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.
• Any branch transactions.
• 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.