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What is the meaning of core banking?

Customers are demanding greater control and independence over their financial affairs, and also in the wake of the pandemic that has locked thousands of us inside banks, they’re offering more user-friendly core banking solutions that increase customer satisfaction and gain many more customers. Businesses like Oracle or IBM have added the use of automation and advanced processing to optimize processes and expand their customer base.

It is becoming more common for companies that are working to stay ahead of the rapidly changing market are examining what the bank’s main system to offer in the event that it’s put in place – and if this is worth it.

If you’re considering whether you should adopt the core banking platform Let us look at the concept and the importance of the core banking system in greater detail. Find out about benefits and disadvantages of banking with core.

What is the term core banking?

It is an system which connects several branch offices of the bank to provide services such as the management of loans withdrawals, deposits, and transactions in real-time.

What is the meaning of core banking?

The term CORE is a reference to Centralized Online Real-time Environment meaning that customers will feel the bank as one entity regardless of their location and with the intention to give more freedom to the customer in terms of the use of their accounts as well as conducting transactions from anywhere across the globe.

What are IT essential banking services?

The most important banking services are new account establishment and management of customer relationships including interest calculations, withdrawals and deposits processing servicing and issuing loans, etc.

How do core banking functions?

A banking system’s core comprises back-end servers that handle routine tasks such as interest calculation, maintenance of the passbook and withdrawal.

When a client withdraws funds at a branch or ATM then the application sends an inquiry to the central data center. The data center takes the request, and then authenticates the transaction.

The data center houses the database as well as an application server and a web server and a firewall that protects your system against malware attack. Banking institutions can house their data centers locally or in the cloud.

What are the key IT essential banking attributes?

After studying the most popular banks’ software We’ve identified the most essential features of banking for a good solution.

Centralized dashboard

Bankers require a single-view dashboard to view the system in real-time. Additionally, both clients and bankers should be able to access the same dashboard; this will allow them to identify and fix issues more quickly.

In-person onboarding (with KYC features)

Before accessing the dashboard, users has to sign into the account with an individual account username as well as password. With KYC tools, banks are able to confirm the identities of potential customers as they sign up. Onboarding procedures should be easy enough for customers to go through without stress.

Two-factor authentication

The solution should provide two-factor verification in order to increase security and protect customers with sensitive information.

Push notifications

If you are building a banking core solution for mobiledevices, you can use push notifications to provide accurate account information to customers.

Loan management

The banking system’s core must permit customers to keep track of their loans and make payments according to the outlined schedule.

Calculators of interest

To make mortgage and loan payments customers require access to real-time calculators that assist them in making informed choices.

Live chat

Live chat is a feature that should be available on the platform in order to allow users to reach support representatives when they require assistance. Chatbots with automated technology can also provide pre-written answers to commonly asked questions.

Transaction management

Customers can personalize their favorite payments and P2P transfer so that they can ensure their contacts are current. Additionally, they can use multi-currency exchanges in order to trade their most preferred currencies.

What are the various types of banking core systems?

Based on the hosting provider, IT central banking systems could be classified as follows:

On-premise solution. This system is local-hosted infrastructure that provides the bank with a variety of possibilities for customizing.
A core bank software that runs on cloud like the name implies it’s hosted on the cloud. It is possible that a cloud service provider can offer the application as an Cloud as a Service (CaaS) with a pay-per-use model. Sometimes, businesses can transfer their servers from their local location into the cloud to gain greater flexibility.

What are the main benefits of the banking system?

A better understanding of the fundamentals and functions of the main banking platforms we can look into their primary advantages:

Increased productivity

Core banking platforms boost efficiency through decreasing the time required to connect to multiple branches. This means that banks can complete transactions faster regardless of the customer’s physical place of residence.

Increased security

Core banking systems utilize advanced encryption technology to shield the infrastructure from malware and hackers. On the side of the customer bio-verification and two-factor authentication add additional layers of security for the platform. These options help banks adhere to KYC standards and adhere to other regulations governing banking.

Access to banking 24/7

In the current age of payment via contactless having access to 24/7 banking services is crucial. Users are able to conduct financial transactions at any time and from anywhere because the banking platform is always online. Customers are also able to contact the customer service department for assistance anytime.

Lower operating costs

Banks can depend on their platforms’ core functions to cut operational expenses since they require less humans to operate. Additionally, the AI-powered infrastructure improves the efficiency and rate of transactions and decreases the likelihood of errors in the documentation.

Multiple currencies

Users can trade multiple currencies immediately without the need to exchange large amounts at an exchange.
Solutions that aren’t as effective IT basic banking applications

Despite the many advantages of the central banking services However, these systems have weaknesses.

The technical downtimes could disrupt normal banking activities, and cause frustration to customers.
The use of a central bank system could result in an unintended fault that can affect branches in the event of cyberattacks.
Core banking technologies can be costly to purchase and maintain, particularly for medium and small-sized banks.
Core banking software that is not up-to-date can expose the entire infrastructure to failure of the system. The effort to modernize will cost a considerable amount of dollars.

Why should you choose a core bank solution?

Despite the limitations listed earlier, your institution requires a banking platform that can optimize your the efficiency of its operations and increase the return on investment.

Final words

Financial services for core banking provide many advantages to banks as well as their clients. By using advanced analytics for data banks can increase their efficiency while keeping satisfaction of customers to a maximum level. Additionally, you can count on automation to keep your system up and running. Most importantly the latest core banking technology can protect your business’s and the data of your customers from hackers.