Traditionally, core banking solutions were designed to serve the requirements of an efficient OLTP (on line transaction processing) system. Core banking applications in India are currently more than 10 years old. The period saw a great amount of data churning. The inherited dirty data got cleansed or made irrelevant vis-à-vis the data retention requirements of IT act.
The eco system was evolving, in the meanwhile. The telecommunication networks got denser and smart phones became ubiquitous. Payment systems in India, developed a new face under the aegis of National Payment Corporation of India. Aadhaar by UIDAI gave a momentum for remote branchless banking. More fintech startups and established players entered the telecom and mobile space. Mobile banking, door step banking and branchless banking did not just remain mere buzz words, but became a reality. The core banking solutions in vogue, required either to be replaced or tweaked to demands of the changing delivery options to customers. Moreover, lots of satellite standalone systems were paddled as quick fixes for these new age requirements, posing a challenge when it comes to integration with core banking solutions. The time is now ripe for redefining the traditional core banking solution.
The typical shelf life of a core banking software is set to reduce in the future, but so are the implementation woes with Software as a Service (SaaS) availability. National Bank for Agriculture and Rural Development (NABARD) has successfully led one of the biggest IT transformations in the Indian banking industry by enabling banking operations of 201 state and district co-operative banks move to a single cloud-based core banking solution. This has enabled rural customers to access basic banking facilities such any branch banking, SMS notifications, NEFT, RTGS and access to ATMs.
However just the availability of core banking software on the cloud would be the equivalent of having old wine in a new bottle. What we need today is a new age software that is truly CBS 2.0.
Core Banking Solution 2.0: Must Have Features
Maker / checker is the fundamental requirement that must be satisfied in a financial transaction. All the core banking solutions have this feature. The feature is random and is not supported by a workflow. Typical core banking solution provides a maker / checker workflow that is:
- Supports reverse flow for modification
- Supports forward flow for double authorization
- Supports masters authorization (I.e. Non-financial)
- Remote authorization on need to do access privileges.
A true CBS 2.0 system should be multilingual to support the vision of inclusive banking. The following features are desirable
- Base currency option
- Multi-currency set up
- Base currency accounting and multi-currency accounting
- Base currency and multi-currency balance sheets.
Single sign on features
The core banking software of the future should support single sign on to applications that are not supported by core banking software
- Treasury/Trade finance package (Treasury could be optional)
- CRM package – An integrated CRM is a real value add
- Government business packages
- Fixed asset management packages
- Cheque truncation applications
- Other relevant packages that impact customer interactions
A good branchless banking solution should address major financial services; savings, loans, transactions, and insurance. It should support
- Biometric, PIN based & contactless payment interfaces
- Agent interfaces like PoS & Mobile
- Comprehensive BC/Agent management services
Customer centric features
- Integrates with mobile banking application
- Integration with social media like Facebook, Twitter
- Customer specific dashboard across channels
- “Do it yourself” interfaces
- Remote banking facility for HNI customers
- Internet banking with Widgets/shortcuts for online shopping, flight booking etc.
Share accounting and payroll services (Credit unions and co-operative banks)
The solution should support the following features –
- Share accounting
- Payroll accounting
- Inventory management
- Cash/Kind transactions
- End to end mobile banking
- Web based solution
- Should be available as a SaaS module
- Voice banking – a possible storing of voice print and authentication (to tackle the growing adoption of Smartspeakers & Voice Assistants like Alexa from Amazon & Google Home)
- Iris scan to authenticate payments (UIDAI has already started approving a few applications).
- Customer friendly artificial intelligence based support
Apart from the above features, Core Banking Solution 2.0 has to be developed as a “mobile first” application with cutting edge security which could be based on blockchain technologies.