CORE BANKING AND ITS SECURITY ISSUES WITH SPECIAL REFERENCE TO SBI Dr. V.M. Chavan (Research Guide) Director, BVU Institute of Management, Kolhapur. Mr. Anil T. Gaikwad ( Research Student) Asst. Professor, BVU Institute of Management, Kolhapur. ABSTRACT The Technology in banking is the need of the present day banking operations are increasing day by day and banking discipline with proper control over banking operations will definitely help the country to grow financially sound over a next decade. Core banking is the term of utmost importance to the banks in the current market scenario. The Authors have studied the need for core banking facility to the customers and also highlighted the security issues with special reference to State Bank of India . In the present scenario the banking processes are mainly dependent on the technology used to handle the process and banking activities. The technological changes in the banking industry are considerably changed over a period of time and it has affected a lot on the stake holders of the bank in India. Banks have been improved drastically with respect to banking services. The paper traces on the ore banking technology and its implementation with respect to SBI and how the security issues will be handled to safe guard the deposits and valuable kept with the bank in this current environment of the computerization. It will also highlight the threats in the Banking industry to avoid the financial looses of the banking system. It also explains various applications of the core banking with respect to branch operations. KEYWORDS Core Banking , SBI, ATM, Online Banking, Encryption, Debit Card. Credit Card.
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Summary Core Banking is a general term used to describe the services provided by a group of networked bank branches . Centralized Operations and process automation using core banking applications and IP based networks improve efficiency and productivity levels to large extent. Core banking applications help a bank to shift from „branch banking „ to bank banking and any where banking by giving flexibility to customers in performing banking operations with ease and saving time. Banking Operations at Branches level deal with Front Office Operations and back office operations. Core Banking plays an important role in performing and changing the concept of above operations in minimum time and with maximum possible accuracy. Elements of Back office Transaction Processing services are request entry, processing and management, Account configuration and checking and balance confirmation . State Bank being the premier bank has implemented the core banking facility to all its branches over a period of five years . The paper takes the review of core banking implementation, maintenance , use and applications to meet the customer needs. INTRODUCTION The branch operations in the SBI are increasing and the complexity of maintaining and managing these operations is not possible without use of computerization. The branches are mainly having front-office and back-office operations to be performed with time specification and with accuracy. The topic selected traces on computerization in branch operations and its impact on various stakeholders. BACKGROUND Since the banking activities were started in different period in different countries. The word „bank‟ has been derived from French word „banco‟ or „bancus‟ or „banc‟ or „banque‟ which means a bench. The early Jews in Lombard transacted their banking business by sitting on the benches and when their business failed, the benches were broken and the term „bankrupt‟ came into existence. The person who is doing banking business is called banker. In the Indian view the banking regulation act section-5(B) define the term banking company as „a company which transacts the business of banking in India and the term banking has been defined as „Accepting for purpose of landing and investment of deposits of money from public, repayable on demand, order or otherwise and withdraw by cheque, draft or otherwise‟. A customer is a person or a group or a company which takes the services of the bank with relationship with banker. The basic banking operations are deposits, safeguarding deposits or items, advances and other products related with customer services introduced in the bank like insurance, mutual funds etc.
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BRIEF HISTORY OF BANKING Banking functions such as safeguarding funds, lending, guaranteeing loans, and exchanging money is old tradition followed in the society. The great banking families of the Renaissance, such as the Medici in Florence, were involved in lending money and financing international trade. The first modern banks were established in the 17th century, notably the Riksbank in Sweden (1656) and the Bank of England (1694). In the 17th century, English goldsmiths provided the model for contemporary banking. Gold was stored with these artisans for safe keeping, lending in the form of currency came into the existence. The State Bank of India started functioning in 1955 as a nationalised bank. CORE BANKING FACILITIES Core banking plays an important role in giving any where banking to the customers of the Technological Milestones in Banking 1) Batch Data Processing Technology 2) Online Banking 3) Mobile Banking IMPLEMENTATION OF CORE BANKING IN SBI It is a generics term which denotes inter branch transaction capability through central database. It will provide stake holders the value added services in effective manner and with saving operations time. Core banking will make available 24 X 7 banking and Any where Banking to customers and all channels like ATM, Internet Banking with fully integrated with branches. All the data will be in a centralized database and branches as well as administrative offices can be connected through „Core Banking‟ better MIS /DSS / Executive System is possible. This connectivity will also facilitate timely and informed decision making for the banking operations. The bank has chosen the Core banking Software Solution Called „B@ncs24‟ from Financial Network Services , Australia. Finance One – Corporate General Ledger Software is being provided by Comlink USA. This will have interface with B@ncs-24 and will enable the top management to have a real time online status of the Bank‟s balance sheet. CS-Exim Bills – Trade Finance Software from China System , Dubai will also have interface with B@ncs-24
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The different hardware and their providers are as under 1) The basic hardware for the core banking is from – HP Systems USA 2) System Integration & Customization by TATA Consultancy Services (TCS) 3) SBI Connect – The Communication Infrastructure – Datacraft Singapore The Core Banking Software will also be integrated with other delivery channels like ATM , Internet Banking , Tele-Banking Interfaces . The Data base connected and maintained by Central Data Centre at Belapur will also be connected to foreign Department and Treasury Management. Network Design :- SBI Connect has four Core centres in Mumbai, New Delhi, Kolkata and Chennai networked among themselves. All LHO centers are connected to two of the four metros with one metro link acting as a stand by. Closely located LHO‟s are also connected among themselves. An LHO therefore have 2 or 3 links. Other cities of a particular Circle , in turn are connected to the respective LHO‟s . All offices in the city are connected to an aggregation point in the city(CAP-City Aggregation Point). The four Core locations , CAP centers and Branches are linked through leased and ISDN Lines of BSNL using Routers and Modems. Besides the CDC there is a Network Operations Centre (NOC) whose function is to continuously monitor the connectivity breakdowns at any point instantaneously. The SBI Connect the networking project of SBI Group is designed with provision for 64,00 end points to connect all the branches , ATMs, Offices, Associate Banks and Foreign Offices. Data craft has entered in to service level agreement with bank undertaking 99.5 plus uptime of the network. The average uptime of SBI Connect at present is more than 98%. Application Network :- SBI Connect is the infrastructure backbone on which the Core Banking Software and any other application which requires communication will run like Trade Finance , Treasury, ATM, Internet Banking , Tele- Banking and Video Conferencing. Major Changes likely in the Business Processing 1) Branch Calendar and Holidays Customers will have access to banking facilities 24 hours , 7days through channels like ATM, Internet Banking irrespective of intervening holidays. Clearing will be released on respective dates and interest will be monitored automatically by the system with value date. 2) Branch End of Day
No End of day or Start of Day will be performed at the branch level.EOD will be performed at the central host after cut off time . There will thus be no need for system administrator at the branch level, no printing activity would be kept pending and all users will have to log out. Branch will have to complete business like closing of cash, transfer of transaction. After EOD at Central Data Centre some reports and minimal amount of data relevant to the operations can be downloaded.
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Accounts will be available to customers from Night data bases during and after EOD but before SOD through other delivery channels. Offline functionality like Acc. No. Customer Name Balance will be maintained at branch level in case of emergency.
The following chart Shows the working of Core Banking System of SBI
SECURITY ISSUES IN CORE BANKING ENVIRONMENT 1) The Core banking with server and client at different sites . 2) Physical Security of the server , clients , devices in the network 3) Access control to each terminal 4) Allocation of login and passwords to the user in the network 5) Preparing the information audit of the nodes and servers. 6) Maintaining login and logout sessions in the network environment. 7) To implement firewalls to protect valuable information and links of the bank 8) To cover the access to various financial transactions and different levels in the bank . 9) To strictly follow the security policy of the organization. 10) To report the drastic changes in the machine usage and other malfunctioning in the core banking environment. 11) To take help of cyber law to control and maintain financial discipline the bank. 12) Provide better updated and new versions of the software‟s with inbuilt security measures at table level and form level. 13) To implement the biometric access and Artificial Intelligence systems to control the access. 14) To appoint the special security officer to manage the functions of the banks network and security issues. Volume:01, Number:02, Dec-2011 : RJSITM www.theinternationaljournal.org
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CONCLUSION The paper has identified the need of the advance technology in the banking sector with security as importance issue. The Core banking has the positive impact on the stakeholders in terms of service , time saving and feasibility to perform banking operations at all level. The future banks have to look into the technological matters and have to implement at the fast rate to be in front to provide better services to the customers. FUTURE SCOPE The lot can be achieved in security in Banking technology to highlight the operations are to be error free and reliable since the faith of the customer depends on the use of technology with our errors This paper is decent effort to find out the core banking applications, use and security issues to provide the better service to customers of the bank and stake holders with special reference to SBI. Further, it could be extended to identify ways and means to use the core banking for transfer of bank data and bank operations over the various technologies like Phone, Mobile, TV and Internet Banking facilities for customer service. REFERENCES [1] [3] [4] [5] [6] [7] [8] [9]
E. Gordon , K. Natranjan “Banking Theory , Law and Practice” Himalaya Pub. 14th Edition. Adhikari, „Business Economics‟ P.C. Pardesi, „Human Resource Management‟ Peter Norton, „Introduction to Computers‟ James Mart, „Principles of Database Management‟ Davis Olson, „Management Information Systems‟, Mcgraw Hill. Web Site www.banknetindia.com Web Site www.sbi.com ***
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