Bank Computerization approaches
[ From chapter-7 of the book "Information Technology in Banking" written by Abul Kashem Md. Shirin and Nusrat Tamanna Prianka and published by Institute of Bankers, Bangladesh (IBB) ]
There
are various approaches for automation of Banking activities. The initial
automation starts with use of stand-alone computer in Banks. Thereafter
gradually LAN, WAN with distributed database and WAN with centralized database
were introduced in different Banks. Introduction of centralized database
facilitate the Banks to start e-banking.
E-banking covers different electronic banking channels like ATM, POS, Internet
Banking, sms and Alert Banking, e-commerce, m-commerce and Call Center. Using
these electronic channels, the Banks can offer different banking services to
their customers. These electronic channels are also collectively called as Alternative Delivery Channels. To use many
of the Alternative Delivery Channels the customer needs a plastic card. The
plastic card can be a debit card, a credit card or a smart card. These cards
are collectively known as Plastic Money.
For production and management of plastic cards, banks need to install various
software and be member of various local and international payment associations
like Q-Cash, MasterCard and VISA card.
The
following paragraphs narrate the various approaches to Bank Automation. Next
chapters will discuss the Plastic Money and Alternative Delivery Channels.
1. Stand-alone
System
In
eighties, Banks in Bangladesh started computerizations just to replace the
customer ledger. The software used for replacement of customer ledger, was used
by the branch for posting debit and credit entries at the customer accounts during
receipt and payment at bank counter. No other banking activities like credit
and foreign trade functionalities, and back office activities like calculation
of interest, service charges, fees and commissions, maintaining general ledger,
preparation of chart of accounts, statement of income-expenses and other
reports were not included in the software.
The
software was stand-alone, that is, it was not sharable by more than one
computer. It should be installed in one computer of a branch. One computer
operator was posted for data entry. The Teller receives the check and passes to
the Computer Operator for posting. After the posting was made successfully, the
Teller handed over money to the customer. However the receipt vouchers could be
posted after close of the transaction hours.
The
big disadvantage of the stand alone system is that it could not be used for the
large branch where number of transaction is huge. Another disadvantage is the
absence of all banking functionalities in the system.
Beximco
Computers was pioneer in developing the first stand-alone banking software in
Bangladesh in the name of “BexiBank”.
2. LAN-based
System
In
the nineties, the LAN-based Core Banking Software comes into picture. In a
LAN-based system, the software was installed on a Computer Server. The Computer
Server was connected to a HUB or Network Switch. All other computers called
work stations were connected to the Server through this HUB or Network Switch.
Each of the Tellers and Back Office Officers were given a work station for
posting. All the customer and account related information and transactions were
recorded in the hard disk with the Server.
|
For
establishing LAN among the computers, Unix or Novel operating system was used.
The data was stored in the Server in a flat file or a database – either FoxPro
or dBase. The software was written in COBOL, FoxPro or dBase.
LAN-based
core banking software was developed by various companies in Bangladesh, a list
of which is given below:
SL
|
Name of Software
|
Name of Developer
|
1
|
PcBank
PcBank/M
PcBank2000
|
Leads Corporation Ltd.
|
2
|
BexiBank3000,
BexiBank3000+
BexiBank4000
BexiBank5000
|
Beximco Computers Ltd.
|
3
|
A-Z Banking Software
|
A to Z Computers Ltd.
|
4
|
EaseBank
|
Computer Ease Limited
|
5
|
IBS
|
Infinity Technology International
Ltd.
|
6
|
E-Banking
|
Desktop Computer Connection Ltd.
|
7
|
Kernel
|
Kernel Software limited
|
8
|
FloraBank
|
Flora Limited
|
9
|
Millennium
|
Southtech Limited
|
10
|
TIBS
|
Technoheaven Limited
|
In
the LAN-based software, many banking features were included. However, the
accountholders data was stored and available in a branch only and thus on-line
banking was not possible using such software.
The
costing of such software was very low, only Taka 50,000 – 70,000 per branch.
3. WAN-based
System with distributed database
In
2000, Bangladesh Telephone and Telegram Board (BTTB) installed the DDN (Digital
Data Network) switch at its Mogbazar Exchange. DDN is a data communication
media using normal telephone line at a maximum speed of 256 Kbps and was
available at district towns in Bangladesh. Using this communication media, some
banks started establishing WAN among the branches at district towns.
|
The
WAN thus established was used to connect different LANs in different branches
and thus provided facilities for the customer to go into another branch and
withdraw or deposit money. This had started an era of semi-online banking. The customer needed to declare the name of
branches from where he wanted to get on-line services. The home branch of the
customer would make copies of the customer’s signature card and photograph, and
send to the declared branches for authentication during on-line transactions.
The Tellers of other branches entered into the server of the customer’s home
branch using WAN connectivity and a special password, and made the posting.
The
software used for WAN-based transactions was exactly same as one used for
LAN-based transactions except a minor customization to accept transaction from
other branch.
However
this system was not considered as a complete solution for on-line banking. This
system does not support inclusion of various delivery channels like ATM, POS,
Internet Banking system, sms & Alert Banking system. Using this system, if
a bank wants to include ATMs, it will need to keep all the branches open 24
hours a day and 7 days a week. This is not possible, as the servers are not
sized for 24-hours of operation, and many other factors like expert manpower, proper
electric power, adequate air conditioning system may not be feasible at all the
branches.
True
on-line banking can be achieved by installing a centralized core banking
system. Among the local banks, the AB Bank, at that time, was using a
centralized core banking system named “Equation”. However only the branches at
Dhaka city were connected to this centralized core banking system.
4. WAN-based
System with centralized database
In
2004, the centralized core banking system was installed simultaneously by
Eastern Bank, Dhaka Bank and Dutch-Bangla Bank. All the three banks procured a
core banking software named “Flexcube” from i-flex solutions limited, India.
The software was installed centrally at the “Data Center” of the bank. LANs
were installed at each of the branches and all the LANs were connected to Data
Center using VSAT, Radio Link, DDN or Fiber Optic Cable or a combination of
them. Two redundant links were used for connecting each of the branches.
In
the centralized core banking system, all the customers’ information and
transactions are recorded centrally at a storage system connected with a group
of clustered servers at Data Center. Clustered Servers provides redundancy to
the system, thus if one server fails, another server takes over the control of
the system and serves all the branches. However in this type of solution, Bank
needs to establish Disaster Recovery Site (DRS) in a distant location for
maintaining an online copy of the database and also for housing a redundant set
of servers and equipments.
In
the centralized core banking system, alternative delivery channels like ATM/POS
can be integrated easily as the ATM/POS system will be connected to the Central
Server, not to the individual branches. And the central servers, equipments and
environments are sized to run 24 hours a day, 265 days a year. Expert IT professional
can be made available at the Data Center and the roaster duty can be arranged
for 24-hour’s monitoring of the Data Center.
Thereafter
the ‘One Bank’ moves to Centralized Core Banking System using “Microbanker” of
i-flex solutions ltd, India; BRAC Bank and City Bank using “Finacle” of Infosys
Limited, India; Prime Bank and EXIM Bank using T24 of Globas Pvt Ltd.
Switzerland; AB Bank and IFIC Bank using Equation of Misys Plc, UK; and BASIC
Bank using “Kastle Core Banking” of 3i Infotech Limited, India.
Meantime
the local software companies like Flora Systems, Leads Corporation, Millennium
Software and ERA Infotech have developed Centralized Core Banking Software in
the name of “Flora Bank Online”, “Bank Ultimas”, “Ababil” and “Stealer”
respectively.
Rest
of the Banks started using locally developed Centralized Core Banking Software after
2007.
thanks for sharing this information.
উত্তরমুছুন"e banking
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