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ISFS614: Core Technologies in Banks — Session 8 readings (Part 1) - Coggle…
ISFS614: Core Technologies in Banks — Session 8 readings (Part 1)
Core Banking
Core banking system
Core applications and infrastructure needed to operate a bank, which include:
Deposit processing and accounting
Loan processing and accounting
General ledger system
Customer information system
Reporting tools
Central systems for a bank to provide:
Operational database of customer’s assets and liabilities
Transaction-processing engine
System for financial management of the bank
Core Banking System — Pictorial Representation
Core Systems in the Context of a Bank’s IT Infrastructure
Why is core banking important for a bank?
Foundational structure of any bank
Determine the speed to market of new p/s offerings
Issues and challenges of core banking implementations
Maintenance & cost
Most core banking systems are old and no longer scalable
IT legacy skills are disappearing
Core legacy systems are difficult and expensive to maintain
High turnover of new generation developers
Meeting business & customer needs
Complex integration — multiple platforms, integrating new with old tech
Batch-oriented and unable to support 24/7 needs
Extensive point-to-point connectivity
Duplicated and fragmented data across the enterprise
Real-time access to bank info (e.g., accounts, transactions)
More comprehensive services through channels that were traditionally done through branches
Volumes & velocity
Volumes and velocity of growth have been exponential
Globalisation of payment and settlement systems
Mergers and acquisitions have dramatically increased the scale of bank customer bases
Information growth
Growth of unstructured data
Other factors
New regulations require timely access to enterprise-wide data (e.g., corporate governance, AML)
Delivery Channels:
Means of delivery or mechanisms whereby banking products and services can be delivered to customers
Modes of delivery can be digital, physical or a combination of both
They require significant investments, especially in retail banking where customers are voluminous (e.g., ATMs, branches, call centres)
Channels investments are optimised when channel attributes or characteristics match closely to the needs of the customers
Channel characteristics
Most valued attributes for each channel
ROI for branch automation
ATM integration view / transaction flow
Trading Technologies:
Digital solutions that enable traders to trade efficiently
Provide three main functions
Market analysis
: allows you to view and customise price charts and display price quotes
Backtesting
: allows a trader to simulate a trading strategy using
historical data
to generate results and analyze risk and profitability before risking any actual capital
Order execution
: many platforms support various levels of trade automation, from conditional orders to fully automated strategies
Governance, Risk & Compliance (GRC) Technologies
Digital solutions that enable R&C professionals to manage banking risks and comply with regulatory requirements
These digital solutions are often based on analytical and artificial intelligence (machine learning) technologies which are grounded in statistics and operational research techniques
What is GRC?
Governance
: describes the overall management approach through which senior executives direct and control the entire organization, using a combination of management information and hierarchical management control structures
Risk management
: is the set of processes through which management identifies, analyses and, where necessary, responds appropriately to risks that might adversely affect the realisation of the organisation's business objectives
Compliance
: means conforming with stated requirements—external and internal compliance
RiskTech vs RegTech