Core Banking System

A core banking system is the software used to support a bank’s most common transactions.

Elements of core banking include:

  • Making and servicing loans.
  • Opening new accounts.
  • Processing cash deposits and withdrawals.
  • Processing payments and cheques.
  • Calculating interest.
  • 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 bank’s 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.

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