What is "Core Banking"?

Core banking is a banking services provided by a group of networked bank branches where customers may access their bank account and perform basic transactions from any of the member branch offices. The group of banks which provide online network with each other and with customer.

Core banking is often associated with retail banking and 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 transaction accounts, loans, mortgages and payments. Banks make these services available across multiple channels like ATMs, Internet banking, and branches.

A core banking system is the software used to support a bank’s most common transactions.

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.

Core banking functions differ depending on the specific type of bank. Retail banking, for example, is geared towards individual customers; wholesale banking is business conducted between banks; and securities trading involves the buying and selling of stocks, shares and so on. Core banking systems are often specialized for a particular type of banking. Products that are designed to deal with multiple types of core banking functions are sometimes referred to as universal banking systems.

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In general when we use the word core banking, it refers to the very basic banking function such as accepting customer deposits and lending to customers and its relevant banking system for maintaining financial accounts, interest calculation and regulatory reporting systems. 

Core banking services are the basic services provided and can be availed by approaching any of the bank's directly by the customer.

Core Banking stands for Centralized Online real time environment for banking transactions, where all transactions in today's world are instantly recording into system and updated across all (internet) connected branches/front end systems( ATM/Mobile/Internet Banking system/Contact Center) including transaction details, balances. Unlike past where the banking system would take1 day to update balance/customer cannot bank in another branches, so core banking system basically covers all such shortcomings and also integrates all channels (ATM/IB/CC) so customer/bank officers have instant knowledge of transactions, as happened including SMS updates for all transactions happened on customer accounts.

The customer details/preferences/interest including offered products to customer (Loans, CASA, signature verification are all now part of core banking systems including CRM, which helps the bank to identify customer choices to cross sell products based on customer segmentation, interests, preferences.

Now Core Banking is integrated with advanced analytics software's, part of CRM/channels like ATM, IB, Mobile to study his/her interest, spend patterns, shops frequented for dinning/retail purchases to come up with tailored products based on individuals choices, be it loan, current/saving account, fix deposit, transaction alerts, its now all part of core banking systems, which is again divided into Retail individual customers, Corporate/SME customers if its integrated Core Banking solution covering Corporate/Retail Products/Customers.

Hoping this helps your query and understanding on Core Banking System.