A basic banking system is a software used to support the most common transactions of a banking institution.
The elements of an entire banking system include the following:
- generate and manage loans;
- open accounts;
- process cash deposits and withdrawals;
- process payments and checks;
- calculate interest;
- lead customer relationship management activities (CRM, Customer Relationship Management);
- manage customer accounts;
- establish criteria such as minimum balance, interest rate, or number of authorized withdrawals;
- set interest rates;
- Order the recording of all banking transactions.
Essential banking functions differ depending on the specific type of institution. Retail banks, for example, cater to individual customers; wholesale banking activity is carried out between banks; as for securities trading, it involves buying and selling, in particular, shares or units. Basic banking systems often specialize in a specific type of banking operation. Products designed to perform more than one type of banking function are sometimes referred to as universal banking systems. Here are the excellent banking sectors by diceus https://diceus.com/sdlc-banking-sector-challenges/
What Is Core Banking For?
Although bankers and account managers constitute the primary interface between the bank and its customers, the bulk of the banking institution’s work is done behind the scenes through core banking. The latter allows the bank to perform many tasks, which range from simply opening an account to setting interest rates. In particular, it makes it possible to manage payments and cash withdrawals or deposits. On the other hand, it is instrumental in calculating interest and conducting customer management activities. Beyond that, core banking is involved in the allocation and management of loans. It takes care of recording all of the bank’s transactions. Of new core banking systems, go even further and take better account of the digitization of banking services. Entering the 21st century, they offer a better user experience through an innovative, flexible and open architecture.
The Nerve Center Of Banking Exchanges
Nothing would work in the banking world without core banking. In general, banking services can be divided into central or investment banks and retail banks. However, neither of these two categories can do without core banking, the functions of which are available at all times. It must therefore adapt to the particularities of the type of establishment for which it is employed.
Fortunately, the evolution of technology allows a transparent and continuous operation of core banking, whatever the use is made of it. We then speak of universal banking systems when referring to core banking designed for different banking functions. Therefore, it is clear that core banking is involved everywhere in the day-to-day or forecasting management of a bank, not only as a customer interface but also as a robust back-end resource that manages the bank’s life behind the scenes. Its importance is both structural and functional.
What Are The Advantages Of Core Banking?
First of all, incorporating core banking into the organization of a financial institution benefits both the said institution and its customers. The latter appreciate the opportunity offered to him to make online payments, remote deposits, or even money transfers between different accounts while remaining in the comfort of his home. In recent years, it has become evident that a bank that fails to meet these needs will have great difficulty developing.
This newly acquired need for comfort by customers also benefits banking institutions. Transactions carried out online represent a considerable saving of time and effort for customers who can invest in more important activities. Likewise, customer mood and satisfaction are better when they no longer have to endure endless queues.
Second, the basic banking service contributes significantly to the entire functioning of the bank. It offers the staff of the banking establishment standardized procedures for receiving and serving customers. Whether for recording transactions or processing data, core banking has proven to be the ideal ally. It allows costs and errors to be minimized. It is the reliability of a bank that makes its reputation.
Apart from the advantages listed above, core banking modules has many other benefits. In particular, it guarantees the transparency of financial institutions by setting up transparent and traceable processes made continuously available. Likewise, thanks to the various applications for detecting embezzlement, core banking is a powerful tool in the fight against financial crime.