Core Banking Solutions (CBS)


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

Core Banking Solutions (CBS) or Centralised Banking Solutions is the process which is completed in a centralized environment i.e. under which the information relating to the customer’s account (i.e. financial dealings, profession, income, family members etc.) is stored in the Central Server of the bank (that is available to all the networked branches) instead of the branch server. Depending upon the size and needs of a bank, it could be for the all the operations or for limited operations. This task is carried through an advance software by making use of the services provided by specialized agencies.

Due to its benefits, a number of banks in India in recent years have taken steps to implement the CBS with a view to build relationship with the customer based on the information captured and offering to the customer, the customised financial products according to their need.

Objectives of CBS

(i) To increase the number of customers
 (ii) To provide multiple delivery channels like internet, mobile banking, ATMs, thereby bringing access to financial services to the doorsteps of the customers
 (iii) To enable faster money fund transfers to reach out to more customers
 for financial inclusion initiatives of the Government of India
 (iv) To become one stop solution

Need for Core Banking Solution 

Improve operational efficiency - reduce cost of operations Core Banking will provide various alternative delivery service channels, which reduce cost and time taken for the transactions. Currently banks‟ counter transaction costs are around Rs. 45-50 per transaction. On the other hand, the transaction cost of withdrawal from an ATM is Rs. 15-18. For net banking, the cost is Rs. 4 per transaction.

Improve customer service  Core Banking will improve customer services by providing services through alternate channels on 24 x 7 basis – ATM, Internet, Phone, SMS and Mobile Banking. Customers would be able to operate their accounts, and avail banking services from any post office on CBS network, regardless of where they maintain their account.

Comply with Anti Money Laundering (AML) / Know Your Customer (KYC) requirements 

It is easy to comply with anti–money laundering norms through core banking. Moreover, compliance with KYC norms is required to issue debit cards to the customers.

Integrate with electronic payment systems Integration with electronic payment systems will allow banks to participate in an inter-operable electronic payment network run by the National Payments Corporation of India. This will help in quick and safe transfer of funds through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS).

Advantages: The CBS process is advantageous both to the customers and the banks in the following manner:

Customer: (i) Transaction of business from any branch, ATM that offers him anytime anywhere banking facility.
(ii) Lower incidence of errors. Hence accuracy in transactions.
(iii) Better funds management due to immediate availability of funds.

Banks: (i) Standardisation of process within the bank.
(ii)Better customer service leading to retention of customer and increased customer traffic.
(iii)Availability of accurate data & Better use of available infrastructure
(iv)Better MIS and reporting to external agencies such as Govt., RBI etc.
(v) increased business volume with better asset liability management and risk management.


Friday, 11th Mar 2016, 10:54:35 AM

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