Manager's Guide

Core banking solution guide for managers

A core banking solution, from the customers perspective, simplifies their banking
experience by allowing them to conduct common financial transactions without visiting
their banks home branch. hey can thus save time and banks can improve upon
operational efficiency and transparency with core banking.
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#utting edge tutorials !or Indian #I$s
%ust how !at is #I$'s wallet&
I" '$I calculation guide
!n this guide"
# $ore banking solution components
# Market trends
# !mplementation precautions
# $ompliance and security
# op vendors
# %elated resources
Solution components
!n terms of &retail banking, core banking solution is an application that enables the bank
customers to conduct common transactions from any branch and a large subset through
net banking, AM, kiosk'based, or phone'banking, instead of visiting their home
branches. A few examples of common transactions are"
(. )eposits and withdrawals
*. !ssuance of account statements
+. !ssuance of checkbooks
,. AM usage
-. .ill payments such as credit card or utility bills
(
/. 0lectronic shopping 12nline payments or card purchases3
he software accomplishes this by pushing all transaction data from various sources to a
centrali4ed database in near real time and securely. !t makes the bank's operations simpler
and cost effective by covering the following functions"
(. New business: $overs processes such as opening of new accounts, initiation, and
servicing of loan applications, etc.
*. Customer relationship management activities such as standing instructions, pre'
5ualifying customers for offers, etc.
+. Internal accounts maintenance 1general ledger showing income and expense,
assets and liabilities3
4. !M usage
-. Speciali"ed banking operations: he solution helps in carrying out all core
banking activities under wholesale banking 1targeting other banks as prime
customers3, and commercial banking 1targeting business entities3.

Market trends
Most large and mid'si4ed banks in !ndia use core banking. he increased customer
demand for integrated banking and 6eb'based secure access will force small banks to
adopt core banking in the near future.

Consolidations
he core banking software business can be said to be in a consolidation phase. %ecently a
solution vendor, emenos, ac5uired 7rimisyn and introduced an integrated offering,
!nsight. Another core banking player, 8(, was recently ac5uired by A$! worldwide.
9undtech was taken over by G$%. 2racle 9inancial 8ervices 8oftware 1formerly i'flex3
is said to be up for sale. 2racle has reportedly recruited $redit 8uisse to advise on the
sale.
SO and cloud
:ew products are being designed and existing ones are re'designed to adhere to service'
oriented 182A3 frameworks. 82A is expected to bring flexibility as banks can pick'and'
choose from a bou5uet of services instead of buying large, tightly integrated packages
that leave little scope for enhancements. ;endors are expected to offer their solution
through 8aa8 model.

Implementation precautions
*
As with most enterprise solutions, core banking can be fraught with issues related to
compatibility, integration, and change management. he following tips can be useful
specially for small banks that are implementing core banking for the first time or mid'
si4ed banks that are migrating to a new package.
# 0ven before buying any solution, assess and ensure that your banks business and
operational re5uirements are future'driven. 2nce thats in place, make sure that the
chosen solution meets these needs. Measure progress regularly to make the solution
effective.
# !f you are migrating from legacy core banking solution, evaluate the costs and benefits
of moving to an integrated branded solution first"
1i3 6ill the migration surely result in reduction in compliance and ! costs<
1ii3 6ill it help the bank to adapt to changing customer needs and competitive
re5uirements<
1ii3 6ill it offer you a single view'driven customer service and assure consistency and
facilitate cross'selling<
# !n case of first'time implementation, ask yourself"
1i3 6ill it result in any change in the banks organi4ational structure<
1ii3 =ave you assessed the type of implementation you want< A standard implementation
will be cost effective and speedy but will offer limited customi4ations and may lead to
change management challenges. A functional implementation will offer high level of
customi4ations to minutely match it to your existing processes and thus keep change
management issues under control, but will also be expensive and time consuming.
1iii3 )o you want to maintain the application in'house or outsourced it<

Compliance and securit#
9or banks that are running in'house developed core banking systems, a small regulatory
directive can prove expensive and time'consuming to comply with. !n case of packaged
solution, the vendors would be compelled to 5uickly accommodate the changes re5uired.
6ith applications or their parts being offered through cloud, data security and privacy
will gain importance.
As the entire banking sector relies on integrated core banking systems, even very small
banks>regardless of their si4es>will be re5uired to invest in information security
policies and solutions to safeguard their customers, their own reputations, and for
compliance.

!op $endors
%endor Solution&s'
+i !nfotech ?A8@0
+
Acute 8oftwares 0asy.ank$ore
$M$ @imited 1$8
Group3 $A, 1otal $oncept ' ,3' and '.%A!:8 *BBB'
)ata;ision 8oftware )ata Mate1for microfinance, cooperative banks3
)imensions 9inancials $ore .anking )imensions, !slamic .anking )imensions
9!8 Global 9idelity
=$@ .ancMate $.8
!)887@ )ynamic $.8
!nfosys echnologies 9inacle
!nfrasoftech 2M:!0nterprise
@aser 8oft !nfosystems @aser 7anacea, 7robanker $., @aser wig, 7robanker 7.
Mindmill .ankMill
:ucleus 8oftware 9inn2ne
2racle 9lexcube, Microbanker, 9inware
7olaris !ntellect 8uite ' 2rbi2ne, .ank6areC .ank:ow
8A7 8A7 for .anking
8araswat !nfotech 8wift$ore core banking solution
$8 98
.a:$8, DEA%F, Duart4 8ecurities, Duart4 7ayments, e'
7ortfolio
emenos *,
heme echnologies heme7ro
rust 8ystems rust.ank, Micro9in8
More :ews and utorials
Polaris Intellect CBS' rich functionality designed for Bangladesh banks,
straddles the entire range of banking operations from basic Core
modules, General Ledger, Operational ccounts, !eposits, Loans and
d"ances, Security Ser"ices #odule, L$C #odule, Counter Operations,
Clearing Operations, %emittances, to other focused modules such as
Integration #iddle&are, #IS and nalytics, udit 'rail and ccess
Control &ith Single Sign(on) 'his uni*ue solution is perfectly suited to
de"elop, modify and launch inno"ati"e products and ser"ices, thereby
impro"ing the go(to(market timeline in a rapidly de"eloping economy like
Bangladesh)
,
Core Banking Software
6hat is $.8
$ore banking systems are basically the heart of all systems running in a bank and it forms
the $ore of the bank's ! platform. Amongst other functionalities, it provides the
customer information management, central accounting and the transaction'processing
functions, which by far are the most fundamental processes in a bank. 6ith the
advancement in technology and with passage of time, core systems now'days tend to
cover more and more functionality giving the bank an integrated 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 +/B degree view
of the customers relationship with the bank, which is fundamental for the $%M strategy
of the bank. $ore banking systems reside either in the heart of a bank's data center or in
other words can also be termed as the heart of the data'centre itself.
60A@= .G $.8
Hhe $.8 at 8.! executes an average of ,* million transactions per day with a peak of
(,IBB transactions per second through a network of about (J,JBB branches.H
he story began in *BBB. 6ith its growth curve heading northward, 8tate .ank of !ndia
18.!3, the country's largest bank with the largest branch network, reali4ed the need for a
core banking solution. An expression of interest was invited in Kuly *BBB, and the actual
implementation was started in August *BB+ when the first branch of the bank was put on
$8' .L:$8 core banking solution.
he planning stage lasted three years, while the .L:$8 implementation took another five
years 1till Kuly *BBM3 to complete. Nhe core banking solution rollout proOect enabled 8.!
to embark on a Oourney of transformation by implementing a state'of'the art technology
foundation within a robust framework,N says ?rishna ?umar, the deputy managing
director of ! for 8.!.
he entire proOect of implementing the core banking solution was handled by $8 as the
systems integrator, while other maOor technology partners in the proOect were =7,
)atacraft, $isco and Microsoft. he core banking solution implemented at 8.! and its
associate banks currently execute an average of ,* million transactions per day with a
-
peak of (,IBB transactions per second through a massive network of about (J,JBB
branches and over *B,BBB AMs servicing nearly *,+ million customers.
$2:8E@A: & =0 $AGA@G8
6hen considering core banking transformation most banks start with a blank slate and
work on the development of an aspirational core end state vision. Esually this vision
includes the selection of a strategic core banking solution. he aspirational end state is
normally intended to move the bank to a single platform, standardi4e master data through
out the enterprise, and provide a clear view of all business processes while meeting stated
business benefits.
7roblems start to arise after the initial core banking end state vision is developed. At this
point most banks want to immediately communicate this vision to their internal teams,
shareholders, and industry analysts. .anks communicate the vision without a clear path to
achieve the vision. .anks are defining the HwhatP but not the HhowP. 6hen a bank
communicates the vision and the start of the core banking transformation program to
multiple stakeholders at the same time expectations are set. he early achievement of
business benefits are re5uired to keep momentum of core banking transformations going.
!t is also re5uired to provide the transformation team with the confidence of the
enterprise, which will in turn earn them the right to do more. 6hen you approach the
transformation with this frame of mind the aspirational end state becomes a series of core
banking renovations based on a framework of the strategic aspirational end state.
=ere, the role of $ore .anking $onsultant &he $atalyst starts.
Ho develop a roadmap of smaller core banking renovations that will ultimately lead to
the transformation that the bank aspirers to reach.P
ransformation initiatives will be taken by the $onsultant are "
(. )evelop a strategic aspirational end state
*. Assess enterprise capabilities
+. )evelop a realistic roadmap
,. $ontrol communications
7erhaps. all of these approaches can be valid depending on the context and the strategy of
the organi4ation. o compete in the fast'developing market of today and meet its
customer 0xpectations, using the latest and advanced technology with secure and helpful
environment. he bank can able to identify and respond to market opportunities which
positively affect to increase market share while achieving significant use of ! as $ore
.anking.
0;0%G .2)G $A: A992%)
!n today's era of e'banking, $ore banking or centrali4e database is the most demanding
re5uirement for all banks ' $o'2perative, 8cheduled or :ationali4ed ' to get accurate,
speedy and real time,up'to'date information about bank's exposure to risks arising out of
/
interest fluctuations Q li5uidity position based on assets Q liability ratios as well as other
risks. $reation of data center, ! security Q lease lines and proper disaster recovery back'
up arrangements as well as the cost of core banking software involves huge investments.
:ationalised banks ' with a large branch network and no budget constraints 'can afford to
invest in high'end $ore .anking solutions from big software companies.
=owever, for $o'operative and small si4e banks with limited branches, fund and
manpower constraints, investment in $ore .anking becomes more of a luxury.
2bOectives"
9acilitate regulatory compliance" he right regulatory platform will lower costs through
improved asset reusability, faster turnaround times, and increased accuracy.
!mprove information flow" o improve the speed and accuracy of decision'making, banks
must deploy systems that streamline integration and unite corporate information to create
a comprehensive analytical infrastructure.
2ptimi4e customer value" hrough a holistic core banking architecture, banks can target
customers with the right offers at the right time with the right channel to increase
profitability.
$ustomer 8atisfaction and %etention " hrough a single view of the customer, you can
build customer intimacy by analy4ing customer needs and creating new products and
solutions based on accurate, up'to'date customer profiles. !n addition to building a long'
term relationship with your customers, you can provide relationship'based pricing>
offering special benefits and services such as preferential pricing for interest, charges,
commissions, fees, brokerage expenses, and taxes based upon overall customer value.
$reate a service'oriented architecture 182A3" A flexible, robust ! architecture based on
82A is not optional. .anks must embrace 82A to survive.
?ey $hallenges"
R .anks need to focus on key factors, which make the core banking transformation a
successful experience. .roadly speaking, the key challenges in core banking
transformation are"
R ;endor capabilities and credentials
R )ependence on legacyAvendor applications and impact on envisioned technology
architecture
R .anks business goals and alignment to leverage the new technology
Core (ank Consultant has the ma)or role in the advent of state'of'the'art
technologies and global best practices which offer improved agility, efficiency, $%M
capability and faster implementation cycles, where banks need to be mindful of the
challenges associated with core banking deployments . All the same, banks must
appreciate that technology is an enabler and not a panacea. As history indicates,
successful banks are those that have understood the potential of new technologies and
aligned themselves to fully leverage its power. hese are banks that have focused on the
adaptive change that made the technology transformation process successful.
J
$.8 1! 3 $onsultant )uties and %esponsibilities
9ollowing duties and responsibilities of an ! consultant are to be followed at Abhipurti
8olutions to bridge the gap of the $lient and 8uccess by !.
R he consultant has to meet the clients to determine the re5uirements and needs.
R !t will be needed to work with the working with the clients for defining the scope of the
proOect.
R =e or she has to plan the timeline and resources that are re5uired.
R !t is also needed to study the clients specifications, perceiving the work practices.
R =e or she needs to maintain the coordination with the staff of the clients organi4ation.
R !t is also necessary to travel the customer sites timely.
R here are many other basic tasks to fulfill such as defining network re5uirements,
analy4ing the ! re5uirements within the companies, and offering obOective suggestions
on various matters of !.
R !t is also necessary to help the clients with different activities and purchasing the
appropriate systems.
R he main and the basic duty are to design and installing new systems.
R =e or she also needs to do the documentation work properly which is needed to present
to the customers.
R =e or she has to organi4e the training process for other consultants.
R !t is the duty to seek the different ways of applying technology to the business
processes.
R =e or she has to do the work of researching and providing information on diverse
technical trends.
R =e or she has to work for the development of the technical solutions so has to consult
with the proOect management.
R !t is also needed to work as a consultant to advice on options, costs, risks vs. benefits etc
for the proper level of development of the system priorities.
;iews by %.! on $.8
About %eserve .ank of !ndia
he %eserve .ank of !ndia is the central banking institution of !ndia. he institution was
established on April (, (I+- in accordance with the provisions of the %eserve .ank of
!ndia Act, (I+, and plays an important part in the development strategy of the !ndia. !t is
the monetary authority of !ndia regulating and supervising the financial system, controls
issue of currency etc. 9or more information, please visit http"AAwww.rbi.org.inA
http"AAwww.rbi.org.inAscriptsA9AD;iew.aspx<!dSJ*
=ow does the 8peed $learing work<
.anks have networked their branches by implementing $ore .anking 8olutions 1$.83.
!n $.8 environment, che5ues can be paid at any location obviating the need for their
physical movement to the )rawee branch. he concept of 8peed $learing combines the
M
advantages of M!$% clearing with that of $.8.
$he5ues drawn on outstation $.8 branches of a )rawee bank can be processed in the
@ocal $learing under the 8peed $learing arrangement if the )rawee bank has a branch
presence at the local centre
http"AAwww.rbi.org.inAscriptsA:otificationEser.aspx<!dSJ-BBQModeSB
!ssue of multicity A payable at all branches che5ues by $.8 enabled banks
As you are aware, various $ore .anking 8olutions 1$.83 implemented in banks marked
a paradigm shift in $ustomer 8ervices. $ustomers of a branch are now the bank's
customers as they can access their accounts from any branch for defined purposes. he
new opportunities offered by $.8 have enhanced customer service by way of offering
various payment products and channels resulting in speedy movement of funds across the
country. @everaging the $.8, banks have started issuing Hpayable at parP A Hmulti'cityP
che5ues to select customers with separate transaction codes 1*I, +B and +(3 by putting in
place infrastructure for processing such che5ues at all $.8 enabled branches.
http"AArbi.org.inAscriptsA:otificationEser.aspx<!dS+I+IQModeSB
)elay in collection of outstation che5ues T :eed for issuance of 7ayable at par A Multi'
city che5ues
A few banks with core banking solution have started providing Hpayable at parNA NMulti'
cityP che5ue issuance facility to select customers as a value added service. he che5ue
books issued to such customers are slightly different. he che5ue leaves bear the
narration Hpayable at par at all branchesP and the M!$% code line of the che5ues have
transaction codes *I 1$urrent AAc3, +B 18avings .ank AAc3 and +( 1$ash $redit AAc3 to
facilitate processing of such che5ues as local che5ues at the M!$% che5ue processing
centres. $.8 is used for signature verification and balance verification. 9or the purpose
of funding the transactions, %G8 and :09 are used effectively.
!t is suggested that such services should be made available by all the banks and should be
made available to all the eligible and re5uesting customers. 6hile designating a branch as
$.8 branch, it should be ensured that such branches are e5uipped to process these
Npayable at parNA NMulti'city che5uesN. !f the banking system offers this service in a big
way, it would not only help banks provide better customer service and minimi4e
complaints, but also help reducing the transaction cost in payment services in the long
run.
http"AAwww.thehindu.comAbusinessAcompaniesApolaris'to'implement'intellect'cbs'in'
rbiAarticle*B-,M/-.ece
7olaris to implement !ntellect $.8 in %.!
he %eserve .ank of !ndia 1%.!3 has chosen 7olaris 8oftware @ab, a financial
technology company, to implement its !ntellect M core banking system 1$.83 across
the bank. he deal is valued at U-- million.
http"AAwww.business'standard.comAarticleAfinanceArbi'to'switch'to'cbs'use'in'its'
I
operations'(BIB/BMBBBM,V(.html
the benefits banks say they enOoy from seamless working on $ore .anking 8olutions
1$.83, the %eserve .ank of !ndia 1%.!3 has decided to adopt this in its operations.
!t intends to integrate its system with banks and financial institutions on a $.8 platform
at a later date.
he main obOective is to achieve a cross'functional and seamless integration of banking
activities, including the public debt office. !t will pave way for a virtual banking
department running on a single G@. !t would enhance the system compatibility for
multiple delivery channels.
http"AAwww.moneylife.inAarticleAcore'banking'rbis'half'baked'directions'to'
banksA*JJ//.html
%.! has Oust come out with guidelines for issuance of H7ayable at parAMulti'cityP
che5ues to all eligible customers in a standard format. .ut the %.! should have thought
of many other possibilities of offering a wide variety of services using $.8.
http"AAarticles.economictimes.indiatimes.comA*B(+'B+'(+AnewsA+J/M,B,IV(Vucbs'urban'
co'operative'branches
he %eserve .ank today asked Erban $o'operative .anks 1E$.s3 to implement core
banking solutions 1$.83 in all their branches by )ecember +(, *B(+.
http"AAwww.thehindubusinessline.comAindustry'and'economyAbankingArbi'asks'urban'
cooperative'banks'to'implement'cbs'by'dec'+(Aarticle,-B-+*M.ece
H...very few E$.s have adopted $.8. =ence all E$.s are advised to implement $.8, in
all their branches before )ecember +(, *B(+,P the %.! said in a notification.
!t further said the failure to implement $.8 within the time frame could result in denial
of various facilities like expansion of branches or area of operation to E$.s.
http"AAwww.rbi.org.inAscriptsA.8V$ircular!ndex)isplay.aspx<!dSJMMM
!mplementation of $ore .anking 8olutions 1$.83 by Erban $o'operative .anks 1E$.s3
he usage of !nformation echnology 1!3 is critical for the survival and growth of
banking institutions as ! usage not only helps banks to reduce their cost of operations,
but also enables them to offer products and services at competitive rates to their
customers. ! has become not Oust an enabler but a differentiator for banks in a
competitive environment. 9urther, for effective regulatory and supervisory compliance
the banks need to use ! in their operations. $onsidering the importance of the matter, the
%eserve .ank had included &%eview of Mechanisation and $omputerisation as one of
the reviews to be placed annually before the .oard of )irectors of E$.s.
*. $ore .anking 8olutions 1$.83 essentially helps in integration of the range of services
that can be offered by all the bank's branches from centrali4ed data centers. !t also helps
the banks, apart from providing better customer service, in generating M!8 reports for the
top management and in submission of various reports to the regulators and the
Government. he Government of !ndia has also observed that E$.s without $.8 do not
integrate well with the banking system and hence there is the need to 5uickly adopt this
model. $.8 is a necessity in todays banking scenario. E$.s are, therefore, advised in
their own interest, as also in the interest of their customers, to adopt $.8 as soon as
(B
possible. A large number of software are available today, including cloud based solutions,
and E$.s may adopt the model that meets their banks re5uirement.
+. !nformation available with the %eserve .ank indicates that very few E$.s have
adopted $.8. =ence all E$.s are advised to implement $.8, in all their branches before
)ecember +(, *B(+. he concerned %egional 2ffice of the %eserve .ank may be kept
informed of the progress made in implementing $.8. !t may be noted that failure to
implement $.8 within the timeframe, could result in denial of various facilities
1expansion of branches or area of operation etc.3 to E$.s.
I! in (anking
, ,
Various Software Systems for Bank
%arious Software S#stems for (ank
[ From chapter-8 of the book "Information Technology in Banking" written by Abul
Kahem !"# $hirin an" %urat Tamanna &rianka an" publihe" by Intitute of
Banker, Bangla"eh 'IBB( )
!n .anks, many software are used for various purposes. he software used for opening
bank account by deposit and loan customers, and recording their transactions is called
$ore .anking 8oftware. 9or managing AM and 728 network, a 8witching 8oftware is
needed. 9or credit card issuance and transaction authori4ation, $redit $ard 8oftware is
used. 7ayment Gateway 8oftware is used for settlement of e'commerce transactions. A
Mobile .anking 8oftware may be used for opening mobile account and recording such
transactions. A brief description of the maOor software used by banks is given below.
*. Core (anking Software
$ore operations of a .ank includes maintaining a ledger of various transactions, keeping
customer information, interest calculation of loans and deposits, adOustments to accounts
on withdrawal and deposits of funds etc. 7reviously these operations were done manually.
6ith the advent of !$ 1!nformation Q $ommunications echnology3, efforts were done
to automate various banking processes using software applications so as to make them
simple, efficient, effortless and cost effective. hus, the platform where !$ is used to
perform the core operations of a bank, like those mentioned above, is known as $ore
.anking 8ystem and the software used for this purpose is called $ore .anking 8oftware.
!n $ore .anking 8ystem 1$.83, the data, instead of huge ledgers, are stored in backend
databases in digital form. he same software can be made available in various branches
of a bank using a 6A:. he advantage, a customer can operate on his account from any
((
branch of the bank and if the bank owns !nternet .anking or AM facilities, then the
customer can operate on his account from virtually anywhere.
$.8 has facilitated better operational efficiency by ensuring improved house keeping and
preventing seepage of income. !nter branch reconciliation has become faster and
accurate.
hus, $ore .anking 8ystem has radically changed the way in which banks function. he
greatest advantage of having a $ore .ank 8ystem is that introduction of new facilities
and products wouldn't be a time'consuming process, and branch clearings would become
instantaneous. 0lectronic funds transfer between banks, online trading in the stock
markets etc. are examples, which were unheard of in banks pre $ore .anking 8ystem era.
he international $ore .anking Applications now'a'day available in the market are listed
in able'("
he $ore .anking 8oftware available locally are H9lora .ank 2nlineP of 9lora 8ystems
@td., H.ank EltimasP of @eads $orporation, HAbabilP of Millennium 8oftware and
H8tealerP of 0%A !nfotech.
able'("
SL Vendor Name of the software Company Logo
1 TEMENOS T24
2
Oracle Fnancal Ser!ces
Software "formerly #fle$
Sol%tons&
Fle$c%'e( Mcro'an)er(
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* +nfosys Technologes Fnacle
4
F+S , Fdelty Natonal
+nformaton Ser!ces "FN+S&
Core'an)
-
TCS FS # Tata Cons%ltancy
Ser!ces Fnancal Sol%tons #
formerly FNS
.aNCS # TCS .aNCS
"formerly FNS .ancs #
Fnancal Networ) Ser!ces
./NCS#24&
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E1%aton( .an)master(
Mdas2l%s
3 S%ngard 4m't
4m't E.S "Enterprse
.an)ng S%te& core 'an)ng
# 5etal 'an)ng6 Corporate
'an)ng "formerly System
4ccess Sym'ols&
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SL Vendor Name of the software Company Logo
7 Sl!erla)e 4$s
Sl!erla)e # S+.S6 Sl!erla)e
+ntegrated +slamc .an)ng
System "S++.S&
8 * +nfotech 94STLE
1: 2olars
+ntellect S%te # Or'One6
.an);are( .an)Now
11 +nfrasoftTech OMN+Enterprse
12
TCS FS # Tata Cons%ltancy
Ser!ces Fnancal Sol%tons #
formerly T9S#Te)nosoft
TCS .aNCS pr!ate 'an)ng6
+. Switching Software
A 8witching 8oftware is an AMA728 transaction processing and management system
which is used for the following specific purposes"
i3 7roduction of )ebit $ards which in addition, includes insertion of customers data into
the system and storing the inserted data into a database,
ii3 7re'authori4ation of on'us debit transactions 1transactions made by banks own
cardholders at banks own AMA7283 or remote on'us debit transactions 1transactions
made by banks own cardholders at AMA728 of another bank3. :ote" pre'authori4ation
includes validation of $ard :umber, 7!:, date of expiry and card status 1normal, stolen,
lost, blocked, hot etc3.
iii3 %outing of on'us and remote on'us transactions to $ore .anking 8ystem 1if debit card3 or
$redit $ard 8ystem 1if credit card3C off'us transactions 1transactions made by cardholders
of other banks at banks own AMA7283 to a switch or credit card system of issuing
bank, or to a localAnational payment network 1D'$ash, $ash @ink etc3, or international
payment network 1Master$ard, ;!8A, American 0xpress, )iners $lub, )iscover etc3 for
its authori4ation,
iv3 9raud management,
v3 =ealth monitoring of all the connected AM and 728 terminals,
vi3 8ettlement and reconciliation.
he standard 8witching 8oftware adheres to open system concepts and clientAserver or +'
tier architecture. he transaction processing engine resides on proven and robust E:!W
(+
platforms while the user and AM device interfaces reside on 6indows client
workstations. 8ystem data is stored in an A:8! compliant relational database like 2racle.
!n a typical environment, a switching system provides support to the hosted AMA728
terminal, an !82M-M+ interface to the $ore .anking 8ystem or other banks core banking
system, and connectivity to regional, national or international networks. 2ther interfaces
may include a host security module 1=8M3 for 7!: verification, card output device 1or
card personali4ation system3 for production of card, automated notification system for
sending sms to the cardholders and ancillary applications for credit card, $all center etc.
he following switching software are in use in different banks in .angladesh"
S, Name of
Software
Name of -e$eloper .sed b# &bank'
( !8A8witch 2asis echnologies
@td., $anada 1now
9!8 Global 8ervices,
E8A3
)utch .angla
.ank, 7rime
.ank
* i8witch !nter .lock, 8rilanka E$.@, !slami
.ank
+ $ardsuite ieto 0nator, @atvia 2ne .ank, 0.@
, 7hoenix A !ris 78 7akistan
@imited, 7akistan
.%A$, 8tandard
.ank, )haka
.ank
- ran4ware $ompas 7lus @td.,
%ussia
!$@
/ !M Eronet 6orldwide,
E8A
A. .ank 1$ash
@ink3
/. Credit Card Software
A $redit $ard 8oftware is a $redit $ard transaction processing and management system
which is used for the following specific purposes"
i3 7roduction of $redit $ards which in addition, includes insertion of customers data into
the system, and storing the inserted data into a database,
ii3 7re'authori4ation and final authori4ation of on'us credit transactions 1transactions made
by banks own cardholders at banks own AMA7283 or remote on'us credit transactions
1transactions made by banks own cardholders at AMA728 of another bank3. :ote" pre'
authori4ation includes validation of $ard number, 7!:, date of expiry and card status
1normal, stolen, lost, blocked, hot etc3 and final authori4ation includes debiting card limit.
iii3 %outing of on'us and remote on'us debit transactions to $ore .anking 8ystem via
switching systemC off'us transactions 1transactions made by cardholders of issuing banks
at banks own AMA7283 to a switch or credit card system of another bank, or to a
(,
localAnational payment network 1D'$ash, $ash @ink etc3, or international payment
network 1Master$ard, ;!8A, American 0xpress, )iners $lub, )iscover etc3 for its
authori4ation,
iv3 9raud management,
v3 =ealth monitoring of AM and 728 terminals, if connected to $redit $ard
8ystem
vi3 8ettlement and reconciliation.
he following $redit $ard 8oftware are in use in different banks in .angladesh"
S, Name of
Software
Name of -e$eloper .sed b# &bank'
( ransmaster ieto 0nator, @atvia )utch .angla
.ank, 0.@
* $ard7ro 8unGurd 8ystem
Access, E8A
7rime, :ational,
.%A$, .078
+ $@ 7rime $ard ech @imited,
$yprus 1now sys
@imited3
7remier, M.@,
@anka .angla
, i$ard !nter .lock, 8rilanka E$.@, !slami
.ank
- ran4ware $ompas 7lus @td. A. .ank
4. 0a#ment 1atewa# Software
A pa#ment gatewa# software is a software that helps in authori4ing payments for e'
commerce transactions. !t is e5uivalent of a physical 728 terminal located in most retail
outlets. 8ome of the main features of a payment gateway include"
8oftware application designed especially for ecommerce, although it can be used to
authori4e payments in traditional brick and mortar businesses.
0ncryption of payment and personal data.
$ommunication between the financial institutions involved and the business and the
customer.
Authori4ation of payments.
8ome payment gateways feature tools that can help customers figure out shipping and
handling costs, as well as sales tax. here are also fraud detection tools and other features
that can be used with a payment gateway.
2unctions of a pa#ment gatewa# Software
(-
A payment gateway software facilitates the transfer of information from cardholder to
merchant portal 1such as a website, mobile phone or !;% service3 to ac5uiring bank to
payment association to the card issuing bank. 6hen a customer orders a product from a
payment gateway'enabled merchant, the payment gateway performs a variety of tasks to
process the transaction"
a3 6hen a customer selects items to be purchased from the merchants website and proceeds
for payment by pressing the '$heckout' or e5uivalent button, the payment gateway
software at the bank to which the merchants website is linked activates and the customer
enters his card details.
b3 he payment gateway then brings the transaction details from merchants web'server to
its own server located in the bank using 88@ 18ecure 8ocket @ayer3 encryption.
c3 !f the transaction is made by on'us card, the payment gateway forwards the transaction
information to the $ore .anking 8ystem 1if debit card3 or to the $redit $ard 8ystem 1if
credit card3 of the bank.
d3 !f the card is off'us 1or not on'us3, the payment gateway forwards the transaction
information to the card association 1i.e., ;isaAMaster$ard3.
e3 !f an American 0xpress or )iscover $ard was used, then the processor acts as the issuing
bank and directly provides a response of approved or declined to the payment gateway.
f3 2therwise, the card association routes the transaction to the card issuing bank.
g3 he card issuing bank receives the authori4ation re5uest and sends a response back to the
payment gateway via card association with a response code. !n addition to determining
the fate of the payment, 1i.e. approved or declined3 the response code is used to define the
reason why the transaction failed 1such as insufficient funds, or bank link not available3
h3 he payment gateway receives the response, and forwards it on to the merchant website
1or whatever interface was used to process the payment3 where it is interpreted as a
relevant response which is then relayed back to the cardholder and the merchant.
i3 he entire process typically takes *T+ seconds
O3 he merchant close a NbatchN of transactions made by different customers in an interval
for settlement purpose. .ank only make settlement for the closed batches.
k3 )uring settlement, the payment gateway checks and deposits the total of the approved
funds in to the merchant's account. his could be an account with the ac5uiring bank if
the merchant does their banking with the same bank, or an account with another bank.
!n the above process, serial number 1a3 to 1d3, 1h3 and 1O3 to 1k3 narrates the functions of a
payment gateway software.
(/
Many payment gateway software also provide tools to automatically screen orders for
fraud and calculate tax in real time prior to the authori4ation re5uest being sent for
authori4ation. ools to detect fraud include geo'location, velocity pattern analysis,
delivery address verification, computer finger printing technology, identity morphing
detection, and basic A;8 1Address ;erification 8ystem3 checks.
here is a growing support by ac5uirers, issuers and subse5uently by payments gateways
for ;irtual 7ayer Authentication 1;7A3, implemented as +') 8ecure by ;!8A,
8ecure$ode by Master$ard and KA8ecure by K$., which adds additional layer of security
for online payments.
!n .angladesh )utch'.angla .ank has launched the countrys first payment gateway
software in the brand name of H:exus GatewayP on +
rd
Kune, *B(B. he software named
H$ard 8uit 0'$ommerceP has been procured from the ieto 0nator, @atvia. he :exus
Gateway accepts )..@s :exus $ards, debit and credit card suits of Master$ard and
;!8A 1issued by any bank in the world3. hereafter .%A$ .ank launched its internet
payment gateway at the end of year'*B(B.
3. Mobile (anking Software
A Mobile .anking 8oftware is an application used by a bank to register mobile users,
agents and merchantsC authori4e and record cash'in, cash'out, 7*7, 7*., .*7, 7*G, G*7
and AM transactions. he 7*7, 7*., .*7, 7*G and G*7 stand for 7erson to 7erson,
7erson to .usiness, .usiness to 7erson, 7erson to Government and Government to
7erson respectively.
3.*. Mobile (anking S#stem %S Core (anking S#stem
he following are the main differences between a core banking system and a mobile
banking system"
!tems $ore .anking 8ystem Mobile .anking 8ystem
Account :umber $onventional bank
account number 1with one
check digit3
Mobile number X a check digit
1optional3
$ustomer
registration
.y bank officer at branch !nput of mobile number by agent, data
entry by bankA+
rd
party, and
authori4ation by bank officer after
verifying ?G$.
$ommunication
media
6A: 19iber 2ptic, %adio
@ink, ;8A etc.3
Mobile network 1smsAE88)3 andAor
6A:Ainternet
7osting device $omputer Mobile 7hone andAor $omputer
$ash'in .y banks eller at branch .y banks eller at branch and by
Agent
(J
!tems $ore .anking 8ystem Mobile .anking 8ystem
$ash'out .y banks eller at branch
and at AM
.y banks eller at branch, by Agent
and at AM
:o of transactions
in a period
A few =uge
Amount per
transaction
@arge 8mall
$ustomer reach Around the branch hrough'out the country
3.+. Mobile (anking s#stem %S sms (anking s#stem
Mobile .anking system is not a sms .anking system. he main differences between the
two systems are given below"
0articulars Mobile (anking S#stem Sms (anking S#stem
he customers access" Mobile wallet A Mobile
account
.ank Account 18avings,
$), 8) etc3
$ash transactions< 7ossible through Agents,
.ank branch or AM
:ot possible
)evice used by the
customer to access the
system"
Mobile set or AM Mobile set only
$onnectivity between the
$ustomer and the .anks
data center
sms, E88), E?, 8? or
.%06
sms only
Merchant payment 7ossible :ot possible
Etility bill payment 7ossible 7ossible
+
rd
party 17*73 transfer 7ossible, but not permitted
in .angladesh
7ossible, but not permitted
in .angladesh
:ote" sms stands for 8hort Messaging 8ystem, E88) for Enstructured 8upplementary
8ervices )ata, E? for E!M ool ?it 1where E!M S Eser !dentity Management3, 8?
for 8!M ool ?it 1where 8!M S 8ubscribers !dentity Management3 and .%06 stands for
.inary %untime 0nvironment for 6ireless.
3./. $ailable Software for Mobile (anking
!n .angladesh, )utch'.angla .ank, for the first time, started Mobile .anking services on
+( March, *B(( using the software named 8ybase Mobili4er. .%A$ .ank has selected
the 9udamo as their mobile banking platform. !t is now 1April, *B((3 under
implementation. $ommercially available mobile banking software are listed below"
:ame of the software )eveloper
.
(. 8ybase Mobili4er" 8ybase +/-, Germany 1now, ac5uired by 8A7, E8A3
(M
+. $omviva" $omviva echnologies @td., !ndia
+. m$heck" m$heck @imited, !ndia
,. 9udamo" 9undamo @imited, 8outh Africa
-. 2bopay" 2bopay, !nc., E8A
3.4. Customers of Mobile (anking and menu items for them
hree types of customers are involved in mobile banking. hey are consumer, agents and
merchants.
Consumer:
he consumers are the mobile phone owners who are registered for mobile banking
services. !n their mobile device, they will find the following menu"
.alance $heck
Mini 8tatement
9und transfer 17*73
Etility .ill 7ayment
uition fee payment
Mobile opup
$hange 7!:
gents:
he agents are .ank nominated parties who will perform $ustomer registration and cash
transactions on behalf of the bank. !n their mobile device, they will find the following
menu"
$ustomer registration
$ash'in
$ash'out
Merchants:
he merchants are .ank nominated shop owners who will sale their goods and services
and receive payment from the customers mobile wallet into their own mobile wallet. !n
their mobile device, they will find the following menu"
Merchant 7ayment
3.3. 2eatures of a Mobile (anking Software
A Mobile .anking 8oftware should have the following features"
(I
7rovide connection to the mobile users, agents and merchants via a mobile operator
using sms, E88), E?, 8? or .%06. he sms stands for 8hort Messaging 8ystem,
E88) for Enstructured 8upplementary 8ervices )ata, E? for E!M ool ?it 1where
E!M S Eser !dentity Management3, 8? for 8!M ool ?it 1where 8!M S 8ubscribers
!dentity Management3 and .%06 stands for .inary %untime 0nvironment for 6ireless.
7rovide facilities to perform following activities by Agents, $onsumer or Merchants"
o $onsumer, Agent and Merchant %egistration
o $ash " $ash'inA$ash'out through Agents, .ank .ranches and AMs
o 7*7" 9und ransfer from one customers mobile account to the mobile account of another
customer
o 7*." Etility .ill payment, uition fee payment, Mobile opEp, Merchant payment, .uying
.usA%ailwayAAirline ticket, $inema icket
o .*7" 8alary disbursement by corporate bodies A !ndustries A 2ffice, %emittance uploading
o G*7" )isbursement of government elderly allowances, freedom fighters allowances etc.
2ther features"
o Audit trail
o Maker Q $hecker
o 7!: verification if interface is ussd A stk A utk A brew.
o !f interface is sms, 7!: verification through !;%
o sms for some Mobile :etwork 2perators 1M:23 and ussdAstkAutkAbrew for some other
M:2s
o All transactions need to send confirmation message to the customer by sms
o %evenue sharing between parties such as .ank, Agent and M:2
o Merchant $ommission deduction from Merchant payment and sharing between .ank and
M:2
o vat deduction at the month end by the system
o 9ee and charge definition for different services
o !nterest calculation on deposit accounts
o $redit facility to the Agents and interest calculation
o 0nd of )ay processing
Lydia Justin , " am
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*B