Advancement in banking tech has enabled a significant shift in how banks operate. The implementation of the Core Banking System or CBS, for instance, is one of the most innovative developments that has revolutionised conventional banking systems.
According to the Market Research Future (MRFR) research, the worldwide CBS in banking is highly lucrative and expected to develop at a 5.61% CAGR over the forecast period (2019-2025).
In such a position, what is CBS facing in 2022? Let’s explore it in this article.
What Does It Mean to Have a Core Banking System (CBS)?
Core banking is defined as a back-end system that processes banking transactions across the various branches. Deposits, loans, and credit processing are all part of this system. In addition, floating new accounts, processing deposits and withdrawals, calculating interest, servicing loans and customer relationship management activities are integral to core banking services.
Core banking systems are designed to give existing and potential customers more control over their account activity. In addition, transactions have become safer, faster, and less onerous due to CBS technology advancements.
CBS in banking reduces operational costs significantly, resulting in fewer workforce requirements for execution. It also allows customers to be more accountable and opens the door to a remote-friendly interface.
The advantages of core banking systems are numerous, including keeping up with a rapidly changing market, streamlining banking operations and making them more straightforward for consumers, and expanding a bank’s reach to remote locations.
Objectives of Core Banking System (CBS)
The main aim of CBS are:
- To improve the customer experience.
- To provide convenient banking to consumers, allowing them to access their accounts at any time and from any location.
- To enable banks to make well-informed decisions based on data and statistics. Data can be adequately stored thanks to the different processes used in core banking. In addition, an authentication system can access all of this data, which assists customers in making informed decisions.
- CBS also allows the government regulators to generate and receive statutory and regulatory reports.
What is the Purpose of Core Banking?
Any industry’s growth and long-term sustainability depend on information technology, and the banking industry is no exception. Moreover, banks can benefit from such technology in lower operating costs and other benefits.
CBS is critical since it can meet the needs of both the market and the clients. In addition, core banking is required since it may improve and simplify the banking experience for both customers and banking institutions.
For instance, rural communities are often exempt from technology and thus lack access to essential banking services for various reasons. CBS in banking can aid in expanding banking services to the country’s remote and rural areas.
Features of CBS in Banking
CBS in banking is software or a system that banks provide core banking services to their customers. It assists banks in performing their core banking operations.
Some of the basic features of CBS are as follows:
- Availability of Internet banking, mobile banking, phone banking, etc.
- Banking analytics.
- Calculation of loan interest.
- Cheque and payment clearance.
- Assists in creating new banking products.
- Assists in opening new bank accounts.
- Manages customer information.
- Process loans.
- Processing and recording deposits of money and cash withdrawal.
How Does CBS in Banking Help?
CBS has dramatically decreased the amount of time and money spent on manual chores. It has simplified data assessment and management and upgraded and boosted employee efficiency and production.
Aside from that, core banking is a crucial component of banking for the following reasons:
- Availability of financial services 24 hours a day, seven days a week;
- Better service can help banks retain clients.
- All branches use central servers to access applications; as a result, deposits made in any branch are immediately visible, and customers can withdraw money from any bank across the country.
- Faster transaction services at banks; banking may be accessible from anywhere, removing the need for branch banking;
- For banks, accuracy in transactions and the reduction of errors are essential.
- Improved record management and documentation;
- It is easier to provide numerous reports to the government and the Reserve Bank of India, and it facilitates the opening of accounts, the processing of cash, the calculation of interest, and the implementation of bank policy changes.
- Payments are processed more quickly with online banking and mobile banking
CBS in banking unlocks more convenient and straightforward banking procedures. Almost all commercial and public sector banks in India have adopted the core banking system.
Although some banks have yet to adopt the system, the RBI is optimistic that it will be fully implemented.
Finezza offers a comprehensive suite of end-to-end lending solutions for banks. It aims to streamline financial analysis and decision assistance for any new-age, growth-oriented lending organisation. Feel free to contact us if you want to modify your existing CBS.