Core Banking Platform: What is it?

Technology has brought about major shifts across all levels in the banking sector in today’s digital world. Banks have now expanded significantly and are more than just a way to lend money. Individuals can now find a variety of goods and services at a go using various core banking platforms.

Core banking involves integrating all the operations essential to an effective financial system. With that in mind, financial institutions that want to be a part of the new era need to be well-versed in important banking systems. In this article, we are going to delve deeper into what core banking entails, plus its many benefits.

What is Core Banking?

Core banking serves as the backbone framework linking multiple branches of a bank. Its primary purpose is to facilitate activities such as loan management, cashouts, deposits, and transactions in real-time. CORE stands for Centralized Online Real-time Environment, emphasising a seamless banking experience for customers. This enables them to manage their accounts and perform operations from anywhere in the world.

Servers located at the back end of a core banking system are responsible for routine tasks such as interest computation, passbook management, and withdrawals. With every branch or ATM withdrawal, the customer’s app notifies the centralised data centre, which verifies the transaction and executes the request.

A firewall, web server, application server, and database all reside in the data centre, which also serves to isolate the system from malicious software. So, financial institutions can host data centres either locally or in the Cloud.

What Types of Core Banking Systems Exist?

There are several types of IT core banking systems available, each with its hosting specifications:

On-premise Solution: Numerous configuration choices are available to the bank management thanks to this system’s locally hosted architecture.

Cloud-based Core Banking Software: As its name implies, a cloud-based core banking programme runs on the Cloud. On occasion, a cloud provider can provide an app as a pay-as-you-go service called Cloud as a Service (CaaS). That’s why many businesses are migrating IT infrastructure to the Cloud to gain greater leeway. 

Benefits of Core Banking System?

Now that we know how the core banking platform function and what features they have, we can look at the advantages of using them. 

  • Increased output: The time it takes to connect with different bank branches is reduced by core banking systems, which increases operational efficiency. That enables banks to execute transactions more quickly, irrespective of the client’s location.
  • Improved Security: The architecture of core financial systems is protected from viruses and hackers by means of powerful encryption modules. Further safeguards for the system are provided via bio-verification and two-factor authorisation on the client side. Banks can stay in compliance with other financial rules and uphold KYC requirements using these capabilities.
  • Reduce Operating Expenses: Since core platforms depend on fewer human resources to operate, banks can count on them to save operating expenses. Not to mention that activities are completed more quickly and documentation mistakes are less likely to happen with the help of AI-powered infrastructure.
  • 24/7 Services: With the rise of contactless payments, having access to bank services at all hours is crucial. No matter where they are or what time of day they are, users of the core banking platform can always make financial transactions. Another option for clients seeking help is to reach out to customer service at any time.

Why Should You Engage a Core Banking Solution

While there are certain drawbacks, a core banking platform is still necessary for your bank to improve efficiency and increase return on investment. You can shorten your time to market when developing banking applications with the aid of Skaleet and their pre-built backend platform. They offer a versatile banking core to provide the groundwork for any PayTech solution. 

To Conclude

The provision of core banking financial services by banks to their clients presents many benefits. So, banking administrators can maximise return on investment while maintaining the highest level of customer satisfaction. Automation can also be utilised to manage the infrastructure of your application. 

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