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What is Core Banking?
Core banking is an abbreviation of centralized online real-time environment banking. It is a back-end system in which banking transactions, financial records, and other updates regarding accounts are processed daily. It includes deposit, loans, and credit processing, including general ledgers and reporting tools interface.
In core banking, multiple branches are connected to deliver different operations, like borrowing loans, financial transactions, cash withdrawals, and payment deposits. Core banking allows a customer to experience banking as a single entity from any location globally. This system aims to offer independence to the customer for using their accounts and conducting financial transactions from any location.
This system empowers existing customers’ freedom of their account transactions. With time, technology is evolving and making financial transactions safer and faster, making it possible remotely from anywhere globally. A core banking system always reduces operational costs considerably, reducing workforce requirements for execution.
Moreover, it increases customer accountability. Core banking systems are more efficient and user-friendly with software applications-based platforms. Bank core systems provide many benefits, including keeping pace with fast-evolving markets, simplifying customer processes, and reaching out to remote areas.
Internet banking allows users to do financial transactions from the internet by using bank websites or banking applications. It is a user-friendly system. Customers can transact through the internet with tablets, mobile phones, or computers, pay bills, and transfer money without visiting the bank. It is also called online banking or internet banking.
Online banking also provides the facilities for local and international funds transfers, investing in mutual funds, ordering checkbooks, open or fixed deposits, and checking account balances.
It is part of the core banking system, which provides convenience to customers and banks by reducing customer load. It is also helpful for doing transactions on holidays. Different banks offer different services, including informational, communicative, and transactional services.
Difference Between Core Banking and Internet Banking
Core banking provides services to bank officials and customers, while internet banking is only limited to customers regarding services.
Core banking is the technological backup of a bank. It is software that holds all the ledgers, transactional data, and data of all integrated branches, ATMs, mobile banking, internet banking, regulatory compliance, payment interface, etc. At the same time, internet banking is the branch of core banking that deals with all kinds of users’ online transactions. It is a form of service that is provided to the consumers by the bank to users to facilities online transactions.
Comparison Between Core Banking and Internet Banking
|Parameters||Core Banking||Internet Banking|
|Definition||Core banking is an abbreviation of centralized online real-time environment banking. It is a back-end system in which banking transactions, financial records, and other updates regarding accounts are processed daily.||Internet banking allows users to do financial transactions from the internet by using bank websites or banking applications.|
|Function||Core banking is operated by centralized software designed to facilitate bank officials and integrate different branches. It holds all the information of customers and the bank.||Internet banking allows customers to use services free of cost without a bank visit.|
|Beneficiary||Core banking software facilitates bank officials and customers.||Customers are the primary beneficiaries.|
|Cash involvement||In core banking, physical cash is involved.||In internet banking no cash involvement; all transactions are virtual.|
|Services||Core banking offers many basic and advanced services like handling charges, establishing interest rates, holding mortgages, promoting bank products, etc.||Internet banking is a personal service that helps view account statements, transfer money, make online payments, and bill payments to customers, etc.|
- Bryan, L.L., 1991. Core banking. McKinsey Quarterly, (1), pp.61-74.
- Furst, K., Lang, W.W. and Nolle, D.E., 2002. Internet banking. Journal of financial services research, 22(1), pp.95-117.