EXECUTIVE SUMMARY

The Core Banking solution incorporates the entire spectrum of Banking

operations on one single platform, Front-to-Back, making it a complete
Core Banking Management software package. The solution ensures high
levels of automation, risk-free deployment, and full STP workflow
coverage, ease of use, low-cost operation and full cross bank account
management.

Core banking became possible with the advent of computer and

telecommunication technology that allowed information to be shared
between bank branches quickly and efficiently.
Before the 1970s it used to take at least a day for a transaction to reflect in
the account because each branch had their local servers, and the data from
the server in each branch was sent in a batch to the servers in the data
centre only at the end of the day (End).
Over the following 30 years most banks moved to core banking
applications to support their operations where CORE Banking may stand
for "centralized online real-time exchange". This basically meant that all
the bank's branches could access applications from centralized data centres.
This meant that the deposits made were reflected immediately on the bank's
servers and the customer could withdraw the deposited money from any of
the bank's branches.
Core banking solutions is jargon used in banking circles. The advancement
in technology, especially Internet and information technology has led to
new ways of doing business in banking. These technologies have reduced
manual work in banks and increasing efficiency. The platform where
communication technology and information technology are merged to suit
core needs of banking is known as core banking solutions. Here, computer
software is developed to perform core operations of banking like recording
of transactions, passbook maintenance, and interest calculations on loans
and deposits, customer records, balance of payments and withdrawal. This
Page 1
software is installed at different branches of bank and then interconnected
by means of computer networks based on telephones, satellite and the
internet. It allows the banks customers to operate accounts from any branch
if it has installed core banking solutions.
Gartner defines a core banking system as a back-end system that processes
daily banking transactions, and posts updates to accounts and other
financial records. Core banking systems typically include deposit, loan and
credit-processing capabilities, with interfaces to general ledger systems and
reporting tools. Core banking applications are often one of the largest single
expense for banks and legacy software are a major issue in terms of
allocating resources. Strategic spending on these systems is based on a
combination of service-oriented architecture and supporting technologies
that create extensible architectures.
Many banks implement custom applications for core banking. Others
implement/customize commercial ISV packages.
While many banks run core banking in-house, there are some which use
outsourced service providers as well. There are several Systems integrators
like Cognizant, Edge Verve Systems Limited, Capgemini, Accenture, IBM
and TCS which implement these core banking packages at banks.
A core banking system is the software used to support a banks 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.

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 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.

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 CHAPTER 1
INTRODUCTION TO STUDY

1.1. INTRODUCTION:

CORE BANKING:

Core banking is a general term used to describe the services provided by a

group of networked bank branches. Bank customers may access their funds
and other simple transactions from any of the member branch offices.
Core Banking is normally defined as the business conducted by a banking
institution with its retail and small business customers. Many banks treat
the retail customers as their core banking customers, and have a separate
line of business to manage small businesses. Larger businesses are
managed via the corporate banking division of the institution. Core banking
basically is depositing and lending of money.
Nowadays, most banks use core banking applications to support their
operations where CORE stands for "centralized online real-time exchange".
This basically means that the entire bank's branches access applications
from centralized data centres. This means that the deposits made are
reflected immediately on the bank's servers and the customer can withdraw
the deposited money from any of the bank's branches throughout the world.
These applications now also have the capability to address the needs of
corporate customers, providing a comprehensive banking solution.
A few decades ago it used to take at least a day for a transaction to reflect
in the account because each branch had their local servers.
Normal core banking functions will include deposit accounts, loans,
mortgages and payments. Banks make these services available across
multiple channels like ATMs, internet banking, and branches.
WHAT TS A CORE-BANKING SYSTEM?

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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.

Core banking solution:

Core banking solutions are banking applications on a platform enabling a

phased, strategic approach that is intended to allow banks to improve
operations, reduce costs, and be prepared for growth. An overall Service-
Oriented-Architecture (SOA) helps banks reduce the risk that can result
from manual data entry and out-of-date information, increases management
information and review, and avoids the potential disruption to business
caused by replacing entire systems.

Core banking solutions is frequently used in banking circles. The

advancement in technology, especially Internet and information technology
has led to new ways of doing business in banking. These technologies have
cut down time, working simultaneously on different issues and increasing
efficiency. The platform where communication technology and information
technology are merged to suit core needs of banking is known as core
banking solutions. Here, computer software is developed to perform core
operations of banking like recording of transactions, passbook
maintenance, and interest calculations on loans and deposits, customer

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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.

Gartner defines a core banking system as a back-end system that processes

daily banking transactions, and posts updates to accounts and other
financial records. Core banking systems typically include deposit, loan and
credit-processing capabilities, with interfaces to general ledger systems and
reporting tools. Strategic spending on these systems is based on supporting
technologies that create extensible.
India post is losing its customers due to lack of modernization in its
customer experience and operations.
At present, India post does not have the services of ATMs, Mobile banking
and demit certificates facility.
Banks have traditionally been in the forefront of harnessing technology to
improve their products, services and efficiency. They have, over a long
time, been using electronic and telecommunication networks for delivering
a wide range of value added products and services. The delivery channels
include private networks; public networks etc. and the devices include
telephone, Personal Computers including the Automated Teller Machines,
etc. With the popularity of PCs, easy access to Internet and World Wide
Web (WWW), Internet is increasingly used by banks as a channel for
receiving instructions and delivering their products and services to their
customers. This form of banking is generally referred to as Internet
Banking, although the range of products and services offered by different
banks vary widely both in their content and sophistication.

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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.

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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.
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 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

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updates the Bank's G.L. in the Core.

1.6 IMPACT OF CORE BANKING:

The Core Banking Systems have to satisfy the requirements of all the
entities that form part of the eco-system of the Bank.
[1] Bank Employee: Head office, regional offices, branches etc: Using
Core banking System. With appropriate authority employee as given above
can help customers do their financial transaction.
[2] Bank management: Executives / managers at respective locations,
head office, regional offices, branches etc. can obtain the financial position
from Core Banking Systems related the respective sphere of banking
operations and thus help pinpoint potential problems so as to avoid crises.
[3] Bank Customers: Can operate any of their accounts from any branch
or preferred delivery channel and have access to his funds any time 24
hours a day.
[4] Bank Auditors : Ones accounts audited, they operate the same year on
year thus enabling auditors to focus more on systems and procedures at
delivery channels like branches, call centre etc.
[5] Bank regulators: Core Banking Systems produce the required reports
for regulatory bodies like the central bank, financial statement, asset and
liability reports, NPA reports large currency transaction reports etc. are all
produced by either the deposits, or the loan or a combination of deposit,
loan and G.L. System.

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 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

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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.

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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.

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2.1 LITERATURE REVIEW

An IDC report, China Banking Industry IT Solution 2007-2011 Forecast

and Analysis, June 2007, evaluated all solution providers based on
revenue and market share for 2006. IDC noted that TCS Financial Solution
has emerged as a major force in Chinas banking IT solutions market after
winning major deals with Bank of China and HuaxiaBank.IDC s research
estimates that the market for core banking solution (excluding hardware) in
China was RMB 1,036.6 million in 2006, an increase of 23.8% over 2005.
Core banking solutions accounted for 23.8% of the overall banking
solutions market and constituted the No. 1 category of bank IT solutions
spending. According to the IDC report, Chinas banking IT expenditures
are forecast to increase 15.1% or RMB 42.1 billion by 2007.
The system called IMAL is the first certified core banking system for Bank
Dhofar s Islamic banking operations. As per the deal, Bank Dhofar will
collaborate with Path Solutions, to provide Sharia-compliant products to
Bank Dhofar customers and help it to enlarge this area of its business. Bank
Dhofar has selected Path Solutions as its Core Banking System provider,
for its Islamic Banking operations.
IBM announced the availability of FLEXCUBE(TM), I-flexs core
banking suite on a J2EE architecture using IBM Software. As part of a
global partnership agreement, IBM and I-flex will jointly market, sell and
deliver FLEXCUBE for core banking. FLEXCUBE is an interoperable and
flexible core banking solution designed to easily interface with complex
systems and enable banks to quickly respond to the changing business and
regulatory environment. The new version, of FLEXCUBE for core banking
runs on IBMs J2EE-based Web Sphere integration and infrastructure
software.
Aite Group recognized DNA with its Alliance Award based on the
platforms open architecture, which makes it easy for virtually any financial
services vendor to integrate their solutions with DNA. Banking Awards
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from Aite Group, a leading independent research and advisory firm focused
on the financial services space. DNA won the most awards of any core
platform mentioned in the report - including systems from Fiserv, FIS, Jack
Henry and Harland - demonstrating how DNA is a dramatically different
core banking platform.
On Oct. 21 MUMBAI, India Tata Consultancy Services (TCS) on
Thursday announced that it had acquired Australian Financial Network
Services (FNS), a core banking solutions vendor, for approximately $26m.
TCS has bought the stakes owned by Macquarie Bank and other promoters
in an all-cash deal. The acquisition of FNS will further strengthen TCS
portfolio of banking and financial services products by adding a strong,
high- performance core banking solution with an established global
customer base. With its rich functionality, proven scalability and
robustness.
In a new report, Celent compares a range of core banking solutions that
have a sizable presence with small global banks, specifically solutions with
more than 80 per cent of their customer base having less than $1 billion in
assets. In Core Banking Solutions for Small Banks: A Global Perspective,
Celent covers solutions where more than 10 per cent of the banks are
located in regions other than North America.
Dannenberg and Kellner (1998), in their study, overviewed the
opportunities for effective utilization of the Internet with regard to the
banking industry. The authors evaluated that appropriate application of
todays cutting edge technology could ensure the success of banks in the
competitive market. They evaluated the services of banks via internet as
websites provide sophisticated line of products and services at low price.
The authors analyzed that transactions via internet reduce the risk of data
loss to customers, chance to cut down expenses, higher flexibility for bank
employees, re-shaping the 43 banks image into an innovative and
technologically leading institutes, etc. The researchers found that banks
could move one step further by entering into a strategic alliance with

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.

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 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-

To study the intense competition and changing market dynamics in

an over banked environment.
To understand the demands of customers who are better informed,
more demanding and less loyal than ever.
To enhance efficiency and effectiveness
Increasing customer satisfaction and convenience
Freeing up time for branch staff to focus on sales and marketing
Simplifying process for employees
Enhancing banks competitiveness in the market
Improved process efficiency.

Shrinking margins, slow growth.... The challenges that confront today

banker are as intense as they are varied and about technology, the bankers
trusted friend in the past few decades has lately become an obstacle in the
quest for market leadership. Stakeholders expectations continue to be
overwhelmed by their positive experience in other industries like retail and
travel, of how technology can make a difference. Satisfying such
expectations requires that banks make their vital systems customer-centric,
cross-channel capable and process- oriented.
Majority of work in manual and duplication
Cheque clearing is done in manual and locally
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 No Global account number system
No data protection and customer data
Cash management function is inadequate resulting extra work
No Management information systems facilities
Issue of certificate in manual instead of Demat
Poor record maintenance
Inadequate audit functions
Non agreement of balances
Calculations of agents commission in manual
Real Time Processing
Multi channel88 support like ATMs/Mobile Banking
Process simplification to reduce service response times.
3.2 BENEFITS OF CORE BANKING SOLUTION

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.

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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.

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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.

3.3 THE EIGHT STAGES OF CORE BANKING

TRANSFORMATIONS

Commonalities in core banking transformations are what 1 look for. The

common issues, mistakes, and roadblocks that I have seen across a number
of large banking transformations are the things I like to solve for. Recently
while speaking with a client they asked me if they were any different than
other banks going through the same type of transformation. Sadly I had to
say no. In fact I had to tell them that they were going through almost an
identical process as other banks. What are the stages that most banks
undertaking a core banking transformation will go through? For simplicity
sake i have distilled my view on the common processes down to a list of
eight stages of core banking transformations.

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The Excitement of Something New

Most banks go through an extremely detailed, time consuming, and costly

RFP process when assessing core banking solutions, integrators, and other
peripherals required for their transformation project. The elation at the end
of the RFP process with the selection of a solution (Vendor), integration
partner (Integrator), and the other required hardware components normally
generates an amazing amount of excitement. The bank is over optimistic at
this point and the new project kicks off, all parties land on the ground... its
the excitement of taking on the new!
Why is this so hard? Its the integrator!

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!

Ill-defined processes start to come out of the woodwork. The capabilities

and standards of the purchased solution start to be understood by the bank.
Enhancements, extensions, and configurations start to be identified; effort
and duration start to increase. The solution was oversold, says the Bank!
You have asked for non-standard processes or functionality that was
identified to you in the RFP responds the vendor. This creates noise and

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.

Maybe its our organization?

The natural progression to question the status quo of the processes normally
leads to an epiphany related to the banks overall organization structure and
questioning their management by silo mentality. Internally a power struggle
over the definition and ownership of the business processes starts as the
business realizes this isnt an IT project it is a dramatic transformation of
the business with the core banking transformation acting as a catalyst.
All Hands on Deck!
The organization wakes up. The executive sponsor realizes that they
actually need to do something other than sitting in status meetings. An all
hands on deck mentality manifests as the Bank realizes internal infighting

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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.

Architecture of Core Banking Solution:

High database security system
Real time functionality with offline capability
Use of graphical user interface
Smart card
Screen verification of signatures
Cash account on accrual basis
One uniform ledger for all modules of all post offices
Auto generation of daily balance sheet
3.4 DEPOSITS:

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

Current Deposit Account:

Big businessmen, companies and institutions such as schools, colleges, and
hospitals have to make payment through their bank accounts. Since there
are restrictions on number of withdrawals from savings bank account, that
type of account is not suitable for them. They need to have an account
from which withdrawal can be made any number of times. Banks
open current account for then, like savings bank account, this account also
retires certain minimum amount of deposit while opening the account. On
this deposit bank does not pay any interest on the balances. Rather the
accountholder pays certain amount each year as operational charge.

Savings Account:

A deposit account held at a bank or other financial institution that provides

principal security and a modest interest rate. Depending on the specific type

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.

Recurring deposit account:

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 Account:

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.

3.5 TYPES OF LOANS:

Following are some of the popular loan schemes offered by banks:

1. Housing Loans:

Finance is provided for purchase of a new House. Loan is also given

for the purchase of land and constructions of house on the same. The
rates of interest to be charged depends on two factors firstly the
amount of loan and secondly the time period for which the loan is
required. The rate of interest may be fixed or fluctuating. In case,
fixed rate interest rate remain the fixed throughout the period of loan
inspire of the fact that the current rate of interest may be different the
rate at which the loan was obtained.

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:

Finance is provided for purchase of car or other vehicles either for

personal or business purposes.

5. Education Loan:

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 Finance is provided to meet out the education cost of children of the
customers.

6. Festival Loans:

Finance is also given to meet out the festival expenses.

INVESTMENTS:
Now a days bank also participates in the activities of investment at
national or international level of investment banks. They help companies
and government to raise money by issuing and selling securities in the
capital markets. They provide necessary financial guidance to its customers
for effective investments in Stock and Mutual Funds. Some banks also have
specialized offices for this purpose

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
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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.

(2) Make-physical strong:

Under this one can Dematerialize the physical shares in various holding
patterns and consolidate all such scattered holdings into primary demat
account at reduced cost.

(3) Digitally Signed Statement:

One can receive account statement and bill by email.

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(4) Mobile Request:
Access ones Demat account by sending SMS to enquire about Holdings,
Transactions, and Bill & ISIN details.

(5) Mobile Alerts:

Receive SMS alerts for all debits/credits as well as for any request which
cannot be processed.
Banks forms a mutual benefit with Securities Limited Organisations
introduce a State of-the Art online trading platform to cater to every trading
need and offer a truly world class experience of online investing- anyplace,
anytime. This service provides with a 3-in- l account which is a combined
platform of Bank Account, Demat Account and an Online Trading Account
to give customers a convenient and paper free trading experience under one
roof. This will help the customer to trade from the comfort of home or
office through the Internet. Buying and selling of shares is now just a click
away distance.

ONLINE SERVICES:

Transaction at the convenience of customers, saving times and cost through

Computers is popularly known as Online Banking. It is also known as E-
Banking or Net Banking or internet Banking. It is done through a computer
with internet facilities. Customers can monitor and control their funds
through Internet Banking. They can check account balance, view their
account, Get summary statement, make bill payments and utility payments,
request for Cheque book, drafts, Bankers Cheques, stop cheque payment
transfer funds, request for third party transfers, invest and renew deposits,
issue standing instructions, register mobile number for SMS alerts and
many more attractive features. User-Id and Password are given by the

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banks to the customer for operation of account after they successfully
register with the bank.
NRI BANKING:

A Non Resident Indian(NRI) as per FEMA(foreign enchantment act) 1999

is an Indian citizen or Foreign National of Indian Origin resident outside
India for purpose of employment, carrying on business or suitability in
circumstances as would indicate an intention to stay outside India for an
Indefinite period. An Individual will also be considered as NRI if his/ her
stay in India is less than 182 days during the proceeding financial year.
Banks allow NRIs to open an NRI account when they complete the
account opening formalities. A customer for this purchase a form has to be
filled up in which the information sought the bank is provided. . They can
open a NRI Saving Bank Account, Current Account, Fixed Deposits in
Indian Rupees, Fixed Deposits in Foreign Currency, NRO account (Rupee
accounts for crediting income in India).
CORPORATE BANKING:

Banks provide facilities to corporate houses for different purposes. Banks

are offering financial services to new projects as well as expansion, and
modernization of existing projects in infrastructure and non-infrastructure
sectors for economic development of our country. Infrastructure sector
includes Road & Urban Infrastructure, Power and Utilities, Oil & Gas and
other natural resources, Ports and Air [ports and Telecommunications. Non-
infrastructure sector includes Manufacturing i.e. cement, steel, engineering,
textiles, chemical & Pharmaceuticals etc; Service i.e. Tourism &
Hospitality, Educational Institutions, and Health Industry etc.

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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:

Cash Management is managing a companys short term resources to sustain

its ongoing activities, mobilize funds and optimize liquidity. Cash
Management comprises of accelerating and efficiently collecting cash
inflows concentrating collected funds; Controlling the timing of cash
outflows; forecasting the position; securing adequate sources of short-term
funds; optimizing use of any temporary cash surpluses; gathering timely
information; implementing the system and services necessary to monitor,
manage, and control the cash position; ensuring the internal and external
transfer of financial data.

TRADE SERVICES:

Banks continued to play a key role in International Trade also. Banks

provide trade services through their experts teams by advanced
technology, global network distribution and comprehensive range of import
and export products and services. One of the examples is HSBC Trade
Service. They offer a broad range of trailer-made technology-based
solutions that bring enormous benefits to both importers and exporters in
improving the management of the total supply chain.

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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.

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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.

OPERATIONS FROM THE BRANCH:

In a core banking set up, all the system in the branches are connected to the
data centre. Usually, In a CBS set-up, there will not be any servers in the
branch (there are a few Implementations the core banking solution with
branch level servers which are used for performance enhancements, storing
of balance etc.). A lower end version of the core banking application is
installed in the client machines that merely collect transaction data from the
users and performs basic validation function. These data are then
transferred to application servers at the data centre where the actual
transaction processing and posting in the accounts happens. Thus, even the
data is not stored in the branches. The inches cannot run any reports as they
can be run only front the application server/report. After the banking
operation are over, all the branches log out. After this process, the branches
are a closed for that date and no further transactions will be accepted for
that date. Day end operation is run from a centralized location from the
CPPD. During day-end operation, the pre-programmed activities in the
application in the nature of interest.

AUTOMATED TELLER MACHINE (ATM) OPERATIONS:

Automated Teller Machine (ATM) kiosks are connected to the banks ATM
switch which in turn is conned to other banks ATM switches and its own
ATM server at the data centre. ATM switch and the kiosk have a Hardware
Security Module (HSM) that stores its encryption key. All data transferred
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between the ATM kiosk and the switch is encrypted. The ATM switch
performs the authentication function when a customer inserts his ATM card
and enters the PIN at the ATM kiosk. To perform any banking transaction,
the ATM switch requests the central database servers which is accessed
through a firewall, middleware and an ATM server.

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.

Cost of maintaining the system rises, without any noticed benefit of

some money to the bank

Cost of maintaining an existing system could raise because of various

reason from the system becoming resource hungry, non-availability of
resources especially the human talent with certain skill sets, product
gathering a large code-base which is primarily unstructured thereby taking
an unreasonably large time even for some simple improvement in quality
etc.

Large Scale Manual Handling of Transactions resulting in longer

turn-around times:

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.

Strict Interfacing issues:

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.

Viability- of the Vendor supplying the Core System:

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.

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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.

CREDIT FACILITIES & RISK MANAGEMENT:

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:

Settles payments on respective maturity dates automatically. Provides

option to buy assets or transfer ownership.
Creates equal payments schedule or calculates the interest rate with the
NPV formula.

Page 39
ASSET MANAGEMENT:

The ICS BANKS Asset Management module provides a wide range of

functionality for high, net-worth customers. This end-to-end solution can be
deployed in several languages globally. ICSFS can provide a variety of
modules for those involved in the acquisition, implementation and
administration of assets including: purchase support staff; IT engineers,
technical support and consultants.
Functionality:
Procurement
Deployment
System administration
Analysis
Compliance

MANAGEMENT INFORMATION SYSTEM -

The ICS BANKS Management Information System module has great no

of functions spread over the entire system, providing the management
information. All systems generate and maintain operational data and its
history. This data is available on the customer account, branch and bank
level.

Functionality:

Produces financial accounting including: Account statements, central bank

reporting, cost accounting and customer and cash positions Manages
financial planning including: Budgeting, interest gap control, performance

Page 40
and profitability and assets liability provides planning and control software
through reports, maps and graphs for information updates.

WORKFLOW AND BUSINESS PROCESS MANAGEMENT:

The ICS BANKS Workflow Management STP module with Business

Process Management (BPM), powered by W4, optimizes the internal
process, document and flow management among various bank departments
as well as enhances customer service through the internet. ICS BANKS
BPM integrates the processes, systems and people into one solution to
achieve effectiveness and enhance customer service.

This system can be extended to achieve the full automation once

implemented with our content management system that handles physical
and cold archives in addition to many ready to use processes such as the
daily jacket.

PROFITABILITY MANAGEMENT:

The ICS BANKS Profitability Management module produces monthly

profitability reports (MPR), which are prepared and submitted to the banks
management on a monthly basis to evaluate the bank s performance. This
capability can also be manipulated to view performance by group sub-
group and business unit as well as assess annual, fiscal account and
customer profitability.
CRM

ICS BANKS Customer Relationship Management module provides a

single view of the customer that can be maintained presented and update
Page 41
across myriad solution to increase business performance. The solution
ensures cost savings, Curtails risk and increases customer interactions and
rate of acquisition. This enables integrated business processes and
technological infrastructure to effectively manage relevant client in

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.

4.2 MEANING OF RESEARCH

Research in common parlance refers to a search for knowledge. Once can

also define research as a scientific and systematic search for pertinent
information on a specific topic. In fact, research is an art of scientific
investigation. The Advanced Learners Dictionary of Current English lays
down the meaning of research as a careful investigation or inquiry
especially through search for new facts in any branch of knowledge.!
Redman and Mory define research as a systematized effort to gain new
knowledge. 2 Some people consider research as a movement, a movement
from the known to the unknown. It is actually a voyage of discovery. We
all possess the vital instinct of inquisitiveness for, when the unknown
confronts us, we wonder and our inquisitiveness makes us probe and attain
full and fuller understanding of the unknown. This inquisitiveness is the
mother of all knowledge and the method, which man employs for obtaining
the knowledge of whatever the unknown, can be termed as research.

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

Questionnaires are a good way to obtain information from a large number

of people and/or people who may not have the time to attend an interview
or take part in experiments. They enable people to take their time, think
about it and come back to the questionnaire later. Participants can state
their views or feelings privately without worrying about the possible
reaction of the researcher. Unfortunately, some people may still be inclined
to try to give socially acceptable answers. People should be encouraged to
answer the questions as honestly as possible so as to avoid the researchers
drawing false conclusions from their study.
Questionnaires typically contain multiple choice questions, attitude scales,
closed questions and open-ended questions. The drawback for researchers
is that they usually have a fairly low response rate and people do not always
answer all the questions and/or do not answer them correctly.
Questionnaires can be administered in a number of different ways (e.g. sent
by post or as email attachments, posted on Internet sites, handed out
personally or administered to captive audience (such as people attending
Page 44
conferences). Researchers may even decide to administer the questionnaire
in person which has the advantage of including people who have
difficulties reading and writing. In this case, the participant may feel that
she is taking part in an interview rather than completing a questionnaire as
the researcher will be noting down the responses on his/her behalf.

4.5 SAMPLING

The selection of construction companies for the survey was based on

probability sampling, using the simple random sampling technique. In this
technique, every unit had an equal chance of selection (Silver, 1997). The
limitation of this sampling method was that members of a subgroup of
interest may not be included in appropriate proportions (Silver, 1997). In
probability sampling, it is important to distinguish between three groups:
the population, the sampling frame and the sample. The population refers to
the 129 group from which the sample was drawn and to which the findings
were to be generalized. The sampling frame is a listing or operational
definition of all of the population elements. The sample referred to the
subset of the population that was selected as respondents. The analyzed
data was then generalized to the population. The target sample size was set
at 200 for the main contractors in order to obtain an adequate number of
responses so that the findings are generalizable. The research plan was also
to survey 200 subcontractors. However, only 100 subcontractors could
be contacted because the addresses of some of the registered subcontractors
and the database maintained by the Singapore Contractors Association
Limited (SCAL) of the Singapore List of Trade Subcontractors (SLOTS)
were out of date.

METHODS USED TO COLLECT SAMPLES:-

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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.

Probability sampling tends to be composite, time consuming and costly

too. Now-a-days, the researcher is using computers as the apparatus for
generating this random number to perform sampling. This procedure also
ensures that each unit should have equal chance to be selected while

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 performing probability sampling.

4.6 DATA COLLECTION

The primary data collection method was a set of questionnaires or survey

forms that were provided in both paper and electronic formats. One or
more senior executives at each organization on the potential participant
list were mailed a personalized survey invitation, a letter from Vice
Chairman of the Federal Reserve Board, Donald Kohn. And a data
contact form with instructions to specify the type of transactions handled
by the organization... Reminder calls were made to non-responding
organizations. As this survey topic is very important to most of the
organizations surveyed, incentives or gratuities were not needed to
obtain participation. It was anticipated that gratuities would not provide
meaningful incentive for organizations to participate in this survey:
rather, participants were offered access to the information at the earliest
occasion permitted by the Federal Reserve.
Methods of data collection
Primary data:
Primary data are those which are collected for the first time and are always
given in the form of raw' materials and originals in character. These types
of data need the application of statistics methods for the purpose of analysis
and interpretation. While secondary data are those which have already been
collected by someone and have gone thought the statistical machines. They
are usually refined of the raw materials when statistical methods are applied
on primary their shape and become secondary data. Methods of Collection
of Primary Data:
There are primary data are collected by the following methods.
Customers were allowed to carry out the information and
documentation related to the payment option survey.
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 Customer gave the detailed information about the payment options
related to the survey.
There were total of 62 respondents.
Samples were collected from many people to different areas of the
globe.
Email surveys and telephone surveys were also done to find out the
data required.

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.

1. Official publications, i.e. the publication of the central statistical office,

Karachi , Ministry of Finance , Ministry of Food, Agriculture, Lahore,
Industry, etc. The Provincial Statistical Bureau, etc.
2. Semi-Official publications , etc., the publication issued by the state Bank
of Pakistan Railway Board , Board of Economic Enquiry , District
councils, Municipalities, Central Cotton Committee, etc
3. Publication of trade-association, chambers of commerce, co-operative
societies, and unions.
4. Research publication, submitted by research workers, economists,
University bureaus, and other institutions.
5. Technical or trade journals. Sources of Unpublished Data: The secondary
data are also available from the unpublished data. Type of material can be

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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

4.7 STATISTICAL TOOLS AND TECHNIQUES

Analysis of data is a process of inspecting, cleaning, transforming, and

modelling data with the goal of discovering useful information, suggesting
conclusions, and supporting decision making. Data analysis has multiple
facets and approaches, encompassing diverse techniques under a variety of
names, in different business, science, and social science domains.
Data mining is a particular data analysis technique that focuses on
modelling and knowledge discovery for predictive rather than purely
descriptive purposes. Business intelligence covers data analysis that relies
heavily on aggregation, focusing on business information. In statistical
applications, some people divide data analysis into descriptive statistics
exploratory data analysis (EDA), and confirmatory data analysis (CDA).
EDA focuses on discovering new features in the data and CDA on
confirming or falsifying existing hypotheses. Predictive analytics focuses
on application of statistical models for predictive forecasting or
classification, while text analytics applies statistical, linguistic, and
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structural techniques to extract and classify information from textual
sources, a species of unstructured data. All are varieties of data analysis.

Page 50
 CHAPTER 5

DATA INTERPRETATION

5.1 TECHNIQUES USED TO INTERPRET DATA

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.

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 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

ACCOUNT OWNED BY CUSTOMERS

42%
Nationalized
Co-operative
58%

The following graph tell us that whether customer have account in

nationalized/co-operative bank.
With the above graph it can be seen that 58% of the customer have account
in nationalized bank and 42% of the customer have account in co-operative
bank.
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 2) What kind of account do you maintain in the bank?

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

AWARENESS LEVEL OF CORE BANKING

2.20% 0%

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.
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 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

FACILITIES GIVEN BY BANK

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.

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 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

SERVICES PROVIDED BY STAFF MEMBERS

50% 46.70%
40%
27% 27%
30%
20%
10%
0% 2%
For any
enquiry Listening to
your problem Guideline for Others
various
deposit
schemes, their
advantages

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.

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 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

AVAILABILITY OF SERVICES OF STAFF

MEMBERS TO THE CUSTOMER

35% Within 20 minutes

20-30 minutes
More than 30 minutes

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.

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 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

TELEPHONE BANKING SERVICES PER

MONTH USED BY CUSTOMERS
100%
80%
60%
11% 52%
40%
20%
0%
Less than 1
1-3 times
time 3-8 times
8-12 times

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...

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 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

REASONS TO OPEN AN INTERNET BANK

ACCOUNT
0.00% Convenience (24 hours service,
anywhere connectivity
Curiosity
30%
30.40%
Better rates

Safe and secure

2%
26.10% 4.30% Low service charge

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

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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.

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 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

SERVICE QUALITY OF YOUR BANK

2.20%

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.

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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

BANKS HAS CORE BANKING FACILITY FOR THE

CUSTOMERS

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.

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 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.

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 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

RECOMMENDATION OF THE BANK

70%
63%
60%

50%

40%
37%
30%

20%

10%

0%
Yes No

The following chart tells us about the recommendation of the customers to

their friends, relatives, associates.
Conclusion:
The above diagram says that 63% of the employees would like to
recommend their friend, relatives and associates.

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.

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11) The above question 11 tells us that most of the employees
would like to recommend their friend, relatives and associates.

Page 65
 CONCLUSION

This project that is mainly used to manage the spread-based income of a

bank. The fact that the fee income of a bank is a key different in terms of
profitability only increases its importance in the current scenario.

This project developed, incorporated all the activities involved in the

browsing centre. It provides all necessary information to the management
as well as the customer with the use of this system; the user can simply sit
in front of the system and monitor all the activities without any physical
movement of the file. Management can service the customers request best
in time. The system provides quickly and valuable information. These
modules have been integrated for effective use of the management for
future forecasting and for the current need of the customer.

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

2. The banks should introduce some attractive schemes to promote these

services to some of the traditionally inclined customer of the bank.

3. Further research and development needs to be carried out to enhance

the core banking services for introducing new and more customer
friendly services.

Page 67
BIBLIOGRAPHY

BOOK:
1) Core banking solution
-M. Revathy Sriram

2) Banking Theory Law N Practice

-Mr. Rajesh
-Ref. Page.268

Web:
1) http://en.wikipedia.org/wiki/Core_banking
2) http://srichidsirvice.com/core%20Banking%20Solutions_%20An%As
sessment.

Page 68
 QUESTIONNAIRES

Q.1) You have account in nationalized/co-operative bank?

o Nationalized
o Co-operative

Q.2) What kind of account do you maintain in the bank?

o Current
o Saving
o Loan
o Demat
o Credit card

Q.3) Which of the following facilities is given more importance in your

bank?
o Loan facilities
o ATM facilities
o O/D facilities
o All of above

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

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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.

o It helps online transaction processing, making it easier and faster.

o Have made banking more efficient by cutting down time in data

access and has made database maintenance easier.
Q.11) What are most important software modules of a core banking
system?
o If it is a Retail Bank services offered are customer Accounts,
Financial Accounting, Teller (Cash), Payments for Funds Transfer,
Deposits and Loans would be the basic modules banks might require.

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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.

o Similarly Corporate Bank would require Bills, Guarantees and

Letter of Credit modules.

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