Core (Centralized Online Real time Exchange) banking system is a back end system that processes daily banking transactions and posts updates to accounts and other financial records. Core banking system typically includes deposits, loan and credit processing capabilities with interfaces to general ledger systems and reporting tools. Banks offer a number of core banking services that improve operations addressing the demands of customers and eradicate the errors arising due to multiple entries. As core banking technology use centralized databases, the necessary data are collected very quickly and as a result there are fewer errors. So, basically Core banking is a win-win situation for both banks and clients.
However, the core banking services differ as per the nature of banks. Retail banks are geared towards individual customers, wholesale banks are business conducted within banks and securities trading consist of sales of shares.
Westpac Bank, Australia, AMP Bank Ltd, National Australian Bank etc. are some examples of major banks providing core business services to their clients.
The following are some explanations of the core banking services offered by banks:
- Acceptance of deposits: This is a primary core banking service offered by banks. Banks generally accept deposits from clients that are kept safe and further channelized into investments that helps them to earn interests. This share of interest is then shared with the clients.
- Granting of loans and advances: The banks advances loan to their clients charging certain rate on the advances given. Banks usually grant advances for short term purposes and loans maybe for either a short term or a long term.
- Customer relationship management: This service refers to the strategies and techniques used by banks to manage client interactions and improving the services that are provided to them. Some other core banking services provided by bank include processing payments and cheques, processing cash deposits and withdrawals, managing customer’s accounts, maintaining records of transactions, calculating interests and so on.
Security and privacy needs in relation to bank’s core business services
Banks’ core business services require high level of safety and secrecy. In this age of modern banking, a bank goes through wide number of risks everyday as customers shop online with their credit cards and share personal contents via social networks. Also with the internet banking, hackers can break into any client’s account. So, data privacy and security are legitimate concerns for a bank.
There are major privacy and security needs of a bank in relation to its business services such as:
- Reliable technology: As technology keeps on changing there’s always a risk that the investment in technology can cause if not planned properly. So, a bank has to remain up to date with the most reliable form of technology.
- Need for vigil: Complex systems operated in the banks require highly skilled employees with relevant set of knowledge in digital platforms. Also, the bank employees are termed to work late on days in which there is security problem.
- Focus on security: A bank has to go through a set of external threats (cyber frauds) as a core banking system provides internet banking services to its’s clients. So, banks have to check and evaluate the program modules and architecture that they’ve been using.
In the modern world, the banking sector has to move quickly with other industrial sectors. For this purpose banks have to adopt and implement cloud technologies so that the potentials of banking sectors can be well optimized. Usage of cloud technologies comes up with the following benefits for bank:
- Cost Reduction: A top priority for all banking sectors is to cut costs. Cloud technologies guarantee the technological advancement that helps the banks to bring their costs down as these technologies operate on a pay on demand model and the banks can update their systems in a considerably affordable price.
- Improvised productivity: Cloud technologies inherit standardized approach that encourages banks to optimize new technologies with agility and increase efficiency by managing uncountable applications.
- Prompt service: The cloud technologies are innovative and fast in nature. As a result, these applications are speedy and easy to launch and operate on a daily basis compared to other technologies used in banks.
- Better insights to public relationship: In the modern banking world relationship with customers play an essential role for the success of banks. Cloud technologies encourage banks to come up with different innovative systems that deliver better services to customers developing better bonds with them.
Why major banks use mainframes
Mainframes are the types of computers known for their high reliability ,storage capacity and processing power which are in use by organizations having to deal with large volumes of data processing on a day to day basis (critical applications). They exhibit the features of having centralized computing, sophisticated operating systems and great processing powers. With the emergence of cloud computing, mainframes are considered to become an obsolete technology but however, mainframes continue to be in the frame. Banks use mainframes to maintain their customer’s accounts by dealing with events and transactions as a result of the deposits and withdrawals that take place. Mainframes occupy a coveted place and value in the banking sector despite the new emerging technologies. A number of major banks throughout the world still pick mainframes as their first choice.
Several reasons can be put to why mainframes still continue to be a favorite, especially of the banking sector. They are enlisted as follows:
- Reliability: Mainframes perform without errors and this serves as a major plus point for banks as they have to maintain millions of records per second with 100% accuracy and mainframes serve with their hardware and software specifications.
- Availability: Mainframes have high availability architectures that prevent banks from having system downtime. An unsatisfied customer is likely to go to other banks and banks don’t prefer losing customers. Also, there exist no computing technologies that can replace the mainframes availability. Hence, this serves to be a major reason why banks still prefer mainframes.
- Security: As banks go through a number of confidential information on a daily basis, it is really essential for a bank to protect the customer’s sensitive information. A bank cannot afford to negotiate with a customer’s confidential information and mainframes have built in security that secures the operating systems helping the banks to keep the information secret.
- Analytical speed: Banks provide services that require instant response such as ATM services, credit card usage etc. Banks deal with millions of customers and transactions in its working and mainframes support banks with the highest clock speed of 5.5 GHz that serves as a real support during critical time.
- Compatibility: One major reason why banks prefer mainframe computing is because of its compatibility. Mainframes deal with multiple languages such as Java, C/C+ etc. that serves as a major helping hand for banking sector.
- Scalability: Since banks constitute of millions of customers and deals with millions of transactions, a number of unlikely scenarios are to be created which are efficiently dealt by mainframes.
- Integration: One major problem that holds back the banks are their system startups and shutdown. Mainframe solves these glitches without any system shutdowns and enables two unrelated pieces of technology to work as one seamlessly.