An important challenge for any bank is to maximize its revenue while increasing profit, Banks take considerable efforts to achieve the same by reducing the cost of operation. Organizations can reduce cost only till a point where further reduction will affect the efficiency of their operations. In such case a transformative initiative helps banks to balance cost and increase business to result in increased profit.
A transformative initiative refers to upgrading a preexisting core banking solution or replacing the traditional banking method with a modern and more efficient web-based or application based system that completely transforms the bank and increase the efficiency to perform its daily operations.
At present, banking has moved from the old days of being a place to deposit & withdraw money and take loans. With Implementation of core banking solution banks have seen a major breakthrough in the banking operations. An ideal Core banking solution is a scenario where products, processes, channels, customer information and management tools are integrated and administered through a central database of the bank with branches and channels as delivery points. This helps in achieving economies of scale by data integration for various purposes such as cross selling, CRM, Regulatory Reporting and internal MIS. Core Banking Solution enables Branch and Multi Branch banking helping bank and customers to carry banking transaction irrespective of which bank branch they are at. The solution also reduces the time and cost to manage Loan, Payments, Securities and other banking transactions becoming the backbone of the bank.
Features of core banking solution—
- Better customer handling.
- Efficient management of withdrawals and deposits.
- Transactions management
- Management and calculation of interest.
- NEFT, cash, check, RTGS payment processing options.
- Banking product designing.
- Management of accounts.
- Management and disbursal of loans.
- Fixing criteria for interest rates, minimum balances, number of withdrawals allowed and others.
Some of the advantages that core banking solutions give to the bank—
- Meeting customer demands with the help of improved operations.
- Avoids multiple entries errors.
- Introducing new financial products by making changes in the existing products.
- Self-service operations and back office data are merged for better use.
- Saves hours and increases staff efficiency.
A successful transformation depends on factors like contribution and strong support of internal stakeholders, change management, effective communication and well defined role and responsibility along with a strong leadership. Vendor selection for the solution effects the success of the implementation as a more experienced vendor with a background of successful transformation helps in smoothing the process. Business goal aligned with IT strategy implemented with a vision for the next 3 to 5 years helps banks to streamline their transformation and deliver positive result.
A well planned transformation can affect business in a positive way. Considering to plan right from the discovery of such transformation including benchmarking performance, reviewing business plan and model, developing project plan and training the team for the situation will have a considerable effect on the time taken and the level of success of implementation. The development phase support includes helping the development team with internal team support, constantly monitoring the progress, constant briefing about the project and suggesting changes depending on the solution package and tracking performance to providing program management support in the implementation stage while coaching the internal staffs and acquainting them with enough knowledge about the solution and understating first level troubleshooting will help measure the success of the transformation and fetch good ROI.