To answer the question in simple terms, a 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 a core banking solution in detail through the example of a small bank: the Cyberabad Police Cooperative Credit Society or CYBPOL.
Revolutionizing Banking with Core Banking Solution
Picture the hassle of being limited to banking at your “home” branch. If you move to a different area within your city or a different city altogether, you cannot access banking services at your bank’s branches in the new location. It’s a frustrating scenario!
Before you start thinking you would simply use net banking 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 without the aid of a core banking solution, it cannot also provide “anywhere, anytime” banking.
Now, 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 solution.
A core banking solution is a centralized back-end system that networks a bank’s branches. This system allows for access to your account and delivery of services from any branch location.
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.
But not anymore, thanks to SmartCBS.
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.
The Importance of Cooperative Credit Societies: The CYBPOL Example
CYBPOL is a 69-year-old institution formally known as The Police Employees Coop Credit Society Ltd., Cyberabad. It serves over 10,000 police employees through 3 branches located in Cyberabad and Rachakonda commissionerates and Vikarabad district in Telangana, India.
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 the good in society, our willingness to help each other, and our sense of social responsibility. Furthermore, the collective aid is not only good for the participants but also income-generating for the group.
Overcoming Banking Challenges with Core Banking Solution
There are three key challenges that cooperative credit societies, in general, face, and CYBPOL, in particular, faced without a core banking solution.
Improving Member Convenience
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 conveniently from their homes.
Members of the cooperative cannot monitor their savings and transactions without needing 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 further developments.
Streamlining Operations for Efficiency and Effectiveness
Tellers and clerks at the bank cannot process transactions fast. Manual work and paperwork lead 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. Eliminating errors is also a key factor.
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 a cloud-based SaaS. It includes net banking 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 offered a compelling value proposition: core banking simplified.
Key Features of Core Banking Solution
SmartCBS core banking solution meets the needs of credit societies and its key functionality was evaluated by CYBPOL during decision-making.
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 monthly savings. annual interest on thrift calculated by Mar 31.
Membership Benefit Fund
Members can make deposits towards retirement and death benefits (monthly, quarterly, half-yearly, or yearly).
Liability Products
Savings, FDs, RDs, agent-driven daily deposits, flex or sweep in/out deposits, current accounts, and lockers.
Asset Products
Variety of loans: Mortgage, Deposit, Gold, Personal, Vehicle, Education, Agriculture, and Overdraft.
Accuracy & Accountability
Task list: maker-approver, employee services, user authentication and authorization, single window support.
Convenience
Member dashboards upon login and transactional SMS and email alerts.
Accounting
Accounting module, product schemes, branches support, reporting, auditing, cash freeze, cashier desk.
Watch this short product explainer video to learn more about SmartCBS functionality:
The Advantages of Implementing 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 also launched its logo on the occasion, which was used for branding the apps.
Self-Service Netbanking Portal for Customer Convenience
Core Banking Software for Cooperative Credit Society
Self-Service Mobile Banking App 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 expressed happiness with the technology advancements that will improve member service efficiency. This included 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.
The committee applauded the YK Innosoft team for our 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
Final Thoughts on Core Banking Solution
Core banking is a centralized back-end system. It networks a bank’s branches to allow access to customer accounts and deliver services like deposits, loans, and credit processing.
The CYBPOL has implemented core banking to provide its members with greater convenience and better access to their account transactions.
Integral to core banking are important functions. These include opening new accounts, servicing loans, calculating interests, processing deposits and withdrawals, and managing customer relationships.
Thanks to technological advancements, core banking has made transactions safer, faster, and less cumbersome. Transactions can now be executed remotely, anywhere and anytime.
Core banking has a number of benefits. This includes reducing operational costs, increasing accountability to customers, and making banking more convenient and user-friendly through software-based platforms.
Adoption of core banking by small and mid-sized banks helps them keep pace with the fast-evolving market. It simplifies banking processes and expands reach to rural areas and the hinterlands.
