CORE BANKING

Core Banking: Core banking refers to a back-end system that seamlessly connects multiple branches of the same bank. Its purpose is to facilitate real-time operations such as loan management, withdrawals, deposits, and payments.

Definition:

Core banking stands for Centralized Online Real-time Environment (CORE). This means that customers can perceive the bank as a unified entity, regardless of their physical location. The goal is to provide customers with greater independence in using their accounts and conducting transactions from anywhere in the world1.

Key Features:

• New Accounts Creation and Customer Relationship Management: Core banking systems handle the process of creating new accounts and managing customer relationships.
• Interest Calculations: These systems compute interest on deposits and loans.
• Deposits and Withdrawals Processing: Core banking ensures seamless handling of deposit and withdrawal transactions.
• Loans Issuing and Servicing: It manages loan origination, disbursement, and servicing

How It Works:

• A core banking system comprises back-end servers responsible for standard operations like interest calculation and passbook maintenance.
• When a customer withdraws money from a branch or an ATM the application sends a request to the centralized data center.
• The data center processes the request, authenticates the operation, and handles tasks like interest calculations.
• Components of the data center include a database, an application server, a web server, and a firewall for security.
• Banks can host their data center either locally or on the cloud.