Black Book
Black Book
Black Book
Page 2
Customer relationship management (CRM) activities.
Managing customer accounts.
Establishing criteria for minimum balances, interest rates, number of
withdrawals allowed and so on.
Establishing interest rates.
Maintaining records for all the banks transactions.
Core banking functions differ depending on the specific type of bank.
Retail banking, for example, is geared towards individual customers;
wholesale banking is business conducted between banks; and securities
trading involves the buying and selling of stocks, shares and so on. Core
banking systems are often specialized for a particular type of banking.
Products that are designed to deal with multiple types of core banking
functions are sometimes referred to as universal banking systems.
Examples of core banking products include Infosys Finacle, Nucleus
FinnOne and Oracle's
Flexcube application (from their acquisition of Indian IT vendor I-flex).
With the expanding of operations across geographies, most global banks
face the need to upgrade their core banking systems. Although an integrated
core banking system has several benefits, there are many unique
deployment challenges that must be dealt with before such benefits can be
realized. This paper presents a generic road map for a multi-country
implementation. First, it highlights the challenges that a multi-country core
banking implementation might have to face. Second, it outlines an approach
to mitigate most of these risks and challenges. Third, it delineates some
techniques to make an objective selection of the right vendor and systems
integrator.
Page 3
CHAPTER 1
INTRODUCTION TO STUDY
1.1. INTRODUCTION:
CORE BANKING:
Page 4
Core banking systems are basically the heart of all systems running in a
bank and it forms the Core of the bank's IT platform. Amongst other
functionalities, it provides the customer information management, financial
information system and the transaction-processing functions, which by far
are the most fundamental processes in a bank. With the advancement
in technology and with passage of time, core systems now-days tend to
cover more and more functionality giving the bank a join solution for most
of its operations in different business lines. Alongside, it also provides a
central operational database of customers assets and liabilities giving
facility to generate a 360 degree view of the customers relationship with
the bank. Core banking systems reside as the heart of the data-centre itself.
Page 5
records, balance of payments and withdrawal. This software is installed at
different branches of bank and then interconnected by means of
communication lines like telephones, satellite internet etc. It allows the
user (customers) to operate accounts from any branch if it has installed
core banking solutions. This new platform has changed the way banks are
working.
Page 6
The core banking system is the central processing unit of a bank. It is a
customer accounting and transaction processing engine for high-volume
back-office transactions. The inflexibility of traditional core banking
systems is hobbling sustainable growth. Banks in most emerging
markets, as well as traditional markets, are finding core replacement
inevitable. Among the main drivers for core replacement, the most obvious
is the need to provide a more cost-effective and efficient way to run core
processes. Global deployment of core banking systems offers significant
benefits. Yet, less than 5% of the worlds banks deploy a multi-country
application to service their global customers. There are several reasons why
a bank operating in multiple countries should choose a single core banking
platform, primary among which are cost savings, having a holistic and
single view of the customer, ease of management information, streamlined
and efficient processes and faster product development and deployment
across multiple geographies. With multi-country deployment of core
banking solutions, banks will be able to leverage IT to the maximum and
build competitive advantage.
Page 7
1.2 OBJECTIVES OF CORE BANKING SOLUTION
To study the core banking services provided by nationalized bank
To study the core banking services provided by co-operative bank
To suggest the scope for improvement to co-operative bank if any
1.3 METHODOLOGY USED TO COLLECT DATA
Primary data:
I) Sample frame:
Questionnaire is prepared to get the information from the public relating to
the subject manner of the topic, minimum numbers of 15 people for the
survey of the topic that is core banking solution.
2) Data collection & analysis:
Data is collected from 15 respondents and depending upon their response
the tabulation & graphical representation of responder is made available in
research work.
Secondary data:
Information is related to the subject matter of the research work is
collection from books, magazines and newspaper and it is made available in
the project work.
1.4 SCOPE OF THE STUDY
To find most important reasons to open an Internet bank account.
To know facilities is given more importance in bank.
To find kinds of account customers prefer maintain in the bank
1.5 LIMITATION OF THE STUDY
Some of the persons were not so responsive. Respondents may not be
prepared to contribute to the research due to lack of time and
resources required.
Page 8
Sample size is limited to 45 customers and 27 employees.
The research is confined only to the Dahisar area.
New Components:
Besides the 5 major ingredients, there are optional components (like a car
with options like leather seats, flashing light etc...) that can be added on to
the Core Banking Systems to help the bank staff uses them in a more
efficient manner, these include:
Delivery Channels:
All the 5 major ingredients of a Core Banking system can be operated by a
bank staff from any location in the country simple by using their terminal at
their workplace. Around the world as banks started focusing on customer
relationship management, they realized that customers interact with the
entire bank for banking transactions in many ways. Customer can go to the
branch, go to an ATM, call on the phone, and log on to the Internet to do
their banking transactions. They can use one or more of these delivery
channels (Called customer touch paints) to conduct segment and decide on
further investment design specific products and services to promote such
delivery channels.
The Core Banking Systems are production factories creating products and
services and tracking them and the delivery channels are distributors and
retailers who ensure these products and services are available to the
customers whenever they are in the country. Hence, the add-on systems for
Core Banking System include;
* Branch Automation system
* ATM Switch and connected ATM
* Call centre system
* Internet Banking System
Any transaction done by the customers in any of the above systems goes
and updates the Core Banking System like deposit or loan at that in turn
Page 9
updates the Bank's G.L. in the Core.
Page 10
CHAPTER 2
REVIEW OF LITERATURE
To-day, we cannot think about the success of a banking system without
information technology and communication. It has enlarged the role of
banking sector in the economy. The financial transactions and payment can
now be processed quickly and easily. The banks with the latest technology
and techniques are more successful in the competitive financial market.
They have been able to generate more and more business resulting in their
greater profitability. Various empirical and theoretical studies have been
undertaken at the national and international level to analyze the impact of e-
banking and information and communication technology (ICT) on banking
sector, customers, and service quality and payment system. The studies
mainly focus upon e-banking impact on productivity and profitability
primarily due to core banking system, electronic fund transfer, real time
gross settlement system and electronic clearing services. From the customer
angle the studies primarily focus upon; why customers choose e-banking
products and increase in their level of satisfaction due to phone banking,
mobile banking, internet banking, website services, ATMs, etc. These
services have not only improved the satisfaction level of customers, but
also helped in reduction of processing time and transaction time. The
productivity of banks in terms of time saving and attending the customers at
the branches has also improved. The review of following studies throws
light upon different aspects of e-banking. To know the impact of e-banking
on various aspects, the research studies undertaken for the review have
been classified into four categories, i.e., studies related to banks, studies
related to customers, studies related to service quality and studies related to
technology.
Core Banking Service (CBS) is one of the recent developments in the field
of banking and it has proved to be very useful. Centralized Online Real-
time Environment (CORE) banking enables anywhere banking. Banks
customers can operate their accounts from any branch of the bank. The
Page 11
present scenario in banking industry is once a customer opens his/her
account he/she becomes the customer of the bank but not the branch alone.
Core Banking Services provides for online banking services everywhere to
fulfil the needs of the customers. Previously all the operations such as
keeping a ledger of various transactions, maintaining customer information,
interest calculations of loans and deposits etc were done manually. With the
advent of Information and Communication Technology (ICT) all the above
core operations are done through the computers. CBS has been effective in
bringing about a radical change in the field of banking. CBS from the
customers perspective simplify their banking operations by allowing them
to conduct common frequently used banking transactions without visiting
bank's branches, thus saving a lot of time. On the other hand bank s have
improved upon their operational efficiency after the introduction of
CBS.CBS provides for online banking, Mobile banking and ATM services
on 24/7 basis to customers so that a customer need not visit a bank for his
banking needs.
Kamakodi (2008) discussed in their Article about the paradigm shift and
implementation of Core Banking System in all the banks. DR.
Anurag.B.Singh; MS.PriyankaTandon (2012) in their Article A study of
Financial Performance: A Comparative Analysis of SB1 and ICICI Bank
stated about the efficient banking system. The purpose of the study is to
examine the financial performances of the banks after the introduction of
the CBS. DR.kalagarsamy ; S.wilson (2013) in their Article A study on
customer behaviour towards banking services with special reference to
public sector banks started the customer satisfaction towards the recent
banking technology towards the services given by banks . Universal
banking procedure can help the customer for the better transaction.
Garimachaudhary (2014) in their Article Performance comparison of
private sector banks with the public sector banks in India stated about the
context of customer satisfaction and the efficiency of banks after the
introduction of CBS.
Page 12
Core Banking Solution (CBS) is networking of branches, which enables
Customers to operate their accounts, and avail banking services from any
branch of the Bank on CBS network, regardless of where he maintains his
account. The customer is no more the customer of a Branch. He becomes
the Banks Customer. Thus CBS is a step towards enhancing customer
convenience through anywhere and anytime banking. Normal Core
Banking functions will include transaction accounts, loans, mortgages and
payments. Banks make these services available across multiple channels
like ATMs, Internet banking, mobile banking and branches. The core
banking services rely heavily on computer and network technology to allow
a bank to centralize its record keeping and allow access from any location.
It has been the development of banking software that has allowed core
banking solutions to be developed.
Page 13
2.1 LITERATURE REVIEW
Page 15
internet service provider. So, the bank of tomorrow stands to be feasible
with todays technology. Daniel (1999), in his research paper, described e
banking as the newest delivery channel offered by the retail banks in many
developing countries. The objective of the study was to analyze the current
provision of electronic services of major retail banking organizations in the
UK. The researcher through a questionnaire found that 25% banks in the
UK were those already providing e-banking services, 50% banks were
testing or developing such services while 25% were not providing any e-
banking services. Electronic channels, PC, digital TV and all these provide
greater accessibility and services at lower price. To make services more
adaptable, customers should be provided maximum choice and
convenience. Restriction and limitation within organization to operate the
services and its market share or strength were viewed as important to
decide and operate the e-banking services. Sathye (1999), in his research
paper, explored the factors affecting the adoption of internet banking by
Australian customers. The author stated that internet and other virtual
banking had significantly lower the cost structure than traditional delivery
channels. So, the banks should encourage customers to use internet for
banking transactions. The author also emphasized that for adoption of
internet banking, it was necessary that the banks offering this service made
the consumers aware about the availability of such a product and explain
how it adds value to the other products. The analysis of the study showed
that security concerns and lack of awareness stand out as the reasons for
non-adoption of internet banking by Australian customers. However,
internet should be considered as a part of overall customers service and
distribution strategy. These measures could help in rapid migration of
customers to internet banking resulting in considerable saving of operating
costs of banks.
Page 16
CHAPTER 3
CONCEPTUAL FRAMEWORK
3.1 NEED FOR CORE BANKING SOLUTION:
The need for such a study does not arise just because of one reason or the
other but it requires a combination of driving forces to income into
existence.
Some of these forces being-
Economic Benefits:
The cost savings from a project of this magnitude are typically visible over
a period of a couple of years from implementation. The ROI compounds as
new lines of business and geographic areas move on to the new platform.
The return of investment typically slow in the first few years till such time
the real benefits of the system start accruing to the bank. Research reports
indicate that large core banking replacement projects enter a positive NPV
as late as the 5th year. Cost benefits in the long run may accrue to the bank
due to all of the performance benefits mentioned above (as most of them
have an indirect linkage to cost) as well as from other areas such as:
1. Lower transaction processing costs within the branch and through other
delivery channels.
2. Reduction in license fees towards other software, which gets replaced by
the core banking system. This can constitute as savings for the bank almost
immediately.
Page 18
3. Reduced maintenance costs in terms less complicated code to maintain,
easy for the bank to build its own customization, lesser time required for
testing etc.
4. Reduced staffing as lesser number of systems now needs to be managed.
5. Cheaper and faster hardware and Database Hardware and Database
costs have dropped significantly in recent times that enable the bank to
leverage on this to deliver faster transaction processing speed etc.
Performance Benefits:
1. Flexibility: -
Lack of flexibility more often tends to create an impediment in building
new functionality, eliciting data for newer regulations like the BASEL 2,
accessing better information on customer so as to enable cross selling,
addition of newer business lines, offering new products in the existing
business lines and so on. New generation core systems provide flexibility
in terms of being modular in nature and supporting an integration layer,
which can be used very effectively to hook on to third party applications.
2. Customer Centric:-
New solutions tend to give a complete 360 degree view of the customer
transaction the objective being to try and give a complete perspective of the
customer's relationship with the bank so as to enable cross selling
opportunities. Some of the core systems use data mining tools to cull out
relevant data from customer transactions and try to get a meaningful
message out of this.
3. Real Time Capabilities:-
Most transactions done in the newer core banking solutions arc on-line real
time not only within the package but across all delivery channels. This
tends to create a lot of efficiency within the system on one hand as well as
reduced risk on the other.
Page 19
4. Straight through Processing:-
This is a new concept, which enables the system to process transactions
end-to-end almost without any human intervention. E.g. a successful
implementation of STP functionality for an inward funds transfer (MT 103)
message itself could save the bank significant costs in terms of reduced
staffing requirement. A feature like this also ensures almost 24 X 7
processing of such transactions which only leads to better customer service
and good-will.
5. Lesser Down-time, smaller or no EOD / EOM cycles.
6. All of this eventually results in addition of new customers, retention
of existing customers and an over-all better customer service.
Page 20
The Excitement of Something New
The excitement only last so long until the bank realizes that this is harder
then they assumed. Gaining traction and momentum on the implementation
takes longer than expected. All of the parties dont seem to play well
together. The bank assumes that the problem has to be the integrator they
hired to help them implement the system. They rethink the strategy, they
look back at the contract the bank and the Integrator descend into a
renegotiation, the Bank looks for alternatives, and time and money are
wasted sorting out the blame game. In the end there is normally a
replacement of the integrators senior management on the project some sort
of concessions made and the project continues.
The Vendors product is defective and full of gaps!
Page 21
uncertainty within the project as suddenly scope is in question, the Bank
and Vendor relationship is in question. Again the Bank looks for
alternatives, time and money are wasted sorting out the blame game. In the
end there is normally a replacement of the Vendors senior management on
the project some sort of concessions made and the project continues maybe
we should cancel the project and sue! The Bank is still upset! They feel
cheated and betrayed. Pride takes over and leads a Bank right to the edge of
cancelling the project and letting the lawyers sort it out. Thankfully extreme
actions normally also lead to extreme introspection. The healthy self
inspection normally takes the bank back to the strategic decisions made
related to the selection of the solution, the understanding that the need to
transform is still in front of them. This normally pulls them back from the
edge and the project continues. Maybe we dont know our processes?
Stage fours introspection normally leads the Bank to question their own
understanding of their processes. The understanding that a complete view
of processes is missing within the organization allows them to question
their status quo and opens their process up to true transformation.
Page 22
will not solve their problems. Normally there are some drastic changes in
the Bank's senior management structure at this point.
Successful go live all is forgiven
Two or three years have passed, with multiple releases, and the final
transformation is ready to go live. There will always be issues to resolve
but for the most part the go-lives are successful. The core-banking platform
has been replaced, processes redesigned, and the organization transformed
for the better. The Bank has forgotten the trials and tribulations and
normally becomes a supporter of the Vendor and their solution, and
considers the Integrator a trusted business partner going forward.
Banks concerned with saving time and money in transformations will do
the work required early on to address their own processes and organization
issues (moving steps five and six ahead of step number one). They will also
diligently work to remove steps two through four from their
transformational journey. 1 would be interested to hear from others that
have seen this pattern.
Page 23
For investment of surplus funds or to create a fund for future needs like
childrens education and marriage, construction of house, business, etc one
can find plenty of opportunities to deposit money banks under various
deposit schemes. Now a days almost all banks are computerized, core
banking/ network banking system is introduced which helps the people to
deposit money at their own convenient locations.
TYPES OF DEPOSITS:
The following are some of the deposit schemes available in banks:
1. Current Account
2. Saving Account
3. Term Deposit/Fixed Deposit/ Recurring Deposit Account
4. Multi Option Deposit Account
Savings Account:
Page 24
of savings account, the account holder may not be able to write checks from
the account (without incurring extra fees or expenses) and the account is
likely to have a limited number of free transfers/transactions. Savings
account funds are considered one of the most liquid investments outside of
demand accounts and cash. Savings accounts are generally for money that
you don't intend to use for daily expenses.
This type of account is suitable for those who can save regularly and expect
to earn a fair return on the deposits over a period of time. While opening
the account a person has to agree to deposit a fixed amount once in a month
for a certain period. The total deposit along with the interest therein is
payable on maturity. However, the depositor can also be allowed to close
the account before its maturity and get back the money along with the
interest till that period. The account can be opened by a person individually
or jointly with another, or by the guardian in the name of a minor. The rate
of interest allowed on the deposits is higher than that on a savings bank
deposit but lower than the rate allowed on a fixed deposit for the same
period.
Multi Option Deposit Scheme is a term deposit which is not fixed at all and
comes with a unique break-up facility which provides full liquidity as well
as benefit of higher rate of interest, through the savings bank account. One
can also keep that deposit intact by advantage an overdraft facility, to meet
irregularly temporary funds requirements. Individual banks have their own
deposit schemes to suit the current as well as future needs of the people.
You may visit nearby branches of the banks and collect information about
different types of deposit accounts to ascertain the comparative advantages
Page 25
and limitations of the different types of deposit schemes.
2. Personal Loan:
Finance is provided to meet out all personal needs like renovating the
house, purchasing a computer, marriage or medical expenses etc.
3. Travel Loan:
Finance is provided to meet out the travel cost of the customers either
domestic or for international visits.
4. Car Loan/Vehicle Loan:
5. Education Loan:
Page 26
Finance is provided to meet out the education cost of children of the
customers.
6. Festival Loans:
CARDS:
Banks provide free ATM cum Debit Card to its customers who have
deposit account with them. This Card provides online access to savings or
current account. They can have access to the widest network of ATMs
across the country to withdraw cash, enquire about the account balance etc.
Banks also involves two parties sharing arrangement with other banks
under this scheme Transactions limit varies from bank to bank. The limit
for withdrawal of money from State Bank of India Card Rs 20,000/- per
day. Banks provide International ATM-cum-Debit Card which can be used
within as well as outside India, at a nominal fee. ATM Cards enables the
customer to shop at a large number of Merchant Establishment in India.
INSURANCE:
Insurance is a kind of investment and is getting popular among the
customers of banks. Insurance can be for life or for fixed assets. Banks do
services for life insurance. In earlier days people used to go for life
Page 27
insurance with Life Insurance Corporation of India. But now, banks also
have entering into the insurance business. ICICI Prudential Life Insurance
is one such example. Life Insurance is a unique investment that helps
customers to meet their dual needs- saving for lifes important goals. And
coverage of risk it helps ones family remain protected from circumstances
such as retirement and even after the death of the policyholder. Property
insurance help in protecting at the assets.
3.6 DEMAT SERVICES:
Banks have come forward to offer Demat services to its customer. Demat
account is opened for the purpose of buying and selling stocks/shares of
companies. Under this, the following facilities are provided to the
customers.
(1) E-Instructions:
One can transfer securities 24 hours a day, 7 days a week through Internet
& Interactive Voice Response (IVR) at a lower cost. Now with Speak to
transfer, one can also transfer or pledge instruction through customer care
officer of the concerned bank.
Page 28
(4) Mobile Request:
Access ones Demat account by sending SMS to enquire about Holdings,
Transactions, and Bill & ISIN details.
ONLINE SERVICES:
Page 29
banks to the customer for operation of account after they successfully
register with the bank.
NRI BANKING:
Page 30
CORPORATE NET BANKING:
Most banks such as SBI and other banks offer Internet banking for
corporate too. Corporate can empower officers identified by them to
operate online one or more of their accounts at one or more networked
branches of the Bank. The company appoints a regulator or super bosses
for corporate Internet banking. The powers are defined and their limits are
specified for transaction.
CASH MANAGEMENT:
TRADE SERVICES:
Page 31
FOREX ONLINE:
Forex means Foreign Exchange. Forex market is very large and growing.
Trading is conduct mostly elite through telephones or through electronic
trading networks. Banks, Insurance companies and other financial
institutions use the forex market to manage the risks associated with
fluctuations in currency rates. Foxes trading involve high level of risk and
may not be suitable for untrained investors. It requires and to understand
the relationship between the currencies and their rates. Before start trading
one has to open an account with a forex dealer. The investor should have
constant touch with currency exchange rates since there will be lot of
fluctuations in the exchange rates. If one is not cautious he/she may lose
money. If one is using Internet based or other electronic system for trading,
in the event of system failure, one, may lose orders or order priority and
result in loss of investments too. The investor should also know about the
foreign currency scam to avoid losses.
SME SERVICES:
SME means Small and Medium Enterprises. The Bank finances for Small
Business activities which are of special significance to a large number of
people as many of these activities can be started with relatively lower
investment and with no special skills on the part of the entrepreneurs. This
includes loan to traders to meet normal business requirements. Large
numbers of small and medium enterprises are working in our country.
These enterprises are a source of employment to the local people. Such
enterprises mainly adopt labour intensive techniques even than finances are
required by them to meet long term as well as short-term credit
requirements. Banks provide a variety of facilities through the SME
Service.
Page 32
Internet Banking Application Server (1BAS):
The internet Banking Application is hosted in the Internet Banking
Application server (IBAS). All internet banking service requests are
received by the IBAS from the web server. Internet Banking Application
Server works with the support of IBDS, middleware and central database
server to process the internet banking services requests. Internet Banking
Application Server is placed inside the de-militarized zone. Location: IBAS
is placed inside the de-militarized zone in a separate VLAN that contains
the Proxy server, mail server, web server and IBDS.
MIDDLEWARE:
Middleware is software that formats the data to make it compatible with
different application. Thus, a middleware is required when more than one
application with different data requirement processes a common database.
NETWORK CONNECTIVITY:
In a core banking set-up all the systems o the bank are connected in a
network. The branches will not be able to access the core banking
application if the network connectivity is lost. Thus, there must be
secondary line connectivity to the data centre from the branches that can
take over in case the primary line is down. The bank should also ensure
adequate bandwidth capacity to transfer all transactions and data across the
network.
Routers & Switches should be strategically placed to transfer data
seamlessly. In a CBS setup there are routers in all the branches. The entire
computer in the branches is connected to a switch which in turn is
Page 33
connected to the branch router. The branch routers are in turn connected to
a central router which is at the data centre.
Function of Routers:
Routers facilitate data transmission over different networks. Routers make
intelligent decisions to route data across the network by choosing the best
path.
Scalability Issues:
The system is unable to provide the same service levels with the estimated
growth in business, which could be either through acquisitions or
developed organically. A slow response time is one of the most common
causes for a drop in customer service in a bank. It is crucial to ensure that
the system in use is scalable enough to support the projected growth in
business volumes without affecting the response time.
Related to the first point, if the bank does not want to let-go of an
opportunity, then the new products would tend to get, processed
Page 35
procedurally in the system lending to over-all inefficiency. This in most
cases also leads in improper MIS on the customer business; profitability
affects the 360 degree view etc.
Increasing the regulatory burden and inability of the system to handle
new regulations. Newer regulation like OFAC (office to foreign assets
control, Basel 2, Anti money laundering if not adhered to not only put the
bank at a risk, but also might attract a higher capital requirement.
W hen banks add business lines; quite rarely would they wait for their
existing system to scale up to the functionality required for the new area of
business. This requires interfacing, on-line interfaces are complicated to
build and batch interfaces do not give a correct picture real time. As more
and more of satellite products add up, interfacing becomes a nightmare.
More time tends to get spent on reconciling information from one system to
another rendering the system inefficient. Old systems using old
technologies do not interface easily with third party applications.
Hard economic times have seen many vendors either scale down the size of
operations, work in a Maintenance Mode or are either eventually taken
over by other companies. If any of this were to happen, the system is bound
to suffer due to the reduced attention and importance it would get, from the
vendor. Quite clearly, no bank can prosper if the platform on which it is
on tends to get shaky. Though most banks go in for escrow arrangements,
these often tend to be theoretical fallback as in practice it extremely
difficult for the bank to take over and maintain the code.
Page 36
3.7 CORE BANKING IMPLEMENTATION STATUS IN THE
INDIAN BANKING INDUSTRY:
The trend of computerization in banking which was initiated in the late
eighties can now be said to have more or less completed its first phase.
Core banking application implementation are today supposed to have all
private sector and MNC banks have been followed by the large PSU
(Public Sector Undertaking) banks as well as the IT-savvy co-operative
banks down this route.
Experts agree that barring a few large banks which would go on-line in the
next 12-15 months most others have already jumped the core banking
bandwagon and are coming to grips with technology. A large number of
PSU banks are undertaking large scale IT initiatives not just to implement
the core banking solution but also to streamline their operations. One of the
key of the key area focused on is centralization of trade finance operations,
retail loans processing and credit approval processing. It is important that
the core banking solution selected enables the bank to take up such
initiatives in the bank. This is expected to help drive up volumes and speed
for these banks.
The ICS BANKS Credit Facilities and Risk Management module has the
capability to distribute funds between the branch and the head office. Risk
Management is maintained on five levels to utilize and monitor groups and
subgroups limits in real time. Whereas, the Credit Facility can include up to
four, unique transaction process control groups.
Functionality:
Customer facility maintenance
Guarantor and parallel maintenance
Page 37
Facility detail maintenance
Dynamic facility system
Revolving facilities
PROMISSORY NOTES:
The ICS BANKS Promissory Note module handles both the front-and-
back office functions of a branch, which supports the details operation of a
bank comprised of:
Discounted Personal and Commercial Bills including Personal and Loan
Systems.
Functionality:
Alternative accounts
Inquiry and reports
Settlement and classification of bills
Prepares repayment schedule with various interest and repayment
methodology
RETAIL AND CORPORATE LENDING:
The ICS BANKS Retail and Corporate Lending modules are designed to
operate in dynamic environments, which offer competitive flexibility that
meets customer and market demands.
ICS BANKS is based on product concept, where our customers can easily
define any new product needed by setting the parameters for this product
and automatically the system will check each product parameters when
adding a loan. The product concept gives the facility for the bank to put the
restrictions needed, i.e. loan amount, interest rate, loan period, loan method;
which can also be defined as exception on the customer level.
Page 38
The system provides full control over the schedule of repayment, including
instalment amount, dynamic commission definition.
TRADE FINANCE:
The ICS BANKS Trade Finance module manages letters of credit and
guarantee as well as Documentary Bills for Collection. The solution
efficiently directs transfers, maintenance, preparation and multi-currency
entries posts with customer-friendly control all integrated with SWIFT
message generation.
Trade Finance system is a complete STP (Sewage Treatment Plan) system
with a powerful workflow layer that automates the application handling.
The system can be with a put initiate the booking from the branch or can be
compatible with a centralized processing centre.
FINANCE LEASE:
The ICS BANKS Lease Financing module provides contractual services
between the customer and bank. This particular module lends to sectors
including: Real estate, services transportation, industry, medical, tourism
and agriculture.
Functionality:
Page 39
ASSET MANAGEMENT:
Functionality:
Page 40
and profitability and assets liability provides planning and control software
through reports, maps and graphs for information updates.
PROFITABILITY MANAGEMENT:
INTERNET BANKING:
The ICS BANKS Internet Banking System (DBS) module brings together
a suite of front office functionality delivered by the same core platform and
database that has, traditionally, been offered to only supporting back-office
activity. ICS BANKS online solution uses the latest web programming
technologies and computing concepts in the systems development,
ensuring an open and portable access for various hardware and operating
systems platforms.
The ICS BANKS online banking solution consist of the internet banking
service provider (IBSP) and IBS, two capabilities that allow banks to
provide customers multi-functional services that can be accessed globally,
Our multi-lingual systems functionality supports the needs of retail,
corporate and universal banking as well as private wealth management-
areas of ICS BANKS previous success and continued growth.
Page 42
CHAPTER 4
RESEARCH METHODOLOGY
4.1 INTRODUCTION
Research Methodology is a way to find out the result of a given problem on
a specific matter or problem that is also referred as research problem. In
Methodology, researcher uses different criteria for solving/searching the
given research problem. Different sources use different type of methods for
solving the problem. If we think about the word Methodology, it is the
way of searching or solving the research problem. The process used to
collect information and data for the purpose of making business decisions.
The methodology may include publication research, interviews, surveys
and other research techniques, and could include both present and historical
information.
Page 43
4.3 SURVEY
Survey involves collecting information, usually from fairly large groups of
people, by means of questionnaires but other techniques such as interviews
or telephoning may also be used. There are different types of survey. The
most straightforward type (the one shot survey) is administered to a
sample of people at a set point in time. Another type is the before and after
surveywhich people complete before a major event or experience and then
again afterwards.
4.4 QUESTIONNAIRES
4.5 SAMPLING
Page 45
Non probability sampling
1) Non probability sampling is any sampling method where some
elements of the population have no chance of selection (these are
sometimes referred to as 'out of coverage under covered') or where the
probability of selection cant be accurately determined. It involves the
selection of elements based on assumptions regarding the population
Of interest, which forms the criteria for selection? Hence, because the
selection of elements is non random, non probability sampling does
not allow the estimation of sampling errors these conditions give rise
to exclusion bias, placing limits on how much information a sample
can provide about the population. Information about the relationship
between sample and population is limited, making it difficult to
extrapolate from the sample to the population. Non probability
sampling methods include convenience sampling, quota sampling and
purposive sampling. In addition, non response effects may turn any
probability design into a non probability design if the characteristics
of non response are not well understood, since no response effectively
modifies each element's probability of being sampled.
2) Probability sampling
Probability sampling is also known as sampling. The criterion in this
sampling is that each unit should have to know chance of being selected
in tine population or universe; the researcher is going to sample.
However known chance does not means equal chance. This sampling
allows the researcher to perform statistical projection of characteristics
on the population sample.
Page 46
performing probability sampling.
SECONDARY DATA:
The secondary data are those which have already been collected by
someone other than the investigator himself, and as such the problems
associated with the original collection of data do not arise here. The
secondary data can be collected directly either form published or
unpublished sources. The following are the sources of published at from
which secondary data can be collected.
Page 48
obtained from the chamber of commerce, (rode associations, labour bureaus
and research workers. Scrutiny of Secondary Data: Thus the data collected
by some other person should not be fully depended as they might have
pitfalls. Thus it becomes necessary to find out the inconsistencies probable
errors and omissions in the data. This necessities the scrutiny of secondary
data because it is just possible that the data might be inaccurate, inadequate
or even unsuitable for the purposes of investigation. Hence the secondary
data should possess the following qualities:
1. Reliability
2. Suitability
Page 50
CHAPTER 5
DATA INTERPRETATION
I here are various techniques which we can used to interpret that data.
Interpretation means the data which has been collected from the general
public such as primary data. This data is analysed and the converted into
the diagram form such as bar diagram, pie chart, histogram, and percentage
bar diagram. Mostly techniques used in this project is the bar diagram, pie
chart. There are 10 questions some are demographic question and rest are
based on the survey of the topic the survey is based on financial futures.
Page 51
5.2 EXPLANATION ACCORDANCE WITH QUESTIONNAIRE
For Customer
1) You have account in nationalized/co-operative bank?
TABLE 5.1
ACCOUNT OWNED BY CUSTOMERS
Nationalized Co-operative
Number of respondent 26 19
% 57.8% 42.2%
GRAPH- 5.1
42%
Nationalized
Co-operative
58%
TABLE 5.2
AWARENESS LEVEL OF CORE BANKING
Current A/c Saving A/c Loan A/c Others
Number of 10 34 1 0
respondent
% 22.2% 75.6% 2.2% 0%
GRAPH- 5.2
22%
Current A/c
Saving A/c
Loan A/c
Others
76%
The following graph tell us about how many people are aware about the
core banking service like Current A/c, Saving A/c, Loan A/c and Demat &
Credit Card.
Conclusion:
With the research work it can be concluded that most of the customers have
used the savings account. From above chart we research that 76%
customers you are using savings account and none of the customer is
preferred the loan account.
Page 53
3) Which of the following facilities is given more importance in your
bank?
TABLE 5.3
FACILITIES GIVEN BY BANK
Loan facilities ATM Overdraft All of the
facilities above
Number of 3 16 1 25
respondent
% 6.7% 35.6% 2.2% 55.6%
GRAPH- 5.3
7%
Loan facilities
ATM facilities
36%
Overdraft
56%
All of the above
2.20%
The following diagram say about the areas of core banking like loan
facilities, ATM facilities.
Conclusion:
From the above chart it can be conclude that as a customer point of view
the most of the banks are gave more importance to providing ATM
facilities rather than Loan facility, overdraft facility. 35% customers say
that banks give more importance to ATM facility.
Page 54
4) What are the services provided by staff member of your bank?
TABLE 5.4
SERVICES PROVIDED BY THE STAFF MEMBERS
For any Listening to Guidelines Others
enquiry your problem for various
deposit
schemes,
their
advantages
Number of 12 12 21 2
respondent
% 26.7% 26.7% 46.7% 2%
GRAPH- 5.4
The following diagram say that what are the services of staff members
provided to the customers like for any enquiry, listening to the problems,
Guidelines for the various deposit scheme
Conclusion: From the above diagram says that customers are satisfied with
the services provided by the member & few customers are not satisfied.
Page 55
5) What time does your bank take for the Delivery of Demand
Drafts/Pay Orders?
TABLE 5.5
Availability of services of staff members to the customer
Within 20 minutes 20-30 minutes More than 30
minutes
Number of 16 19 11
respondent
% 34.8% 41.3% 23.9%
GRAPH- 5.5
41%
The following diagrams tell us about what time are taken by the bank for
the Delivery of the demand drafts, pay order.
Conclusion:
With the research work it can be conclude that most of banks are given
within 20 minutes for the delivery of the demand draft, pay order, and 24%
customers are says that banks take more than 30 minutes for the delivery of
demand draft & pay order.
Page 56
6) How frequently do you use telephone banking services per month
(for example, balance enquiry. Fund transfer between accounts)?
TABLE 5.6
Telephone Banking Services per Month Used By Customers
Less than 1 1-3 times 3-8 times 8-12 times
time
Number of 5 24 11 6
respondent
% 10.9% 52.2% 23.9% 13%
GRAPH- 5.6
The following diagram is about the how many time customers using the
Telephone banking service.
Conclusion:
With the research work it can be conclude that around 52% of customer are
using the telephone banking services for the 1 to 3 times...
Page 57
7) What are the most important reasons you opened an internet bank
account?
TABLE 5.7
REASONS TO OPEN AN INTERNET BANK ACCOUNT
Convenience Curiosity Better Safe Low Easy to Others
(24 hours rates and service maintain
service, secure charge my
anywhere banking
connectivity transaction
activity
Number of 14 1 2 3 12 14 0
respondent
% 30.4% 2.2% 4.3% 6.5% 26.1% 30.4% 0%
GRAPH- 5.7
6.50%
Easy to maintain my banking
transaction activity
The following diagrams tell the most important reasons to open an internet
bank account according the customer. The reasons are Convenience (24
hours service, anywhere connectivity), Curiosity, Better rates, Safe and
Page 58
secure, Low service charge and Easy to maintain banking transaction
activity
Conclusion:
The above diagrams say that 30% customer is open with internet bank
account for the easy to maintain banking transaction activity and its given
more safe & secure. Only 2% customers are open for the better rate.
Page 59
8) What do you feel about overall service quality of your bank?
TABLE 5.8
SERVICE QUALITY OF YOUR BANK
Excellent Very good Good Average Poor
Number of 10 18 11 6 1
respondent
% 21.7% 39.1% 23.9% 13% 2.2%
GRAPH- 5.8
13.00% 22%
Excellent
Very Good
23.90% Good
Average
Poor
39%
The following diagram is about what the customer feel about overall
service quality of the bank.
Conclusion:
With the research work it can be conclude that 39% of customer are says
that overall service quality of bank is very good. And 24% of customers are
that overall service quality of bank is good.
Page 60
For Employees
9) Does your banks have core banking facility for the customers?
TABLE 5.9
BANKS HAS CORE BANKING FACILITY FOR THE CUSTOMERS
Yes No
Number of respondent 17 10
% 63% 37%
GRAPH- 5.9
37%
Yes
No
63%
The following chart tell us about the core banking facility for the customers
Conclusion:
With the research work it can be concluded that 63% of customers agree
that they have core banking facilities for the customers.
Page 61
10) Do they charge unnecessarily for not maintaining minimum balance
in your account?
TABLE 5.10
UNNECESSARY CHARGES
Yes No
Number of respondent 14 13
% 51.9% 48.1%
GRAPH- 5.10
UNNECESSARY CHARGES
53%
52%
51%
50%
49% 52%
48%
47% 48%
46%
Yes No
The following chart tell us about what the customer agree for the
unnecessarily charges in their account.
Conclusion:
The above diagram says that 52% of customers think that it charges
unnecessarily for not maintaining minimum balance in their account.
Page 62
10) Would you recommend this bank to your friends, relatives,
associates?
TABLE 5.11
RECOMMENDATION OF THE BANK
Yes No
Number of respondent 17 10
% 63% 37%
GRAPH- 5.11
50%
40%
37%
30%
20%
10%
0%
Yes No
Page 63
FINDINGS
1) From the above question 1 we have found that most of the customer
that is 58% have account m nationalized bank and 42% of the
customer have account in co-operative bank.
2) From the above question 2 we have found that most of the customers
have used the saving account. Whereas other customer have been
using loan A/C, current A/C, and Demat A/C.
3) The above question 3 tells us that there are most of the banks who
gave more importance ATM facility rather than Loan facility,
overdraft facility.
4) From the above question 4 we have found that customers are satisfied
with the services provided by the staff member and few of the
customers are not satisfied.
5) The above question 5 tells us that there that most of banks are given
within 20 min for the delivery of the demand draft, pay order, and
other banks gives less delivery time.
6) From the above question 6 we have found that around most of the
customer
7) The above question 7 tells us that most of the banks give convenience
of 24 hours services and anywhere connectivity. Whereas other
customer look for the bank that have less interest rates and better
services.
8) From the above question 8 we have found that, most of customer are
says that, overall service quality of bank is very good. And the rest,
customer says that overall service quality of bank is good.
9) The above question 9 tells us that most of customers agree that they
have core banking facilities for the customers.
10) From the above question 10 we have found that most of
customers think that it charges unnecessarily for not maintaining
minimum balance in their account.
Page 64
11) The above question 11 tells us that most of the employees
would like to recommend their friend, relatives and associates.
Page 65
CONCLUSION
Core banking is all about knowing our customer need and provide them
with the right service at the right time through right channel 24*7 day a
week. Being electronic, it not only provides its customers with faster and
better facilities, it even reduces the manual overhead of accounts
maintenance.
Page 66
SUGGESTIONS
From the study of core banking services, I would like to propose the
following suggestion.
1. Core banking services offered by the various commercials as well as
public sector banks needs to be properly publicized so that the
common people would be able to make optimum use of these services
Page 67
BIBLIOGRAPHY
BOOK:
1) Core banking solution
-M. Revathy Sriram
Web:
1) http://en.wikipedia.org/wiki/Core_banking
2) http://srichidsirvice.com/core%20Banking%20Solutions_%20An%As
sessment.
Page 68
QUESTIONNAIRES
Q.4) What are the services provided by staff members of your bank
a) For any enquiry
o Very good
o Good
o Average
o Poor
Page 69
b) Listening to your problems
o Very good
o Good
o Average
o Poor
c) Guideline for various deposit schemes, their advantages
o Very good
o Good
o Average
o Poor
Q.5) What time does your bank take for the delivery of demand drafts/pay
orders?
o Within 20 minutes
o 20-30 minutes
o More than 30 minutes
Q.6) How frequently do you use telephone banking service per month (for
example, balance inquiry, fund transfer between accounts?
o Less than 1
o 1 to 3 times
o 3 to 8 times
o 8 to 12 times
Q.7) What are the most important reason you opened an Internet bank
account?
o Convenience (24 hours service, anywhere connectivity)
o Curiosity
o Better rates
o Safe and secure
o Low service charge
Page 70
Q.8) What do you feel about overall service quality of your bank?
o Excellent
o Very good
o Good
o Average
o Poor
Q.9) How many third parties are there that interfaces a core banking
system?
o ATM & ABM
o Replay
o Cheju Clearing
o Point of Sale (POS)
o Loan Insurance
Q.10) What type of network is used in core banking solution?
o Data related to transactions, customer data (such as name, profession,
income, family members, etc.) are stored and are available to all
networked branches for access.
Page 71
o If it was a Private Bank they would require the Securities Trading,
Corporate Actions and Asset Management modules in addition to
customer, Customer Account, Accounting, Deposits and Payments.
Page 72