Banking software

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Banking software is enterprise software that is used by the banking industry to manage their core operations, customer relationships, risk compliance, and financial transactions. These systems support the automation and management of banking processes such as account management, payments, lending, regulatory reporting, and customer onboarding. The scope of banking software ranges from core banking systems, which handle deposit and loan processing, to digital banking platforms, which enable online and mobile banking services. Additional modules often cover areas like anti-money laundering (AML), fraud detection, and treasury management.

Banking software encompasses a broad range of systems designed to support different functions within a financial institution. These systems are typically classified by the type of banking activity they support or the operational layer they address.

Core banking systems (CBS) are the backbone of a bank’s operations. They manage key transactional processes such as deposits, withdrawals, interest calculations, loan servicing, and customer account maintenance. These systems operate in real time and are critical for ensuring consistency and accuracy across branches and digital channels.

Digital banking platforms enable customer-facing services such as online banking, mobile apps, and self-service portals. They provide the user interface and service orchestration required for retail and business banking clients to interact with their accounts, make payments, or access financial products.

These systems are used by banks to manage liquidity, trading, investment portfolios, and capital market operations. They support functions such as risk analysis, treasury transactions processing system, derivatives processing, and securities settlement. Solutions in this category often include modules for interest rate management and regulatory capital tracking.

Payment systems support the execution of transactions across multiple payment rails, including ACH, SWIFT, SEPA, card networks, and real-time payments. These systems are designed to process high volumes of transactions securely and in compliance with global payment standards.

This category includes tools designed to meet regulatory obligations and monitor financial and operational risks. Features may include anti-money laundering (AML), know your customer (KYC), fraud detection, sanctions screening, and audit trail generation. Compliance software is often updated to reflect changes in international frameworks such as Basel III, FATF recommendations, or GDPR.

Commercial or retail banks use what is known as core banking software which records and manages the transactions made by the banks' customers to their accounts. For example, it allows a customer to go to any branch of the bank and do their banking from there. In essence, it frees the customer from their home branch and enables them to do banking anywhere.

Moreover, core banking software facilitates seamless integration with other channels such as ATMs, Internet Banking, payment networks and SMS based banking.^[1] This integration ensures that customers can access banking services through various channels, enhancing accessibility and the customer experience.

Banking software is used by millions of users across hundreds or thousands of branches. This means that the software must be managed on many machines even in a small bank. The core banking system is a major investment for retail banks and maintaining and managing the system can represent a large part of the cost of running a bank. Given its critical role in daily banking operations and customer interactions, ensuring the smooth functioning and security of the core banking software is of utmost importance for financial institutions.

Investment banks use software to manage their dealing departments and their client's accountants. These systems often connect to financial markets such as securities exchanges or third-party providers of financial information about international market.

For example, a company such as Bloomberg is a financial software, news, and data company that offers financial software tools through the Bloomberg Terminal. Another example is Reuters whose products specialize in financial information management, purchase order management, positions and risks, and financial instrument sales.

These types of companies provide control solutions and overall productivity for corporate treasury, improved workflow, central banking, bank treasury, exchange and global back-office operations. Examples of these back-office tasks include IT departments that keep the phones and computers running (operations architecture), accounting, human resources (customer relations) and sales and marketing where they come into contact with their customers.

With the help of these software companies, there is efficiency and proper management of transactions both in the front and back offices of banking firms and other financial institutions.