Core banking solutions in the the banking sector witnessing exceptional growth over the last few years and the industry has seen the introduction of newer technologies in order to serve the ever-increasing need of its customers. It can well be said to be the brainchild of this innovation.
Core Banking Solutions
The term core banking solution is used to define a comprehensive, integrated, modular and agile business solution which is able to address all the core needs of banks, in an easy-to-configure manner. It refers to services of a particular bank that is offered across a group of networks or branches.
Banks are equipped with the technologies of core banking to help customers access their funds and other transactions from any of the member branch offices. Many banks across the world treat their retail customers as core banking consumers. They also have a separate line of business for small businesses allowing them with the option of transacting freely without any hitches. Whereas large organisations are managed through the corporate banking division of the bank, core banking is employed to cater to the other section of businesses.
Usually a core banking solution has a General Ledger (GL) subsystem at its core enabled with plug-in satellite modules to cater to the various businesses of the bank. The satellite modules are used to serve the various functions of the bank.
However there are some disadvantages of using CBS as well. Usually there is an additional amount that is charged along with various other fees and charges as well. These charges have a significant impact on the overall income of the bank. Banks generally levy these charges using multiple fringe systems in each business segment.
Ideally a large bank is bound to levy a number of charges that can run into thousands. The fees can range well between the category of charges related to Automated Clearing House (ACH), money market sweeps, tracking and reconciliation charges and many more.
Pricing and Billing Solutions
On the other hand ‘Pricing and Billing Solution (PBS)’ has the ability to levy and fix prices on millions of transactions on the basis of multiple perimeters. It can come up with a consolidated bill for the end customer.
One of the major offerings of PBS is its ability to put preferential price schemes together in order to include various charges under the service line. This includes services like ACH, balance sweeps amongst others. The pricing of the product depends on the kind of relationship that the client maintains with the bank.
There can also be minimum expected revenue for those service lines or minimum monthly value commitment from the customer in order to make matters even more complex. The product offering in the PBS can either be bundled or volume tiered.
Therefore the PBS facility allows the bank to charge any customer optimally in ways they can. Later on the priced transactions are billed according to the billing preferences opted by the customer.
There are various banks and even other organisations offering billing and pricing solutions. They provide real-time pricing and other complex billing requirements. There are also pricing analysts who can help with the flexibility to structure and bill contracts that can include various products.
At the end, thus, it can be said that even though the technicalities of the two concepts might appear to be complex, both involve charges of some kind. Whereas CBS levies lower charges suitable for smaller business players, PBS is an even more complex solution which can be beneficial for bigger players. Therefore, it would be ideal to do a detailed research before committing yourself into any of the core banking solutions.