The dark side of core banking transformations

Banks are leveraging the benefits of technology with implementation of various core banking systems. Banks as well as their customers are benefited in various ways with implementation of core banking systems. Banks have been able to redefine banking by introducing features like anywhere banking, channel banking i.e. banking through various channels like ATMs, internet banking, mobile banking etc. which would not have been possible without core banking systems and automation. With these, customers are less dependent on the bank branches and not constrained by the business timings of branches. These also help in providing faster/instant information to customers of the various transactions happening in their accounts leading to other benefits like better management of funds by customers, minimizing fraud and so on.

On the other hand core banking systems helps banks to standardize their processes, automate various activities and accounting which leads to availability of more time for bank staff, so that they are available for focusing on marketing and personalized banking. It also helps banks to lunch new products faster, quicker implementation of policies and changes in regulatory framework, availability of accurate data for internal MIS and reporting to external agencies. This also helps in handling more volumes.

The dark side of the core banking transformations is that bank staff is forced to follow the laid down processes blindly without understanding the underlying transactions. They do not understand what exactly is going on the back ground, let it be from accounting perspective, interest calculations perspective etc. Let me take a simple example. Let us talk about a cash receipt transaction by a teller. In today’s world, he will have a screen to input the customer’s account no., the amount received and may be the denomination of currency received. On inputting these details, the teller will simply submit the transaction and the corresponding transaction takes behind the screen. Many cases, the teller is not aware of the transaction passed. Another example could be interest related. As interest accruals and applications happen in the backend most of the staff does not understand interest calculations. This makes the bank staff merely mechanical and process oriented. Many times they may not be in a position to clarify customer queries on interest calculations etc. and will have to depend on someone else.

Purely process oriented staff can lead to adverse image of the bank and also operational risks. Hence Banks should also focus on training their staff on the various intricacies of banking, making them understand the why and how of various transactions they do.