Saturday, 19 November 2016

Core Banking and Retail Banking - The Difference

My friends in the banking industry could not help but spend a few minutes in my brief analysis of the difference between core and retails banking.

One thing I let my subscribers know is that there is a subtle difference between doing the job and doing the job with a reason. In the first, you don't have much to do with the theoretical concepts of the tasks provided you get it done, possibly efficiently.

In the later, you get to know the concepts behind the actions being taken and that is what a being a professional means.

That is would like to highlight the concept of Core Banking and Retail Banking.

1. Retail Banking (aka Consumer Banking)
Retails banking also called Consumer banking deals with providing financial services to customers. Customers may be individuals or corporate organisations

Examples of Retail Banking Activities
a. A bank account is opened for a particular customer
b. School fee is paid by a student and processed
c. Someone withdraws money from the bank's ATM
d. A debit card is provided for a customer
c. A company account is opened for staff of XYZ limited

2. Core Banking (aka Corporate Banking or Consolidated Banking)
Core banking deals with the transaction between a bank and other banks or between a branch of a bank and other branches. It may also involve transaction between a bank and some other organisation.
In core banking transactions details is shared between entities based on network and internet facilities. Core banking tasks may generally have been programmed to run at some intervals without the intervention of the customer or banking personnel.

Examples of Core Banking Activities
a. Communication between a local bank and bank overseas when on travels to another country with a local debit card and uses it for purchases
b. A bank consolidates data to a central repository from many branches in different locations
c. Communication between an ERP used by organizations and monthly cash transfer eg. employees salaries are transferred to banks at certain point in the month
d. Multinationals remit funds to the Federal account