What is Core Banking Solution?

To answer it in simple terms, core banking solution is what makes a customer the customer of the bank and not of a particular branch of the bank. In this article, we describe the concept of core banking as well as the solution in detail through an example of a small bank: the Cyberabad Police Cooperative Credit Society.

Introduction

Imagine the inconvenience if you could only bank at the “home” branch where you opened your bank account. Imagine you have just relocated to another part of the city or to another city altogether and your bank wouldn’t provide service to you at its branches at those locations!

Before you start thinking you would simply use netbanking and mobile banking in such a scenario and avoid the branch at your new location, know this. If your bank cannot provide “any branch” banking service, it cannot also provide “anywhere, anytime” banking.

Thanks to the behind-the-scenes core banking solution, these scenarios are all but a thing of the past. At least, this is the case with large banks.

Banks would simply be restricted to serving customers in home branches if it weren’t for core banking.

A core banking solution is a centralized back-end system that networks a bank’s branches and allows them to access your account and deliver services to you regardless of their locations.

In a nutshell, core banking enables any-branch banking convenience to customers. Netbanking and mobile banking extend this to anywhere, anytime self-service. 

Core banking has been implemented by major banks everywhere. However, small and mid sized banks are yet to adopt it. This includes cooperative banks, regional rural banks, urban banks, Nidhi companies, NBFCs, and credit cooperative societies.

To better understand what core banking is and what its benefits are, let us look at the example of the Cyberabad Police Cooperative Credit Society or CYBPOL.

About Cyberabad Police Cooperative Credit Society

Formally The Police Employees Coop Credit Society Ltd., Cyberabad, CYBPOL is a 69-year old institution serving over 10,000 police employees of Cyberabad and Rachakonda commissionerates and Vikarabad district in the Telangana state of India through 3 branches.

Cooperative credit societies or credit cooperative societies are financial organizations that perform a vital role in society. Fully owned and controlled by their members, they help members borrow money at low interest rates from an amount of money they have saved as a group.

Also, the criteria for issuing loans are simple in these societies. At CYBPOL, for example, as a member, you could get a loan if two of your colleagues agree to serve as guarantors.

Cooperative credit societies ultimately represent good in society, our willingness to help each other and our sense of social responsibility. Furthermore, the collective aid is not only good for participants but also income-generating for the group.

Challenges that Core Banking Solution Addresses

There are three key challenges that cooperative credit societies, in general, face and CYBPOL, in particular, faced without core banking solution.

Inconvenience to Members

Members with smartphones and Internet access have come to expect more from their society than the traditional, restrictive home branch banking. They want the ability to make deposits remotely, make online payments, and move funds between accounts from the convenience of their homes. 

Lack of Transparency

Members of the cooperative are unable to monitor their savings and transactions without a need to contact an executive member or someone else. Furthermore, the cooperative group is unable to expose its program to (attract new) members and carry members along on new developments.

Inefficient and Ineffective Operations

Tellers and clerks at the bank cannot process transactions fast. Manual work and paperwork leads to disputes and loss of data. The overall branch-based operations are inefficient and ineffective.

Ultimately, the success of modern cooperative credit societies lies in increasing the speed of operations, from deposits to loan disbursals to EMI collections, and eliminating errors.

To overcome these challenges and modernize their society, CYBPOL adopted the SmartCBS core banking solution from YK Innosoft following an extensive evaluation of available solutions.

SmartCBS was selected as it is the next gen core banking solution offered as cloud-based software-as-a-service (SaaS). It includes netbanking and mobile banking capabilities and enables integration with third-party RBI network banks. SmartCBS standardizes and simplifies processes with high levels of automation and enhanced efficiency, 

In short, SmartCBS embodies the compelling value proposition: core banking simplified.

Key Functionality of Core Banking Solution

The key functionality of SmartCBS core banking solution that meets the needs of cooperative credit societies and that was evaluated by Cyberabad Police Cooperative Credit Society during their decision-making process is as follows:

Membership

Managing the entire life cycle of a member from registration to cancellation.

Share Capital & Dividend

Share capital and distribution of dividends to members. 

Thrift Deposits

Mandatory savings usually recovered every month from the members. Interest on thrift is calculated annually and added in the thrift deposit itself on 31st March.

Membership Benefit Fund

Members can make monthly, quarterly, half-yearly, or yearly deposits over the long term towards retirement and death benefits.

Liability Products

Savings, fixed deposits, recurring deposits, daily deposits – agent-driven savings deposits, flex deposits or sweep in/out deposit, current account, and lockers.

Asset Products

Mortgage loans, deposit loans – loans on FD and RD, gold loans, personal loans, vehicle loans, education loans, agriculture and farmer loans, and overdraft loans.

Accuracy & Accountability

Task list – maker and approver concept, employee services, user authentication and authorization, single window branch support.

Convenience

Member dashboards upon login and transactional SMS and email alerts.

Accounting

Accounting module, schemes feature for all products like SB, FD, RD, lockers and loans, branches support, reporting, auditing, cash freeze, cashier desk.

Learn more about SmartCBS functionality from this short product explainer video:

Benefits of Core Banking Solution

In November 2020, at the annual general body meeting, the Cyberabad Police Cooperative Credit Society launched their SmartCBS-powered “Co-operative Credit Society Apps.” The society had also launched its logo on the occasion, which was used for branding the apps.

Self-Service Portal for Netbanking for Customer Convenience

Cooperative Credit Society Core Banking Software

Self Service Android App for Mobile Banking for Customer Convenience

The benefits of the apps to CYBPOL and its members were spelt out by leading committee members in their launch address.

Adopting technology helps in better delivery of the services to the cooperative society members.

Shri Mahesh M. Bhagwat, IPS, ADGP (Rachakonda CP) in his launch address

I like the idea of automating the co-operative society operations which will help society to provide more and more services to the members; and it also brings more transparency into operations.

Shri V. C. Sajjanar, IPS, ADGP (Cyberabad CP) in his launch address

Mobile app would be handy for the members to easily avail the services of the cooperative society and would bring in transparency into operations.

Shri M. Narayana (Vikarabad SP) in his launch address after launching the mobile app

The society’s managing committee of Shri Mahesh Bhagwat, Shri V. C. Sajjanar, Shri M. Narayana, Smt C. Anasuya, DCP, Cyberabad, Smt Shilpavalli, ADCP, Rachakonda, Shri C. Bhadra Reddy, Police Association President, Cyberabad, and other society directors and members also expressed happiness with the outcome and said that technology advancements will help in serving the members more efficiently.

The committee appreciated the YK Innosoft team for their stupendous work in implementing the apps and seamlessly migrating the society’s 69 year-old data into the SmartCBS platform.

Shri Mahesh Bhagawat announced a reward to the YK Innosoft team.

By adopting the SmartCBS core banking solution, CYBPOL has leapfrogged other police cooperative societies across the country and transformed itself into a 21st-century cooperative credit society.

Shravan Keerthipati, Director and CEO of YK Innosoft

Conclusion

Core banking is a back-end system that networks the branches of a bank and processes transactions across them. This includes deposits, loans, and credit processing.

Integral to core banking are opening new accounts, servicing of loans, calculating interests, processing deposits and withdrawals, and customer relationship management activities.

The core banking solution is aimed at empowering customers with greater convenience to do their account transactions. Thanks to technological evolutions, transactions are now safer, faster, and less cumbersome. They can be executed remotely, anywhere anytime.

Core banking drives down operational costs, ensuring lesser manpower for execution. It also enables greater accountability to customers. Software application-based platforms make core banking user-friendly and efficient.

The benefits of core banking systems are multi-faceted – keeping pace with the fast-evolving market, simplifying banking processes and making it more convenient for the customers, and expanding the outreach of banks to rural areas and hinterland.

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