banking is the phrase used for a centralized system that manages all the functions and activities of the banking sector. It is the central server that interconnects all branches of the bank and manages their activities. With such a centralized system, one can easily avail banking services from anywhere in the world. Accessing banking services from any location is crucial and time convenient. It also provides a faster way to perform the transactions. As a result, core banking solutions have become ideal for people who wish to transfer cash over long distances.
The former architecture of core banking intended to serve customers of retail banking but has now extended towards corporate customers. Following this, the architecture has modified into a new form, comprising of four divisions.
- A system interconnecting the core platforms as well as the partners involved. It also contains enterprise resource planning, an operational data store and a customer information file that tracks the financial activities of a customer.
- The interconnect network system is followed by data that comprises intricate and detailed information. It is basically the most important zone as all secure information is stored here. Each data contains a database, customer relationship management and a database application.
- An interconnected network of data and systems is integrated with business platforms. It involves services such as retail and corporate banking, wealth management, insurance and capital markets.
- The three sectors build up the network with outlets of ATMs, bank branches, call centres, etc.
The new core banking architecture ensures accuracy in the delivery of financial services, with no errors. With its automated analysis of data, the feature brings more competency to banking. By minimizing human intervention, core banking prevents errors in data analysis.
Many banking sectors have started relying on this architecture for its ability to reduce the cost of operations. The central network facilitates real-time banking which helps prevent theft and fraud. While providing transparency in customer activities, the system helps predict their behaviour through reports and analytics, and allows banks to take necessary measures.
