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The introduction of technology into the banking system has caused a massive transformation in the way banks function. The traditional banking methods have made way for the latest technological innovations with highly sophisticated systems. Among these, one of the significant moments was the adoption of Core Banking in India.
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The Core banking solutions are essential for the proper functioning of banks. It is a vital part of the banking system, which helps in serving their clients and customers with excellent service. Core banking is account management back end and front end processes.
It is a centralized system or a network made by a bank and its branches. It allows the customers to access their bank accounts to manage and perform basic transactions from any branch of the bank where they hold an account.
Some of the underlying core banking solutions include deposit, loans, payments etc. These services are made accessible to customers with the help of Core banking software. Core banking system uses information communication technology to simplify the banking procedures and processes for its various applications.
The requirement for computerized banks in India was felt in the early 1980s. The Indian banks applied the process at the branch level. Various national committees were formed by the government to modernize the banking system in India.
In the late 1980s, the then deputy governor of Reserve Bank of India (RBI) Dr C Rangrajan implemented the concept of core banking in India. It formed a platform for facilities like telebanking, off-site ATM’s and customer terminal.
In the 1990s, core banking was transformed when private sector banks and foreign banks started having access to the Indian banking industry. The progress continued due to globalization, liberalization and the introduction of TRAI (Telecom Regulatory Authority of India).
Implementation of the core banking system in India was a landmark moment for the Indian Banking industry. It has transformed the way business of money is handled and the functioning of banks. Core banking could be just a beginning, paperless and branchless banking system could be the future of Indian Banking industry.
The primary objective of the core banking system is to improve the customer experience. It aims to provide convenient banking to its customers where the customers are able to access banks anytime and from anywhere.
Another objective of the core banking system is to make informed decisions with facts and figures. The different process of core banking allows the storage of data in a proper format. All such data can be accessed by an authentication system and helps the customers to make informed decisions. Moreover, it allows generation and providing statutory and regulatory reports to the regulators of the government.
Use of Information Technology is vital for the growth, and long term survival of any industry, and the same applies to the banking industry as well. Banks can benefit by using such technologies in terms of reduction in operation costs etc. The need for core banking is significant because it can satisfy the needs of the market and customers. Core banking is needed as it can improve and simplify the process of banking and provide convenience to customers and banks.
The rural areas are unexposed to such technologies, and they are unable to access banking facilities due to various reasons. Core banking can help in expanding the banking facilities to the remote and rural areas of this country.
Core banking system is an operating software or system employed by banks to provide core banking solutions to their clients. It helps the banks in carrying out the basic functions of the banks.
Few of the basic features are as follows:
Banking and financial institutions have benefited immensely after the introduction of core banking in India. It offers excellent support to the bank and is an integral part of their daily businesses. It has significantly reduced the burden of manual tasks which consumes time and money. It has made assessing, managing, and upgrading of data simple and has increased efficiency and productivity of the employee.
Apart from there are various benefits of core banking for customers as well as for banks. These are as follows:
When compared with traditional banking methods, core banking is more convenient and simplified.
Also, read: Reasons for implementing the Digital Banking
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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