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Core banking systems are basically the heart of all systems running in a bank and it forms the Core of the bank's IT platform. Amongst other functionalities, it provides the customer information management, central accounting and the transaction-processing functions, which by far are the most fundamental processes in a bank. With the advancement in technology and with passage of time, core systems now-days tend to cover more and more functionality giving the bank an integrated solution for most of its operations in different business lines. Alongside, it also provides a central operational database of customers' Assets and liabilities giving facility to generate a 360 degree view of the customer’s relationship with the bank, which is fundamental for the CRM strategy of the bank. Core banking systems reside either in the heart of a bank's data center or in other words can also be termed as the heart of the data-centre itself.
WEALTH BY CBS
“The CBS at SBI executes an average of 42 million transactions per day with a peak of 1,900 transactions per second through a network of about 17,700 branches.“
The story began in 2000. With its growth curve heading northward, State Bank of India (SBI), the country's largest bank with the largest branch network, realized the need for a core banking solution. An expression of interest was invited in July 2000, and the actual implementation was started in August 2003 when the first branch of the bank was put on TCS' BαNCS core banking solution.
The planning stage lasted three years, while the BαNCS implementation took another five years (till July 2008) to complete. "The core banking solution rollout project enabled SBI to embark on a journey of transformation by implementing a state-of-the art technology foundation within a robust framework," says Krishna Kumar, the deputy managing director of IT for SBI.
The entire project of implementing the core banking solution was handled by TCS as the systems integrator, while other major technology partners in the project were HP, Datacraft, Cisco and Microsoft. The core banking solution implemented at SBI and its associate banks currently execute an average of 42 million transactions per day with a peak of 1,900 transactions per second through a massive network of about 17,700 branches and over 20,000 ATMs servicing nearly 243 million customers.
CONSULTANT ‘THE CATYALYST’
When considering core banking transformation most banks start with a blank slate and work on the development of an aspirational core end state vision. Usually this vision includes the selection of a strategic core banking solution. The aspirational end state is normally intended to move the bank to a single platform, standardize master data through out the enterprise, and provide a clear view of all business processes while meeting stated business benefits.
Problems start to arise after the initial core banking end state vision is developed. At this point most banks want to immediately communicate this vision to their internal teams, shareholders, and industry analysts. Banks communicate the vision without a clear path to achieve the vision. Banks are defining the “what” but not the “how”. When a bank communicates the vision and the start of the core banking transformation program to multiple stakeholders at the same time expectations are set. The early achievement of business benefits are required to keep momentum of core banking transformations going. It is also required to provide the transformation team with the confidence of the enterprise, which will in turn earn them the right to do more. When you approach the transformation with this frame of mind the aspirational end state becomes a series of core banking renovations based on a framework of the strategic aspirational end state. Here, the role of Core Banking Consultant ‘The Catalyst’ starts.
“To develop a roadmap of smaller core banking renovations that will ultimately lead to the transformation that the bank aspirers to reach.”
Transformation initiatives will be taken by the Consultant are :
Perhaps. all of these approaches can be valid depending on the context and the strategy of the organization. To compete in the fast-developing market of today and meet its customer Expectations, using the latest and advanced technology with secure and helpful environment. The bank can able to identify and respond to market opportunities which positively affect to increase market share while achieving significant use of IT as Core Banking.
EVERY BODY CAN AFFORD
In today's era of e-banking, Core banking or centralize database is the most demanding requirement for all banks - Co-Operative, Scheduled or Nationalized - to get accurate, speedy and real time,up-to-date information about bank's exposure to risks arising out of interest fluctuations & liquidity position based on Assets & liability ratios as well as other risks. Creation of data center, IT security & lease lines and proper disaster recovery back-up arrangements as well as the cost of core banking software involves huge investments. Nationalised banks - with a large branch network and no budget constraints -can afford to invest in high-end Core Banking solutions from big software companies. However, for Co-operative and small size banks with limited branches, fund and manpower constraints, investment in Core Banking becomes more of a luxury.
Facilitate regulatory compliance: The right regulatory platform will lower costs through improved asset reusability, faster turnaround times, and increased accuracy. Improve information flow: To improve the speed and accuracy of decision-making, banks must deploy systems that streamline integration and unite corporate information to create a comprehensive analytical infrastructure.
Optimize customer value: Through a holistic core banking architecture, banks can target customers with the right offers at the right time with the right channel to increase profitability.
Customer Satisfaction and Retention : Through a single view of the customer, you can build customer intimacy by analyzing customer needs and creating new products and solutions based on accurate, up-to-date customer profiles. In addition to building a long-term relationship with your customers, you can provide relationship-based pricing—offering special benefits and services such as preferential pricing for interest, charges, commissions, fees, brokerage expenses, and taxes based upon overall customer value.
Create a service-oriented architecture (SOA): A flexible, robust IT architecture based on SOA is not optional. Banks must embrace SOA to survive.
Banks need to focus on key factors, which make the core banking transformation a successful experience. Broadly speaking, the key challenges in core banking transformation are:
A Core Bank Consultant has the major role in the advent of state-of-the-art technologies and global best practices which offer improved agility, efficiency, CRM capability and faster implementation cycles, where banks need to be mindful of the challenges associated with core banking deployments . All the same, banks must appreciate that technology is an enabler and not a panacea. As history indicates, successful banks are those that have understood the potential of new technologies and aligned themselves to fully leverage its power. These are banks that have focused on the adaptive change that made the technology transformation process successful.
CBS (IT ) Consultant Duties and Responsibilities :
Following duties and responsibilities of an IT consultant are to be followed at "Abhipurti Solutions" to bridge the gap of the Client and Success by IT.
Views by RBI on CBS :
About Reserve Bank of India
The Reserve Bank of India is the central banking institution of India.
The institution was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934 and plays an important part in the development strategy of the India. It is the monetary authority of India regulating and supervising the financial system, controls issue of currency etc.
For more information, please visit : http://www.rbi.org.in/ or http://www.rbi.org.in/scripts/FAQView
How does the Speed Clearing work?
Banks have networked their branches by implementing Core Banking Solutions (CBS).
In CBS environment, cheques can be paid at any location obviating the need for their physical movement to the Drawee Branch. The concept of Speed Clearing combines the advantages of MICR clearing with that of CBS.
Cheques drawn on outstation CBS branches of a Drawee bank can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee bank has a branch presence at the local centre
http://www.rbi.org.in/scripts/NotificationUser Issue of multicity / payable at all branches cheques by CBS enabled banks as you are aware, various Core Banking Solutions (CBS) implemented in banks marked a paradigm shift in Customer Services. Customers of a branch are now the bank's customers as they can access their accounts from any branch for defined purposes. The new opportunities offered by CBS have enhanced customer service by way of offering various payment products and channels resulting in speedy movement of funds across the country. Leveraging the CBS, banks have started issuing “payable at par” / “multi-city” cheques to select customers with separate transaction codes (29, 30 and 31) by putting in place infrastructure for processing such cheques at all CBS enabled branches.
http://rbi.org.in/scripts/NotificationUser.aspx Delay in collection of outstation cheques – Need for issuance of Payable at par / Multi-city cheques
A few banks with core banking solution have started providing “payable at par"/ "Multi-city” cheque issuance facility to select customers as a value added service. The cheque books issued to such customers are slightly different. The cheque leaves bear the narration “payable at par at all branches” and the MICR code line of the cheques have transaction codes 29 (Current A/c), 30 (Savings Bank A/c) and 31 (Cash Credit A/c) to facilitate processing of such cheques as local cheques at the MICR cheque processing centres. CBS is used for signature verification and balance verification. For the purpose of funding the transactions, RTGS and NEFT are used effectively.
It is suggested that such services should be made available by all the banks and should be made available to all the eligible and requesting customers. While designating a branch as CBS branch, it should be ensured that such branches are equipped to process these "payable at par"/ "Multi-city cheques". If the banking system offers this service in a big way, it would not only help banks provide better customer service and minimize complaints, but also help reducing the transaction cost in payment services in the long run.
Polaris to implement Intellect CBS in RBI The Reserve Bank of India (RBI) has chosen Polaris Software Lab, a financial technology company, to implement its Intellect TM core banking system (CBS) across the bank. The deal is valued at $55 million.
The benefits banks say they enjoy from seamless working on Core Banking Solutions (CBS), the Reserve Bank of India (RBI) has decided to adopt this in its operations. It intends to integrate its system with banks and financial institutions on a CBS platform at a later date. The main objective is to achieve a cross-functional and seamless integration of banking activities, including the public debt office. It will pave way for a virtual banking department running on a single GL. It would enhance the system compatibility for multiple delivery channels.
RBI has just come out with guidelines for issuance of “Payable at par/Multi-city” cheques to all eligible customers in a standard format. But the RBI should have thought of many other possibilities of offering a wide variety of services using CBS.
The Reserve Bank today asked Urban Co-operative Banks (UCBs) to implement core banking solutions (CBS) in all their branches by December 31, 2013.
“...very few UCBs have adopted CBS. Hence all UCBs are advised to implement CBS, in all their branches before December 31, 2013,” the RBI said in a notification. It further said the failure to implement CBS within the time frame could result in denial of various facilities like expansion of branches or area of operation to UCBs. http://www.rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=7888 Implementation of Core Banking Solutions (CBS) by Urban Co-operative Banks (UCBs) The usage of Information Technology (IT) is critical for the survival and growth of banking institutions as IT usage not only helps banks to reduce their cost of operations, but also enables them to offer products and services at competitive rates to their customers. IT has become not just an enabler but a differentiator for banks in a competitive environment. Further, for effective regulatory and supervisory compliance the banks need to use IT in their operations. Considering the importance of the matter, the Reserve Bank had included ‘Review of Mechanisation and Computerisation’ as one of the reviews to be placed annually before the Board of Directors of UCBs.
2. Core Banking Solutions (CBS) essentially helps in integration of the range of services that can be offered by all the bank's branches from centralized data centers. It also helps the banks, apart from providing better customer service, in generating MIS reports for the top management and in submission of various reports to the regulators and the Government. The Government of India has also observed that UCBs without CBS do not integrate well with the banking system and hence there is the need to quickly adopt this model. CBS is a necessity in today’s banking scenario. UCBs are, therefore, advised in their own interest, as also in the interest of their customers, to adopt CBS as soon as possible. A large number of software are available today, including cloud based solutions, and UCBs may adopt the model that meets their bank’s requirement.
3. Information available with the Reserve Bank indicates that very few UCBs have adopted CBS. Hence all UCBs are advised to implement CBS, in all their branches before December 31, 2013. The concerned Regional Office of the Reserve Bank may be kept informed of the progress made in implementing CBS. It may be noted that failure to implement CBS within the timeframe, could result in denial of various facilities (expansion of branches or area of operation etc.) to UCBs.
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