“CUSTOMER SATISFACTION WITH RESPECTIVE CORE

BANKINGSYSTEM OF KOKAN MERCANTILE CO-OPERATIVE

BANK”

A Project Submitted to

University of Mumbai for Partial completion of the Degree of Bachelor in

Commerce (Banking and Insurance)

Under the Faculty of Commerce

By

VINAY SHANTARAM MANDAVKAR

Under the Guidance of

PROF. SHRUTI DEVRUKHAKAR

SEMESTER VI

KARMVEER BHAURAO PATIL COLLEGE, VASHI

(AUTONOMOUS COLLEGE)

2018-2019
 DECLARATION

I the undersigned Miss/Mr.VINAY SHANTARAM MANDAVKAR. Hereby,

declare that the work embodied in this project work titled, “CUSTOMER

SATISFACTION WITH RESPECTIVE CORE BANKING SYSTEM OF

KOKAN MERCANTILE CO-OPERATIVE BANK”Forms my own contribution
to the research work carried out under the guidance of Prof. SHRUTI DEVRUKHAKARis
a result of my own research work and has not been previously submitted to any other
University for any other Degree/Diplomato this orany other University.

Wherever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.

I, hereby further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

VINAY S. MANDAVKAR

(Signature of student)

Certified by
Prof. SHRUTI DEVRUKHAKAR

ACKNOWLEDGEMENT

To list who all have helped me in difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my Principal,Dr. V .S. Shivankarfor providing the necessary

facilities required for completions of this project.

I take this opportunity to thank my Coordinator Prof. C.D Bhosale for his moral support
and guidance.

I would also like to express my sincere gratitude towards my Project Guide Prof. Shruti
Devrukhakarwhose guidance and care made the project successful.

I would also like to thank College Library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project.
 CERTIFICATE

This is to certify that Ms VINAY SHANTARAM MANDAVKAR

has worked and duly completed her/his Project Work for the degree of Bachelor of Bachelor
in Commerce (Banking and Insurance) under the Faculty of Commerce in the subject of
BANKING.

And his/her, project is entitled. “CUSTOMER SATISFACTION WITH RESPECTIVE

CORE BANKING SYSTEM OF KOKAN MERCANTILE CO-OPERATIVE
BANK”under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.

It is her/ his own work and facts reported by her/ his personal findings and investigations.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of the University.

It is her/ his own work and facts reported by his/ her personal findings and investigations.

………………………... ………………………….
…………………………..

Project Guide Coordinate Principal

(Prof.Shruti Devrukhakar) (Prof.C. D.Bhosale) (Dr. V. S.

Shivankar)
……………………………….

University Examiner
 INDEX
CHAPTER SR.NO TOPIC NAME PAGE NO
NO
INTRODUCTION TO THE STUDY

1.1 Introduction
1.2 Objective of the study
CHAPTER 1 1.3 Importance of the study 1–3
1.4 Scope of the study
1.5 Research Methodology
1.5.1 Methods of data collection
1.5.2 Sampling and sample size
PROFILE OF THE ORGANIZATION

2.1 Introduction of KOKAN MERCANTILE

CHAPTER 2 CO-OPERATIVE BANK 4 - 18
2.2 History
2.3 Loan Schemes
2.4 Service Charges
2.5 Board Of Directors
CONCEPTUAL FRAMEWORK

3.1 Introduction
CHAPTER 3 3.2 Solution Components 18 – 52
3.3 Impact of CORE BANKING Facility
3.4 Products
3.5 Advantages & Disadvantages

CHAPTER 4 DATA ANALYSIS & 53 – 59

INTERPRETATION

Conclusion 60

Bibliography 64

Questionnaire 65
 CHAPTER.1

INTRODUCTION TO THE STUDY

1.1INTRODUCTION

Core banking is a general term used to describe the services provided by a group of
networked bank branches. Bank customers may access their funds and other simple
transactions from any of the member branch offices.

Core banking is all about knowing customer’s needs. Provide them with the right products
at the right time through the right channels 24 hours a day, 7 days a week using technology
aspects like internet, mobile, ATM.

1.2 OBJECTIVE OF THE STUDY

 To study practically the concept
 To studyanalyse the scope of core banking solutions.
 To study understand complete operation of core banking solutions.
 To study know the impact of core banking on employees and customers.

1
1.3 IMPORTANCE OF THE STUDY

Since the research is to determine the effectiveness of core banking solutions in banks.
Therefore the importance of the study of core banking solutions is limited to the banks. It is
important to study that core banking system in banks and it is how beneficial to the
customers.

1.4 SCOPE OF THE STUDY

The study clearly indicates that the customers were for the CBS because of its ease of
operations, instantaneous, timely response and cost effectiveness. As CBS offers any time
anywhere banking facility, customers are surely benefitted out of it and after the introduction
of CBS the operational efficiency of banks has certainly improved.

1.5RESEARCH METHODOLOGY

1.5.2METHOD OF DATA COLLECTION:

The study was conducted by the means of personal interview with respondents and the information
given by they were directly recorded on questionnaire.For the purpose of analysing the data it is
necessary to collect the vital information. There are two types of data, this are.
 Primary Data
 Secondary data

METHODOLOGY
 PRIMARY DATA
Primary data is fresh data. This data is collected from direct questionnaire. . The questionnaire is filled
from customer through direct interviewing them.
Source of data collection: - Questionnaire

 SECONDARY DATA
Secondary data is collected from magazines, newspaper, etc.
Source of data collection: -social networking sites, books, newspaper, etc.

2
1.5.3 SAMPLE SIZE:-
It indicates the numbers of people to be surveyed. Though large samples give more reliable results
than small samples but due to constraint of time the sample size was restricted to 100 respondents.

3
 CHAPTER.2

PROFILE OFTHEORGANIZATION

2.1 Introduction of Kokan mercantile co-operative bank

It has passed through various phases and has emerged as one of the leading Co-operative
Banks of Mumbai. At present the total number of Bank’s Branches is 25 spread all over
Mumbai, Thane, Raigad, Ratnagiri Districts and the State of Goa, fulfilling the needs of
people from all walks of life.

Out of the 25 Branches, 21 premises are owned by the Bank thus strengthening its assets
base.

Keeping at par with the current market demand, the Bank is offering lucrative interest rates
on deposits and has several Term Deposit Schemes, including Recurring Deposit and Daily
Deposit Schemes etc. to suit the requirement of the common man. Similarly, the advances are
extended under various heads such as - Education Loan, Housing Loan, Business Loan,
Vehicle Loan, and Loan against pledge of Gold Ornaments at competitive rates and
affordable repayment schedule.

The Bank offers the facility of Safe Deposit Lockers at Central Office, Ratnagiri, Khed,
Chiplun, Kalyan & Shriwardhan Branches.

The Board of Directors are planning to extend its Branches bases in near future, if permitted
by the Reserve Bank of India

2.2 History

Kokan Mercantile Co-operative Bank Ltd. is a leading Multi State Co-operative Bank
registered under the Multi State Co-operative Societies Act, 2002.

Although initially the Bank was established in the year 1969 as the Ratnagiri Mercantile Co-
operative Credit Society with 105 members and Share Capital of mere Rs. 11200/-.

Thereafter in the year 1973 the Society was converted into Bank under the name of “The
Ratnagiri Mercantile Co-operative Bank Ltd.”. Subsequently the Bank’s name was changed
to “The Kokan Mercantile Co-op. Bank Ltd.” in the year 1977.

4
2.3 LOAN SCHEMES

5
2.4 SERVICE CHARGES
1. Collection of outstation cheques (Excluding our outstation cheques): OBC

Upto Rs. 1000/- Per cheque Rs. 17.00

Rs. 1001/- to Rs. 5,000/- Per cheque Rs. 27.00
Rs. 5,001/- to Rs.10,000/- Per cheque Rs. 38.00
Rs.10,001/- to Rs 1 lac Per Rs.1000 @ 4.50
Maximum Rs. 100/-
Rs. 1,00,001 & above Per instrument Rs. 150/-

There will be no charges for any instruments received in Transfer drawn on our Local Branches (upto
Mumbai Clearing Zone).

2. Collection of Bills: IBC

Upto Rs.1000/- Per bill 27.00

Rs.1001/- to Rs.5000/- Per bill 42.00
Rs.5001/- to Rs.10000/- Per bill 76.00
Per Rs.1000 @ 5.00
Rs.10001/- to Rs.1 lac
Minimum 80.00
Above Rs.1 lac to Rs.10 lac Per Rs.1000 @ 3.50
Minimum 525.00
Above Rs.10 lacs Per Rs.1000 @ 3.00
Minimum 3750.00
Maximum 4000.00

3. Collection of cheques in National Clearing

Same as applicable to collection of outstation cheque

4. Remittance (DD/TT/MT) for KOKAN BANK / IDBI BANK / ICICI BANK

Upto Rs.1000/- Per remittance 20.00

Rs.1001/- to Rs.5000/- Per remittance 25.00
Rs.5001/- to Rs.10000/- Per remittance 30.00
Rs.10001/- to Rs 1 lac Per Rs.1000 @ 2.50

6
 Minimum 35.00
Above Rs.1 lac to Rs.10 lac Per Rs.1000 @ 2.25
Minimum 300.00
Above Rs.10 lacs Per Rs.1000 @ 2.00
Minimum 2500.00
Maximum 3500.00

(free for SB/ CD/CC A/cs With average credit balance of Rs.10 lacs & above p.a.
with maximum 10 remittances per month or 50 remittance p.a.)

Remittances against tender Upto Rs.1000/- Normal charges

of CASH Above Rs.1000/- Normal charges + 50% of
normal charges.

5. Issue of Bankers cheque / Pay order / Pay slip

Upto Rs.1000/- Per instrument 12.00

Rs.1001/- to Rs.5000/- Per instrument 22.00
Rs.5001/- to Rs.10000/- Per instrument 25.00
Rs.10001/- to Rs.1 lac Per Rs.1000 @ 2.00
Minimum 30.00
Above Rs.1 lac to Rs.10 lacs Per Rs.1000 @ 0.75
Minimum 225.00
Above Rs.10 lacs Per Rs.1000 @ 0.80
Minimum 850.00
Maximum 3500.00

(free for SB/ CD/CC A/cs With average credit balance of Rs.10 lacs & above p.a.
with maximum 10 remittances per month or 50 remittance p.a.)

Pay Order / Pay Slip against Upto Rs.1000/- Normal charges

tender of cash Above Rs.1000/- Normal charges + 50% of
normal charges.

7
Note: No Commission on Pay Order issue

6. Cash Counting Charges

Cash Deposited upto Rs.1.00 Lac : No Charges

Above Rs.1.00 Lac : 0.1% of the amount in a single day

7. Issue of cheque books

MICR/Non-MICR–
Current 3.00
per cheque leaf
Golden Customer 1.00
Savings (60 cheque free in a year for Savings Bank 1.50
A/cs)

8. Draft Arrangement / Purchased from Other Banks

Upto Rs.1000/- Per instrument 9.00

Rs.1001/- to Rs.5000/- Per instrument 12.00
Rs.5001/- to Rs.10000/- Per instrument 14.00
Rs.10001/- to Rs 1 lac Per Rs.1000 @ 1.25
Minimum 20.00
Above Rs.1 lac to Rs.10 lacs Per Rs.1000 @ 1.00
Minimum 150.00
Above Rs.10 lacs Per Rs.1000 @ 0.80
Minimum 1100.00
Maximum 2500.00

The above charges

9. Guarantees
* For calculation see below.

8
Fully Secured Rs. 200 + 1% p.a. on amount of guarantee
Partly Secured Rs.200 + 2% p.a. on amount of guarantee
Obtain through UBI Rs.200/- + 1% of Bank Guarantee + UBI Commission�+
or other Banks Rs.400 + Stamp Paper of Counter Indemnity

Guarantee Commission

a) In case of 100% secured guarantee we charge 1% commission as follows:

Amount of guarantee x 1% x period of guarantee (month) / 1200

b) In case of unsecured guarantee we charge 2% commission as follows:

Amount of guarantee x 2% x period of guarantee (month) / 1200

Note: In case we are issuing Bank Guarantee through Nationalised Bank, then our commission +
commission charged by Nationalised Banks would be taken.

10. Issue of solvency certificate

Upto Rs.1 lac 250.00

Rs. 1 lac upto� 5 lacs 1000.00
Rs.� 5 lac upto 10 lacs 2000.00
Rs. 10 lac upto 25 lacs 2500.00
Rs. 25 lac upto 50 lacs 5000.00
Rs. 50 lac upto 1 Crore 10,000.00
Rs. 1 Crore & Above 15,000.00

11. Handling charges for cheque / Bills returned unpaid:

For Banks participating in Bombay Clearing Branches

a) Outward Return
Upto Rs. 10,000/- 100.00
Clearing
Above Rs. 10,000/- 100 + 1.5 per thousand or part

9
 thereof
b) Inward Return Ist Time per Rs. 300/- + Int. @ 36% p.a.
Clearing instrument:
2nd Time per
Rs. 400/- + Int. @ 36% p.a.
instrument:
3rd Time onwards Rs. 500/- + Int. @ 36% p.a.
per instrument:
c) Inward ECS Return Per entry 300.00
Debit

12. Handling charges for cheque / Bills returned unpaid (Non-Mumbai Clearing Branches):
For Banks participating in Outstation Clearing / Counter Present

a) Outward Return Clearing Per cheque 105.00

b) Inward Return Clearing Per cheque 100 + interest @ 36%
p.a.
c) OBC cheque returned unpaid Per cheque 105 + postage

13. Commission on Cash Deposits / Transfer for clearing Inward cheques (after 12:00 noon)
@ 0.15% on short-fall of amount deposited.

14. Incidental Charges (Monthly)

Local Outstation
Saving Bank 25.00 25.00
Current Account 55.00 55.00

15. Loan Commission

Per Rs.100/- 0.60

10
16. Loan Processing Charges

Per Rs.100/- 0.5% + Taxes

Maximum 33,700.00

17. Maintenance of Minimum Balance

Local Outstation
Easy Saving 25.00 25.00
Saving Bank Deposits
a) Without Cheque Book Facility 500.00 100.00
b) With Cheque Book Facility 500.00 100.00
Current Account Monthly 2000.00 500.00

18. Closure of Accounts

Particulars Within 6 months After 6 months

Easy Saving 50.00 25.00
Saving Bank Deposit 100.00 50.00
Current Deposit 250.00 125.00

19. Other Miscellaneous Services:

A. Revalidation of DD/PO (Upto 1 year from

30.00
the date of issue)
B. Cancellation of DD/PO 25.00
C. Issue of Duplicate DD/PO 30.00
D. Duplicate Deposit Receipt 30.00
E. Signature Verification/Photo attestation 15.00
F. Stop Payment 30.00
G.Change of Authorised Signatory including
25.00
reconstruction

11
H. Issue of Duplicate Passbook/Statement
i. With latest balance 15.00
ii. For previous entries per page 20.00
I. No dues Certificate 25.00
J. Balance Certificate 25.00
K. Interest Certificate 25.00
L. Draft Purchases 0.30% of amount per day
M. Commission Against Payment 0.27% of amount per day basis
Minimum Rs. 25.00
N. Clearing Cheque in Accomodation Rs. 150/- per instrument + Interest
@ 24% p.a.

20. Issue of NOC (In case of outstation branches)

Rs. 50 (Except for Govt. Scheme Loan).

21. Charges on NEFT

Upto Rs.10,000/- Rs. 3/-

Rs.10,001/- to Rs.1,00,000/- Rs. 6/-
Rs.1,00,001/- to Rs.2,00,000/- Rs.17/-
Rs.2,00,001/- & above Rs.28/-

22. Charges on RTGS

Rs.2,00,000/- to Rs.5,00,000/- Rs. 28/-

Rs.5,00,001/- & above Rs.57/-

2.5 BOARD OF DIRECTORS

12
MEMBERSHIP KYC FORM

13
 MEMBERSHIP KYC FORM

Photo

Membership No. : ________________________________

Name of the Member :

________________________________________________

*Address (as per :

________________________________________________
Aadhar Card)
_____________________________________________
___

*Aadhar Card No. :

________________________________________________

PAN No. :
________________________________________________

* Mobile No. : ________________________,

_______________________

Email Id :
________________________________________________

Standing Instructions : Transfer the Yearly Dividend to Saving / Current

Account_

Account Number : ___________________ Branch :

____________________

Name of the Nominee :

________________________________________________

Relationship with Member:

________________________________________________

14
 ( )
SIGNATURE
*Columns to be compulsorilyfilled
Enclosures :

1. Copy of Aadhar Card,

2. Copy of PAN Card,
3. One Passport size photograph

COMPLIANCE WITH KYC GUIDELINE

15
 NOTICE
(for members only)

COMPLIANCE WITH KYC GUIDELINES

Members of the Bank are hereby informed that the Reserve Bank of India has
made it compulsory to make all Accounts as well as Memberships KYC
Compliant. Members are therefore required to submit the following self attested
documents to the Bank’s Share Department at Central Office or nearest Bank
Branch latest by 30th June, 2019 :

1. Copy of Aadhar Card as proof of address and identity

2. One latest passport size photograph
3. Mobile Number, E-mail address, if any
4. Copy of PAN Card, if available,

Members who fail to submit the above documents and comply with KYC
requirement, their share amount, irrespective of their shareholding, will be
transferred to the Bank’s General Reserve and the same will be paid / refunded
to the members as and when their applications are received for refund.

Members may also forward their KYC details for updation on email id -
membershipkyc@kokanbank.in

Further, Members are also requested to submit their Account Number and Name
of the Branch of our Bank in order to link the same with their respective
Membership.

We look forward to a positive response from your end to help up to serve you
better. Assuring you to our best services at all times.

for KOKAN MER. CO-OP. BANK

LTD.,

Sd/-

16
 CHIEF EXECUTIVE OFFICER
Place : Mumbai
Date : 10th August, 2018

17
 CHAPTER-3

CONCEPTUAL FRAMEWORK

3.1 INTRODUCTION:

Core banking is a banking service provided by a group of networked bankbranches where

customers may access their bank account and perform basic transactions from any of the member
branch offices. Normal Core Banking functions will include transaction accounts, loans, mortgages
and payments.

Elements of core banking include:

 Making and servicing loans.

 Opening new accounts.

 Processing cash deposits and withdrawals.

 Processing payments and cheques.

 Calculating interest.

 Customer relationship management (CRM) activities.

 Managing customer accounts.

 Establishing criteria for minimum balances, interest rates, number of withdrawals

allowed and so on.

 Establishing interest rates.

 Maintaining records for all the bank’s transactions

BENEFITS

 Meets unique banking requirements of Rural Banks

 Capability to function in offline mode

18
  Lower Total Cost of Ownership (TCO)

VALUE PROPOSITION

 Internet Banking Capability

 Interface to RTGS/NEFT

 Multi-Currency GL & PL

FUNCTIONAL FEATURES

 Current Account & Saving Accounts

 Cash Credit/Over Draft

 Signature & Photo Scan

TECHNICAL FEATURES

 Web-services enabled functionality

 Content delivery in XML, custom formats

 Extensible workflow engine

Core Banking Software

"Core Banking Software" is a troublesome term because every banking software vendor has
its own definition!

Strategic Information Technology defines core banking software as the functionality required
to run a bank or credit union. Period. SIT's Portfolio Plus core banking includes:

 Retail Banking (includes EFT, Chequing, Savings, teller functionality, etc.)

 Lines of Credit & Segregated Lines of Credit

 Loans

19
  Mortgages

 Web Banking

 Investments (Includes retirement plans)

 Clearing

 Term Deposits

 Accounting

 ... and more.

In addition, there are many third party interfaces that a core banking system must
accommodate. These include:

 CANNEX

 ATM & ABM

 FundSERV

 Telepay

 Cheque Clearing

 Equifax

 Trans Union

 Point of Sale (POS)

 Loan insurance

3.2Solution components

In terms of ‘retail banking’, core banking solution is an application that enables the bank
customers to conduct common transactions from any branch and a large subset through net
banking, ATM, kiosk-based, or phone-banking, instead of visiting their home branches. A
few examples of common transactions are:

1. Deposits and withdrawals

2. Issuance of account statements

20
3. Issuance of checkbooks

4. ATM usage

5. Bill payments such as credit card or utility bills

6. Electronic shopping (Online payments or card purchases)

The software accomplishes this by pushing all transaction data from various sources to a
centralized database in near real time and securely. It makes the bank's operations simpler
and cost effective by covering the following functions:

1. New business:- Covers processes such as opening of new accounts, initiation, and
servicing of loan applications, etc.

2. Customer relationship management:-activities such as standing instructions, pre-

qualifying customers for offers, etc.

3. Internal accounts maintenance:- (general ledger showing income and expense,

assets and liabilities)

4. ATM usage

5. Specialized banking operations:- The solution helps in carrying out all core
banking activities under wholesale banking (targeting other banks as prime customers),
and commercial banking (targeting business entities).

3.3 Impact of core banking facility:

Modern banking services have been predominantly popular among the customers. The
banking services are offered in its simplest and useful form to reach the common man
everywhere. Even uneducated customers today whole heartedly without any hesitation make
use of banks predominant ATM’s services. Banks also aim at biometric identification of
customers for security and hassle free identification of customers for various banking
services. The present study aims at finding out the opinion of the customers regarding the
modern banking services and to ascertain and evaluate the customer satisfaction through the
various services utilized by them quite often.

21
Core Banking Service (CBS) is one of the recent developments in the field of banking and it
has proved to be very useful. Centralized Online Real-time Environment (CORE) banking
enables anywhere banking. Bank’s customers can operate their accounts from any branch of
the bank. The present scenario in banking industry is once a customer opens his/her account
he/she becomes the customer of the bank but not the branch alone. Core Banking Services
provides for online banking services everywhere to fulfil the needs of the customers

Objectives:
 Replace old technologies seamlessly with state-of-the-art multi-tier Software.

 Replace multiple disparate and older generation software systems with single
integrated multi-product tailor made application software.

 Move to Centralized Processing and handle much higher volumes without a

proportionate increase in resources or infrastructure costs.

 Use business intelligence tools to analyze customer needs and create new product
offerings.

 Build and retain customer relationships based on the strength of customer service
capability.

 Enable and modify product offerings quickly and efficiently based on market needs.

 Reduce costs, improve governance, bottom-line and stakeholder rewards Enable

multiple new delivery channels (RTGS, ATM, POS, Mobile, Internet, Telephony)

Solution:
 Entire bank will operate as one Unit (Single General Ledger).

 Central Server facility will be created within the premises of head office.

 Operations of the branches will be synchronised with the Central Server.

Action Plan:
 The Central Facility Creation will need three major areas to be addressed:

 Building Infrastructure for the Data Centre to be located at the Head Office.

 Up gradation of the hardware at the Branches and Implementation of the new

software.

 Establishing Network of all the branches and synchronisation with the Central Host.

The Software has have functionality in eight major areas:

22
  Core Banking - Real Time Accounting

 Products - Retail, Corporate and Treasury

 CRM - Customer profiling, relationship, contacts

 Risk Management - Credit Risk and Market management and profitability, ALM

 Delivery Channels - Branch, ATM, POS, Call Center, Internet, Investment Center

 MIS - Reporting, Data warehousing & Mining ,Budgeting

 General Facilities - Security, Messaging, Workflow, Depository Linking

 API - Protocol Exchange with Business Alliances & RBI, Payment Gateways

The architecture of the software is designed for high functional performance, ease of use,
flexibility and scalability to take on the challenges of future and it is developed around
reputed technologies such as

 Front End based on .net technology

 Back End based on Oracle

 Windows 2003 as Server Operating System

 Windows XP or Thin Client as Client Operating System

1. Core Banking
All the transactions originating from any branch or other delivery channel will be
processed realtime ensuring that the information acquired is accurate and up-to-date. A
perfect acquisition and proper storage of transactions in a structured database leads to
high reliability of inputs to further related systems. It will maintain General Ledger with
User Definable Chart of Accounts, multiple level sub ledgers, transaction Journals with
all the details acquired at the time of transactions. Quick Transaction Processing, Quick
Response, Accommodative to new transaction types, easy adaptability to any new
delivery channel and easy protocol exchange with external systems will be the focused
areas.

Highlights of the Centralised Application are

 Unified General Ledger, Profit & Loss and Balance sheet

 Global User Profile and Access.

 Checks and Controls over Customer Transactions with Audit Trails.

23
3.4. Products

1. Retail Banking
 Current and Savings Accounts

 Deposits

 Loans

 Loan Appraisals

 Account Services

 Cheque Book Management

2. Corporate
 Commercial Loans

 Consortium Loans

 Letter of Credit

 Bills and Collections

3. Customer Relationship Management (CRM)

 Customer Profiling

 Customer Relationship

 Customer Profitability

4. Risk Management
 Credit Risk Management

 Market Risk Management

 Asset Liabilities Management

 Liquidity Risk

 Currency Risk

 Interest Rate Risk

 Behavioral Patterns

24
5. Delivery Channels
 Call Centers

 Investment Centers

 Point of Sale (POS) Terminals

 ATM Network

 Internet Banking

 Mobile / WAP Banking

 RTGS

6. Management Information System (MIS)

 Reporting

 Periodic Returns

 Data Warehousing and Mining

 Budgeting

7. General Facilities
 Security

 Messaging

 Workflow and Documentflow

 Depository Linking

8. Application Program Interface (API)

Linkages with external agencies for Cheque Truncation and other Applications

Core Banking Solution (CBS) is networking of bank branches, which allows customers to
manage their accounts, and use various banking facilities from any part of the world.

In simple term, there is no need to visit your own branch to do banking transactions. You can
do it from any location,any time. You can enjoy banking services from any branch of the
bank which is on CBS network regardless of branch you have opened your account.

For the bank which implements CBS, the customer becomes the bank’s customer instead of
customer of particular branch.

25
Execution of Core banking system across all branches helps to speed up most of the common
transactions of bank and customer. In Core banking, the all branches access banking
applications from centralized server which is hosted in secured datacenter.

Banking software/application performs basic operations like maintaining transactions,

balance of withdrawal & payment, interest calculations on deposits & loans etc. This banking
application are deployed on centralized server & can be accessed using internet from any
location.

Why we need Core Banking Technology ?

Nowadays, the use of Information Technology (IT) is must for the survival & growth of any
organization and same applicable to banking industry also. By using IT in any industry, banks
can minimize the operation cost; also banks can offer products & services to customers at
competitive rates.

CBS is required:

To meet the dynamically changing market & customer needs.

To improve & simplify banking processes so that bank staff can focus on sales & marketing
stuff.

Convenience to customer as well as bank.

To Speed up the banking transactions.

To expand presence in rural & remote areas.

Basic elements of CBS that helps customers are:

 Internet Banking
 Mobile Banking
 ATM
 POS & kiosk systems
 Fund Transfers – NEFT, RTGS

Benefits of Core banking –

Core banking solutions are beneficial to both banks as well as customers.

A] Benefits For Customers

26
Quicker services at the bank counters for routine transactions like cash deposits, withdrawal,
passbooks, statement of accounts, demand drafts etc.

Anywhere banking by eliminating branch banking.

Provision of banking services 24 X 7.Fast payment processing through Internet banking,

mobile banking .Anytime anywhere banking through ATMs.All branches access applications
from central servers/datacenter , so deposits made in any branch reflects immediately and
customer can withdraw money from any other branch throughout the world.CBS is very
helpful to people living in rural areas. The farmers can receive e-payments towards subsidy
etc. in his account directly. Transfer of funds from the cities to the villages and vice versa
will be done easily.

B] Benefits For Bank

 Process standardization within bank & branches.

 Retention of customers through better customer service.
 Accuracy in transactions & minimization of errors.
 Improved management of documentation & records – having centralized databases
results in quick gathering of data & MIS reports.
 Ease in submission of various reports to the Government & Regulatory boards like
RBI.
 Convenience in opening accounts, processing cash, servicing loans, calculating
interest, implementing change in policies like changing interest rates etc..
 In India most of the private sector banks have implemented the Core banking
solutions but most of the Co-operative Bank, Regional Rural Banks are missing the
benefits of CBS.
 With the help of core banking & latest technology, private sector banks are giving
tough competition to urban co-operative banks(UCBs) & other government managed
banks.

3.5 What are the advantages and disadvantages to dealing with internet-
only bank

In recent years, large companies have set up internet-only banks as a means of diversifying
into the financial sector and providing personal banking services. For a company, the greatest
advantage of providing internet-only banking services compared to a traditional brick and
mortar bank is that this type of bank has very low costs. These savings come as a result of the
low overhead costs that are associated with electronic transactions. For example, internet-

27
 only banks can avoid paying bank tellers, renting the physical location of the bank branches
and other overhead costs associated with running a regular bank.

As a result of these low costs, internet-only banks are able to offer special deals such as
higher interest rates on savings/checking accounts, unlimited free internet transactions and/or
no-fee checking to their customers. These act as incentives and are typically unattainable at
traditional banks. These benefits can be worth a substantial amount to a consumer when you
realize that most traditional banks change fees every month for using checking accounts and
pay little to no interest for savings/checking accounts.

As nice as these benefits sound, there are some drawbacks that should be considered before
you rush off to join an internet-only bank. Seeing as internet-only banks do not have branches
where you can conduct transactions, it can be hard to deposit money into your account.
Someone who has direct deposit can easily direct an employer to send a paycheck to the
online bank account, but for those who do not have direct deposit or want to deposit extra
cash into their accounts, having an internet-only bank could be an inconvenience.

Another drawback to consider has to do with automatic teller machines (ATM) and the fact
that most internet-only banks do not have their own machines. Typically, you will need to
pay a fee of a couple of dollars in order to use another bank's ATM to withdraw cash. People
who make frequent cash withdrawals with ATMs can incur large costs that may outweigh
the costs of traditional bank transaction fees.

Depending on the internet-only bank you choose, you may have two solutions. Some
internet-only banks can accept non-electronic deposits (cash or check) through the mail,
which results in a time delay before you can access your money and/or a possible safety
issue of mail theft. Other internet-only banks have another solution in which you create two
accounts - this allows you to deposit your cash or check at a brick and mortar bank and then
transfer your money to an internet-only bank account. This way, money can easily be moved
back and forth between both accounts. While this solution is a lot safer and faster than the
first method, it is still fairly complicated.

Overall, internet-only banking has some obvious benefits compared to traditional banks, but
due to the inherent nature of internet-only banking, it may not be for everyone.

3.6 Some advantages of CBS are:

 CBS increases employee efficiency and reduces human error and fraud.

28
 It also facilitates the correction of errors.
 CBS adoption has given bank employees the opportunity to strengthen their relationships
with customers.
The number of public sector bank branches in India with CBS implementation increased from
79.4% in March 2009 to 90% in March 2010.

 Money Multiplier Facility - Allow us to take care of your idle money by moving it
into high interest savings account earning.

 Internet Banking - Banking could not have been more convenient. Just log in with
your user ID and password and make banking a hassle-free routine.
3.7 Current core banking systems

Product-oriented core banking solutions are plagued by ongoing application fragmentation

resulting in an ever-increasing maintenance burden. In 2005, Tower Group reported that core
systems account for one-half of total IT spending in a bank and account for three-quarters of
the total maintenance in IT. The inflexibility within core systems limits the ability to respond
to business requirements, and this in turns leads to patching to keep the solutions relevant and
viable. One current client commented that adding a financial product to their existing CICS-
based core systems required over six months. Such an IT burden creates an untenable
situation. As a result, banks are reviewing core systems alternatives to reduce costs and --
perhaps more importantly -- to provide better alignment between business and IT.
So what is the answer to modernizing core systems?
In many cases, of course, there is no single recommended approach. Business priorities,
geographical considerations, risk exposure, and time to market needs are some of the key

29
 dimensions that drive a "surgical" decision. At the Banking Center of Excellence, we find
core systems modernization usually falls into one of four major areas:
 Package replacement: Selecting and implementing a vendor package to replace the
current core systems.
 Custom application development: Design, develop, and implement custom solutions
to replace the current core systems.
 Augment or extend current core system functionality: Select and implement off-
the-shelf solutions to extend or augment current core function areas, suchas product and
pricing management, customer master data management, customer relationship management,
and other specific core banking domains.
 Progressive modernization approaches: Use a combination of off-the-shelf
solutions and custom development to renovate and extend (and, in some cases, replace)
portions of the current core systems architecture over time.
The first three approaches listed above are valid options, but the focus for this discussion is
the fourth approach, the progressive renewal of banking core systems. Entire end-to-end core
system replacement projects ("heart transplants," if you will) can take four or more years to
complete, cost hundred of millions of dollars, and come with no guarantee for success. On the
other hand, the progressive approach enables banks to "perform heart surgery during a
marathon" with an iterative approach that targets business-critical gaps in the current core
systems while leaving much of the overall infrastructure untouched.

3.8 Core Banking Solution

Rapid Upgrade for Bank's Overall Competitiveness

International Integrated System, Inc. offers core banking system solutions for core banking
applications, branch terminals and front-end processor system service to meet the business
needs of commercial banks and the versatile customer channels.

hence banking solutions contain a system modulation design and flexible scalability to ensure
a smooth operation process, accelerate the development of financial products and assist
customers with free operations in a highly competitive financial environment with basis on
reliable and stable service quality, which will facilitate the banks with the expansion in
breadth and depth of service, as well as enhance the operational efficiency and market
competitiveness.

3.9 Functions

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 The core banking system solutions include CBSAP, TPEII, WebDBP, and FEP,
which are described as follows:
 CBSAP
The first domestic core banking system on an open platform that offers new functions such as
trading product parameters around the clock, synchronous batch operations for multiple lines,
automatic posting in the background, immediate triggering of related transactions,
Online/Batch/On batch transactions, tellers process cash accounts only, transaction real-time
account balance, multiple transactions, and balance of debit and credit accounts (linked
accounts), in addition to quick adjustment to meet business needs.
 TPEII
The system provides a standard X/Open DTP Model V2 distributed process platform in line
with the trend for information technology architecture. The system comes with a complete
application programming interface, high scalability, support of multiple centralized host
based architecture, consistency between transactions and journal records, friendly transaction
management, availability of convenience control and monitoring function, diverse transaction
processing model and connections, and development management of consistent batch.
 WebDBP
A financial terminal and comprehensive branch system solutions are based on the architecture
of Web Browsers adopting centralized architecture for integration with existing banking
counter equipment and teller safety control.
 FEP
The system provides peripheral business servers and connects with core account hosting to
enhance the Multi-Layer and Multi-Channel pre-banking system in 24-hour operations.

Core Banking System Solutions Diagram

31
 System Architecture Diagram of Core Banking System Solutions

3.10 Features
 Using open system architecture to provide IT strategies with optimal cost-effectiveness.
 Multi-Layer parameter design
 Programming design for module business process
 Flexible product definitions to provide and assist new products with improvement of
requirement for time-to-market.
 Diverse linked transaction functions to cooperate with operational requirement from the
tellers
 Diverse database access interface for data integration
 Versatile customer information management with year-round and Multiple-Channel services.
 Integrated accounting management, supporting multi-currencies, profit center, multiple
transactions, real-time account opening, posting, closing, and balancing, as well as complete
monitoring from supervisory unit/financial statement.
 Meeting information required for BASELII Risk Model.

Benefits
 Counter service available 24 hours a day and all year round. Multiple channel service which
substantially improves quality and efficiency, and reduces risks and costs.
 Providing integrated customer management system, automatic transaction
balancing, posting, and reduces teller error and auditing time.
 With the user-friendly interface, tellers can quickly meet customers' diverse
demand.
 Providing integrated customer management information and risk control.

32
 Clients
 Sun Bank
 Cathay United Bank
 O-Bank

 Never overspend – shop using your International Debit Card that reflectsthe actual
balance in your savings account.

 Personalized cheques with your name printed on e

3.11 Core Banking has changed the way you bank

33
 Core banking is the centralization of banking transactions carried out by the
individuals and banks as a whole. The entire bank and its functions are
managed under a single environment.

The India Post has a bigger core banking system than that of SBI, said Union
IT and communications minister Ravi Shankar Prasad. The India Post was
helped by tech giant Infosys to deploy the core banking solutions connecting
1.5lakh post offices with 20crore customer accounts in 2012. Implementation of
CBS is an integral part of Government’s plan for IT modernization.

 Avail of facilities like Safe Deposit Lockers, Sweep-In and Super

Saverfacilities on your account.

 Free cash withdrawals at any other Bank's ATMs

 Free Payable-at-Par cheque book, without any usage charges.

 Free Insta Alerts for all account holders for lifetime of the account.
 Free passbook facility available at home branch for account holders

 Free Email Statement facility.

Focal points of CBS
1. It gives the client a chance to get to manage an account administrations 24×7.
2. It is the most effective method for performing keeping money exchanges.
3. Quicker than the routine techniques for saving money.
4. From the financiers’ perspective, it enhances the productivity of the
administrations.
5. Includes more noteworthy consumer loyalty.

34
Core Banking Transformation
The core banking transformation domain allows you to modernize and renovate the legacy
applications that support core banking functions while aligning with the changing needs of the
business
Payments and Securities
The payments and securities domain helps you progressively transform your payments operations to
become more flexible and efficient
Integrated Risk Management
The integrated risk management domain supports taking a holistic approach to managing financial
risk, financial crimes, operational and IT risk, and compliance
Customer Care and Insight
The customer care and insight domain helps you build a foundation for creating a single view of the
customer and enabling more effective and efficient sales and service

 Free Internet Banking. All one would require to do is to send ICICI Bank an advice in
form of designated employees in a soft and hard copy format and we will credit the
respective employees' accounts as per your statement of advice. Besides all of the above,
employees will automatically become ICICI Bank account ho

35
 3.12 CORE BANKING SOLUTIONS

 Core Banking Solutions (CBS) or Centralized 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.

36
 Due to its benefits, a no. 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 customized financial products according to
their need.

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

 Customer:

 • Transaction of business from any branch, ATM that offers him anytime anywhere
banking facility. Lower incidence of errors. Hence accuracy in transactions.
Better funds management due to immediate availability of funds.
Banks. Standardization of process within the bank. Better customer service leading to
retention of customer and increased customer traffic. Availability of accurate data
&Better use of available infrastructure Better MIS and reporting to external agencies such
as Govt., RBI etc. Increased business volume with better asset liability management and
risk management.

 It’s a scale business that thrives on customer acquisition and retention. As such, banking
solutions must satisfy the needs of multiple customer segments, geographies and service
levels, efficiently and effectively. Info Dynamic is an integrated solution that automates
all aspects of core banking operations across entities, languages. The solution helps
financial institutions to quickly introduce new products and efficiently manage changes in
existing products. Info Dynamic Core Banking supports a variety of products including
savings accounts, checking accounts, overdraft accounts term deposit accounts and a
variety of lending products including personal loans, Corporate loans, mortgages, along
with a full complement of transnational services incorporating remittances, drafts,
banker’s cheques, cards and etc. These capabilities are accessible through multiple
channels, from branch to call center to mobile banking and web. The solution integrates
front, middle and back-office processes in real-time, providing bankers throughout the
organization with complete timely and actionable information about customer
relationships and providing a single view of the bank to the customer.

37
 Developed around advanced architecture, the solution also integrates seamlessly with
other third-party applications. Info Dynamic Core Banking is an easy-to-integrate, scale-
able, enterprise-wide solution that handles large transaction volumes on a 24×7 basis. It
automates banking processes and provides best-in-class customer service at reasonable
cost, thereby maximizing operational efficiency and minimizing risks. With world class
implementation and support expertise.

 The Big Business Benefits

 Centralized setting & maintaining of product, interest, charges Centralized application of

Interest, SI and charges Centralized Customer mgmt. (Opening, stmt. Of A/c, unified
view) Centralized inward / outward clearing mgmt. Centralized System Admin. (day
begin / day end, Backup, DR, User mgmt., etc…) Centralized MIS and regulatory
reporting Centralized Loans mgmt. (sanction, disburse, collaterals and track) Centralized
recovery management Centralized Audit Centralized Reconciliation: Inter branch, Inter
bank, Nostro, 3rd party payment settlements.

3.13What it offers to a customer?

It offers invariably all information that a bank's customer would need if he/she visits a bank
branch in person.

These are as herein follows:-

1. To make enquiries about the balance or debit or credit entries in the account.

2. To obtain cash payment out of his account by tendering a cheque.

3. To deposit a cheque for credit into his account.

4. To deposit cash into the account.

5. To deposit cheques / cash into account of some other person who has account in a CBS
branch.

6. To get statement of account.

38
7. To transfer funds from his account to some other account – his own or of third party,
provided both accounts are in CBS branches.

8. To obtain Demand Drafts or Banker’s Cheques from any branch on CBS – amount shall
be online debited to his account.

9. Customers can continue to use ATMs and other Delivery Channels, which are also
interfaced with CBS platform.

3.14 Top CBS Application Software Providers

1-Infosys Technologies Ltd. Finnacle is the universal banking solution from Infosys.

2-I-flex solutions Ltd. since late 2005 it is owned by Oracle

3-TCS FNS (Financial Network Services Limited) is an Australian developer and supplier of
banking application software, operating in world markets. Now owned and managed by TCS.

Thus, CBS is a step towards enhancing customer convenience through anywhere and anytime
banking.

 5 Free transactions per month at Non- HDFC Bank ATMs in India

 Free for life International Debit Card for the primary applicant with ATM cash
withdrawal limit of Rs 25,000 per day and POS usage limit of Rs.40,000 per day.

 Add-on International debit card for secondary holder (Free for the first year)

 Free Personal Accidental Death Cover of Rs. 1 lakh

 Anywhere Banking across our extensive Branch and ATM network

 Free Quarterly Account Statements

 Free Monthly Account statements by e-mail (Optional)

 Free Passbook facility available at home branch for account holders

39
  Free DDs /MCs up to Rs. 25,000 per instrument payable at HDFC Bank branch
locations

 Free mobile and e-mail alerts (Insta Alerts Facility)

 Free Utility payment facility (Bill Pay)

 Free Phone banking, Mobile Banking and Net Banking & Electronic Funds Transfer
option.

Core banking Integration

 Integrate core banking platforms (such as T24 for Temenos, Tata Bancs, Infosys
Finacle and Polaris among others) up to five times faster with disparate applications
by standardizing on the Fiorano ESB and leveraging native connectors to SWIFT,
FIX and a number of ISO standards
 Seamlessly integrate with multiple payment gateways using a host of available,
standards-based connectors
 Accelerate development and reduce time to market for new offerings using Fiorano's
peer-to-peer, parallel processing infrastructure to manage Big Data efficiently across
your global banking network
 Deploy straight-through-processing (STP) to reduce turnaround times to minutes from
days or even weeks
 Reduce errors, optimize exception processing, decrease customer-care costs and
optimize efficiency and responsiveness

Some problems over the development of a centralized electronic banking

(core banking) are:
1. Difficult to access and purchase of software

2. Difficult to adapt the external applications by domestic banking operations

3. Lack of design and supply of core bank software

4. Difficulty of attracting and keeping skilled people in the field

5. Difficulties caused by the lack of knowledge about management and supervisory and
inspectors

6. Statutes of limitations trading

3.15 Core Banking Issues

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In around 80% of cases, financial institutions run systems they built themselves; pre-internet
era systems designed for 9 to 5 branch banking and patched up over time to meet changing
technology and customer needs. This has left them with major issues:

 Risk and complexity - A typical universal bank runs more than 180 badly-
documented applications, restricting flexibility but also creating thousands of points
of failure

 Scalability - Systems can't keep up with the exponential growth in volumes brought
about by the digitization of banking, and soon the Internet of Things

 High expenditure and opportunity cost - According to Celent, the cost of

maintaining ageing legacy systems eats up more than 75% of banks' IT budgets,
leaving little for value-enhancing expenditure

 An expectations gap - Customers want financial institutions to perform the role of

infomediaries, helping them to make better financial and commercial decisions. To
achieve this, banks need real-time, integrated systems

How our solution helps

The Temenos Core Banking solution is an open, integrated and real-time platform providing:

 Real-time, complete customer information – enabling financial institutions to offer

their customers the right products at the right time

 Product builder – allows for extremely quick time to market for new products, as
well as the ability to personalize products and services to individual customers; a
market of one

 Infinite scalability – the solutions run on any software stack and is engineered to be
linearly scalable, allowing customers to generate significant economies of scale

 Extremely low TCO – against the industry average of 78.8% of IT budgets being
spent on maintenance, Temenos customers spend 44.3%

 Zero risk of obsolescence – Temenos spends more than 20% of sales annually on
R&D, continually developing software based on customer requirements and
innovation from our labs. We make this available to customers through regular
releases, ensuring once they've caught up, they never fall behind again

How it's delivered

There is a growing realisation of the need to replace ageing core systems, but where to start
and how to mitigate risk?

41
  Temenos boasts an extremely broad range of system integration and consulting
partners, bringing you choice and a deep pool of experience to help with your system
migration

 The system can be deployed on premise, on a range of hardware platforms, or on

shared infrastructure, allowing you to keep your existing infrastructure, move to a
lower cost stack or not have to worry about infrastructure at all

 The system is modular, allowing for progressive renovation and build and migrate
strategies, which dramatically reduce risk and speed up time to value

3.16 Advantages of core banking :

1. Advantages to branch functionality: with reduced bank at the
branches they can focus on development of business, customer
service and attendance and meaningful liaison with customer
getting new business. Since customer needs are known with proper
analysis they can be well attended even before their demands that
boost the image of bank as customer savvy.
2. Centralized product control and monitoring:centralization helps in
better product analysis, monitoring and roll out. Aspect like interest rate
modification, product modification and interest application can be done
centrally from one place for all the branches. Bank can quickly respond to
market scenario and customer needs. This gives competitive edge to the bank.
3. Introduction of technology based services:Service channels such as
ATM, either on site or off site can be started. Cheque deposit machines can be
installed. Such machines in WAN connectivity can allow any customer to
deposit the cheque for collection at any branch. Cheque-book printing
machine can be installed at central location to give personalized cheque books.
Such machine in WAN connectivity can receive command from any branch.
4. Advantages to customers:customer can operate his bank account from
any of the branch of the bank. More service channels can be made available
with the customers. Customer gets immediate credit if the transaction between
the branches of the bank. Even extension counters can provide all services to
the customers.

42
 5. Centralized customer account management: any customer becomes
the customer of the bank rather than of a branch. With unique id / account
number the accounts of the customers can be viewed centrally by the bank.
6. Centralized reporting: presence of centralized data constantly live up-
dated at any time ensures comprehensive report/ generation. This
tremendously helps in decision making as well as submission to various
authorities. Operational efficiency of the bank gets increase due to quick
report generation for bank as a whole.
7. Centralized system administration:centralized system administration/
I.T administration enhances system security and user management. In TBA
mode man-power for I.T administration is required at each branch. But in core
banking it is required only at one place. Thus reduction in man power need
and cost. Due to single point resource available I.T manpower is utilized
properly.

3.17 Present State of Technology being used

Information Technology has become an essential and integral part of banking. As a result,
during last five years UCBs have realized the need to create IT infrastructure in order to have
a competitive edge. But with limitations on capital budgets on hand and skilled, professional
and IT enabled manpower, the result is inadequate IT infrastructure to face the challenges.

UCBs tried applications developed by vendors who had limitations on technical capabilities,
banking domain knowledge and ability to assimilate needs of the changing hour. These
systems proved to be inadequate as well incompatible with the business needs except a few
gains of saving labour in routine work. The management of the banks who were suppose to
be the major beneficiaries had very marginal gains while employees at the front office were
relived to a great extent in the labour and customers were benefited to some extent by way of
few quicker services such as service at the counters for routine transactions, delivery of
passbooks, statement of accounts, demand drafts, and better accuracy in interest calculations
etc. UCBs have numerous vendors with varied technologies used with different level of
comfort for end users. Multi locational or distributed location of data, ineffective back office
activities, Management Information Systems with poor speed in gathering data and
questionable accuracy.

At the same time state of IT in PSBs is very different. They have implemented and Integrated
leading edge retail banking systems, have improved overall management and appearance of

43
documentation, have centralized databases resulting in quick gathering of data. And are using
above systems for better risk cover, customer relations management, better identified and
understood opportunities, promoted credit card services, introduced internet based primary
banking services.

In short those who have taken lead in making most of available technology will gain in
market share and advantage in an increasingly competitive market. Those satisfied with the
status quo are left behind and have threat to disappear altogether.

3.18 Why we need core banking technology?

Nowadays, the use of Information Technology (IT) is must for the survival & growth of any
organization and same applicable to banking industry also. By using IT in any industry, banks
can minimize the operation cost; also banks can offer products & services to customers at
competitive rates.

CBS is required:
 To meet the dynamically changing market & customer needs.

 To improve & simplify banking processes so that bank staff can focus on sales &
marketing stuff.

 Convenience to customer as well as bank.

 To Speed up the banking transactions.

 To expand presence in rural & remote areas.

Basic elements of CBS that helps customers are:

 Internet Banking

 Mobile Banking

 ATM

 POS & kiosk systems

 Fund Transfers – NEFT, RTGS

Benefits of Core banking –

Core banking solutions are beneficial to both banks as well as customers.

44
A] Benefits for Customers
 Quicker services at the bank counters for routine transactions like cash deposits,
withdrawal, passbooks, statement of accounts, demand drafts etc.

 Anywhere banking by eliminating branch banking.

 Provision of banking services 24 X 7.

 Fast payment processing through Internet banking, mobile banking .

 Anytime any where banking through ATMs.

 All branches access applications from central servers/datacenter, so deposits made in

any branch reflects immediately and customer can withdraw money from any other
branch throughout the world.

 CBS is very helpful to people living in rural areas. The farmers can receive e-
payments towards subsidy etc. in his account directly. Transfer of funds from the
cities to the villages and vice versa will be done easily.

B] Benefits For Banks

 Process standardization within bank & branches.

 Retention of customers through better customer service.

 Accuracy in transactions & minimization of errors.

 Improved management of documentation & records – having centralized databases

results in quick gathering of data & MIS reports.

 Ease in submission of various reports to the Government & Regulatory boards like
RBI.

 Convenience in opening accounts, processing cash, servicing loans, calculating

interest, implementing change in policies like changing interest rates etc..

In India most of the private sector banks have implemented the Core banking solutions but
most of the Co-operative Bank; Regional Rural Banks are missing the benefits of CBS.

With the help of core banking & latest technology, private sector banks are giving tough
competition to urban co-operative banks(UCBs) & other government managed banks.

To cope up with the growing needs of customers; co-operative banks need to implement core
banking solutions. To face the challenges of dynamic market, UCBs need to take help of IT
their operations. Considering the importance of the matter, the Reserve Bank of India (RBI)
mandated a deadline for Urban Co-operative Banks (UCBs) and advised to implement the
core banking solutions (CBS) by December 31, 2013.In India many IT organizations like

45
ESDS Software are helping in implementation of the cost effective core banking solutions &
Turn-Key Data center solutions.

A Group of networked bank branches providing core banking services to customers. So it

provides facility to customers to make transactions and access their funds easily from any
member branch bank office. Core banking is nothing but banking institutions conducting
business with their retail and small business customers. Most of the banks treating core
banking consumers for their retails consumers. For supporting bank operations many banks
using core (CORE- centralized online real-time environment) banking service. Basically it
means that all branches access applications from centralized data centers. Core banking
provides 365/24/7 support to their customers.

In core banking services India, GIS technology is useful to customers as well as employees
of bank. GIS model useful in safe monetary transaction route analysis, customers record
mapping, debtor record analysis, ATM network solutions, market analysis, bank merger
evaluations, client asset mapping, analyzing business continuities etc. Monetary, statistical
and operation of bank data can possible to represent spatially by using GIS techniques. It is
useful in banking business also.

Banks need to implement customer centric business model. Financial product and services is
important functions of banks. Nowadays Market analysis is required feature for banking
industry. Banks managing all over world’s consumer information, so database management
for bank data and customer relation management is key functions of the bank and that can
easily achieved by GIS. Bank database with Location information significant in many ways.
Geographic modelling with future plans provides crucial benefits to banking industry.

Why GIS is required in core banking:

GIS techniques having unique capability to achieve different business goals of the banks. It
is important in banks operations, processes and customer management.

1. Customer database management

46
 2. Improve services using GIS

3. Fullfillment of customer needs, ultimately increased user satisfaction

4. Business expansion

5. Increasing profit rate.

Strategic decision making, effective resource management and operations management can possible
by adopting GIS techniques in banking sector.

Market Analysis:
 Essential in highly competitive Business environment.

 Marketing is customer-orientated operation.

 Help to understand financial needs of market & customer.

 Demand & supply can be pinpoint to geographical locations.

 Geo-demographic study of market.

 Census data and customer data uses for market segmentation.

Customer Management:
 Useful in determination of customer characteristics (classification and market
segmentation of residential areas)

 Bank branches can be drawn for the catchment areas.

 Provides information about the potential customers. And it is useful of their power for
high end core banking facilities

 Postal address can possible to convert a location reference such as a to its

corresponding position on a map

 Customers location display on map in relation to a bank branch

 Ascertain how many customers live or work within one km of certain branch

Asset Management:
 Bank assets management

 Online tracking of Cash status in ATM

 Cash distribution in ATM’s by using cash Van Fleet management

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  Performance monitoring of branches of banks

 Requirement to maintain minimum asset condition.

 Advertisement management

So we can recognized that GIS is important in core banking in following

ways:
 Market analysis

 Searching and Management of customers

 Competitor analysis

 Focused marketing

 Business expansion planning

 Home loans

GIS implementation phases in core banking are:

1. Input data collection: Collection of spatial and non-spatial data of bank

2. Design of database: Mapping of spatial data and linking with non-spatial (attribute)
data. And including testing and analysis of the data

3. Integration, testing and implementation of data

4. Application development: gathering of required data, application development and

SRS preparation and provision of different banking solutions.

Core banking has historically meant the critical systems that provide the basic account
management features and information about customers and account holdings.

Modern packaged core banking platforms are typically more holistic and often include these
features as well as:

 Customer relationship management features including a 360 degree customer view

 The ability to originate new products and customers

 Banking analytics including risk analysis, profitability analysis and provisions for
capital reserve allocation and collateral management

 Banking finance including general ledger and reporting

48
  Banking channels such as teller systems, side counter (sales) applications, mobile
banking and online banking solutions

 Best practice workflow processes

 Content management facilities

 Governance and compliance capabilities such as internal controls management and

auditing

 Security control and audit capabilities

As you can likely tell from the two very different descriptions above – older core banking
platforms and modern core banking platforms are quite different. Replacing these older
systems with modern ones is often a time when banks consider strategic transformation,
process revision and identifying new target operating models.

These are considered some of the most (if not the most) challenging and rigorous initiatives
that organizations can undertake with some programs lasting ten years or more and others
assigning teams of hundreds working towards a single “big bang” event.

Regardless of how you define or assess these programs it is clear that this is an emerging area
where collaboration and discussion can help develop best practices in this area

Core banking is a general term used to describe the services provided by a group of
networked bank branches. Bank customers may access their funds and other simple
transactions from any of the member branch offices.

Core Banking is normally defined as the business conducted by a banking institution with its
retail and small business customers. Many banks treat the retail customers as their core
banking customers, and have a separate line of business to manage small businesses. Larger
businesses are managed via the Corporate Banking division of the institution. Core banking
basically is depositing and lending of money.

Normal core banking functions will include deposit accounts, loans, mortgages and
payments. Banks make these services available across multiple channels like ATMs, Internet
banking, and branches, Customers can easily avail various banking facilities from any branch
located anywhere. The services provided are as follows:
 To make enquiries about the balance; debit or credit entries in the account.

 To obtain cash payment out of his account by tendering a cheque

 To deposit a cheque for credit into his account.

 To deposit cash into the account.

49
  To deposit cheques / cash into account of some other person who has account in a
branch.

 To transfer funds from his account to some other account – his own or of third party,
provided both accounts are in CBS branches.

Chapter – 4

Data Analysis’s & Interpretation of Data

4.1 bank have core banking facility for the customers

Customer Result
Yes 41 82%
No 09 18%
Total 50 100%

Customer
45

40

35

30

25

20 Customer

15

10

0
Yes No

INTERPRETATION : It can be understood from the above diagram that 82%

customers bank have provided core banking facility to their customers and on the other hand
18 % people not getting core banking facility from their bank.

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4.2 Using the service of alternate bank

Customer Percentage
Yes 60 60%
No 40 40%
Total 100 100%

Customer
70

60

50

40

Customer
30

20

10

0
Yes No

INTERPRETATION :From the above diagram it is concluded that, 60 % people

are using the service of alternative bank and on the other side 40% people are not
getting the service of alternative bank.

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4.3 charge unnecessarily for not maintaining minimum balance in
account
Yes 75 75%
No 25 25%
Total 100 100%

Customer
80

70

60

50

40
Customer
30

20

10

0
YES NO

INTERPRETATION :Above diagram shows that , the 75 % people said a bank

charges unnecessarily for not maintain minimum bank balance with their bank and
25% people said that a bank doesn’t charge unnecessarily for maintaining minimum
bank balance to their bank.

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4.4 offers competitive interest rate
Customer Percentage
Yes 85 85%
No 15 15%
Total 100 100%

Series 1
90

80

70

60

50

40 Series 1

30

20

10

0
YES NO

INTERPRETATION : The above diagram shows that, 85% customers

concluded bank offers competitive interest rate to their customers and 15% people
said bank does not offer competitive interest rate to their customers.

53
4.5 public access allowed to this system support
Customer Percentage
Yes 90 90%
No 10 10%
Total 100 100

Customer
100
90
80
70
60
50
Customer
40
30
20
10
0
Category 1 Category 2 Category 3

INTERPRETATION :The above diagram shows that , 90% customers were

allowed to support this core banking system and 10% customers were not allowed to
support this core banking system. It shows the customers support to the core banking
system.

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4.6old system
Current system 80 80%
Old system 20 20%

Customer
90

80

70

60

50

40 Customer

30

20

10

0
Current System Old System

INTERPRETATION :The above diagram shows that how lid is core banking
system. Where 80% people said that it is a current system and easy to access and 20%
people said it is old system.

55
4.7 A facility which give more importance
Customer Result
Loan facilities 20 20%
O.D facilities 15 15%
ATM facilities 65 65%

Customer
70

60

50

40

Customer
30

20

10

0
Loan Facilities O.D Facilites ATM Facilities

INTERPRETATION :Above diagram shows that , which are the facilities which
give more importance to the customers. Where 65% customers said ATM facilities ,
20% people said that loan facility and 15% people said O.D facilities.

56
 4.8 you think of your bank comes first in your mind
Customer Result
Personalized service 20 20%
Customer service 20 20%
Computerized banking 60 60%

Customer
70

60

50

40

30 Customer

20

10

0
Personalizes Service Customer Services Computrized
Banking

INTERPRETATION : The above diagram shows that 60% customers think first that
computerized banking 20% customers said that personalized service and other 20%
customers said customer services.

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 4.9 Accounts with bank

customers Result
Commercial bank 60 85%
co-operative bank 40 15%

Total 100%

Customer
90

80

70

60

50

40 Customer

30

20

10

0
commercial bank co-op bank

INTERPRETATION: The above diagram shows that 85 % customers have account with
commercial banks and 15% have an account with co-operative banks.

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 4.10 satisfaction of opening an bank account

CUSTOMER RESULT

Yes 75 85%
NO 25 15%

Customer
90

80

70

60

50

40 Customer

30

20

10

0
YES NO

INTERPRETATION : In the above diagram concluded that, 85% customers were

satisfied by opening an bank account with their respective bank and 15% customers were not
satisfied with their bank by opening an bank account.

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4.11 costly bank for the customers

CUSTOMERS RESULT

Commercial bank 70 80%

co-op bank 30 20%

Customer
90

80

70

60

50

40 Customer

30

20

10

0
COMMERCIAL BANK CO-OP BANK

INTERPRETATION: The above diagram concluded that 80% customers were said that
commercial banks are costly and on the other hand 20% customers said co-op banks are
costly

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4.12 secure card

customers Result

Debit card 50 75%

Credit card 40 15%
others 10 10%

Customer
80

70

60

50

40
Customer
30

20

10

0
debit card credit card others

INTERPRETATION : The above diagram concluded that , the 75% customers were think
that debit card is secure , 15% customers were think credit card is secure and 10% customers
are using other cards they think that are secure.

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4.13 important reason to chose particular bank

customers Result

Best service 30 25%

Core banking service 60 75%

Customer
80

70

60

50

40
Customer
30

20

10

0
best service core banking service

INTERPRETATION: Above diagram shows that important reason behind customers

chose a particular bank where 75% customers getting core banking service from their bank on
the other hand 25% customers chose bank for best service.

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 CHAPTER – 5

Conclusion

Core banking is a general term used to describe the services provided by a group of
networked bank branches. Bank customers may access their funds and other simple
transactions from any of the member branch offices.

The study was aimed to understand and the concept of core banking services and system.

A study also analyzed the scope of core banking solutions in banking sector in India and it
also understand complete operation of core banking solutions. The CBS has created
awareness about the presence of the banking sector everywhere and the benefits of banking to
common man. . Such customers prefer branch banking with the assistance of counter clerks.
No doubt, CBS has made a significant welcome change in the banking scenario of the
country and certainly improved the efficiency of the banking operations.

Normal core banking functions will include deposit accounts, loans, mortgages and
payments. Banks make these services available across multiple channels like ATMs, Internet
banking, and branches.

A study also aimed and analyze the impact of core banking facility on employees and
customers

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 BIBLOGRAPHY

www.google.com
www.scribd.com
www.corebanking.com

64
 QUESTIONNAIRE ON “CORE BANKING

A. Personal Information

Name of the customer:_______________________________________________________.

Address:__________________________________________________________________________
__________________________________________________________________________________
_________________________________________________________________.

Phone no.:_________________________________________________________________

E-mail Id: ______________________________________________________________.

Age:_________________________.

1. In Which Bank you have an account?

Commercial bank

Co-operative bank

2. Does your bank have core banking facility for the customers ?

Yes

No

Don’t know

3. Do you use the service of alternative bank

Yes

No

4. What was the single most important reason that you chose this particular Bank?

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 Best service

Online banking

5. when you think of your bank what comes first in your mind ?

Personalized service

CustoMer service

Computerized service

6. which of the following facilities is given more importance in your bank ?

Loan facility

O.D facility

ATM facility

7. Do they charge unnecessarily for not maintaining minimum balance in your account ?

YES

NO

8. Are you satisfied with open account with this Bank?

YES

NO

9. Do you think bank offers competitive interest rate ?

YES

NO

10.Is public access to allowed to this system support ?

YES

NO

11. How old is the system ?

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 Current system

Not old

12. Which card you find more secure?

Debit Card

Credit Card

Others

13. Which Banks is Costly for the Customer

Commercial banks

Co-operative banks

67