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Core banking solutions (CBS) are software that improve the performance of financial institutions’ core operations, such as processing deposits and withdrawals. CBS allows for the creation of branch networks and immediate reflection of transactions across multiple branches. Technological advancements have made central banking more accessible through various means, including the Internet.
Central banking refers to the core operations of a financial institution. As there are different types of banks, their main business actions may vary. However, in most cases, the main functions of a bank are to process deposits and withdrawals. The technology that drives performance improvement in these areas is known as core banking solutions (CBS). Implementing CBS provides benefits such as the ability to link branches and maintain more accurate ledgers.
It is common for companies such as banks to offer a wide range of services. For example, a bank may hold money in a savings account, may extend loans, and may act as a broker for investors. However, there are certain services that will be considered core functions of a particular financial institution.
For most banks, the majority of their customer base consists of individuals and small businesses. The types of services that these types of customers most frequently require are depositing and withdrawing funds. Therefore, these two functions represent core banking for most financial institutions. Specialized financial institutions, such as retail banks or treasury banks, are likely to have other core functions.
Technological advancement changes the way people live and do business. Those changes commonly create demands, such as better accessibility and speed. It is in the interest of a financial institution to meet these demands with respect to its central banking. This is commonly done using CBS.
Core banking solutions refer to software that performs a number of functions. One, which has drastically changed the banking industry, is the creation of branch networks. CBS allows multiple branches of a bank to operate as a single unit. To understand the effect technology has had, it’s important to consider how banks generally operated in the past.
At one time, it was common for transactions at a bank branch to be traced. This means that if a customer made a transaction at branch A, this was the only location that had an immediate record of that information. It would be made available to other branches some time later. However, the CBS implementation allows a transaction at branch A to be immediately reflected in the ledgers at branches B, C, and D.
Technology is also making central banking more accessible by providing more means to conduct transactions. Instead of having to report to a branch to access a bank’s primary services, a person can do so through a variety of means, including the phone, ATMs, and the Internet.
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