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Building a Robust core banking system for One of Europe’s largest mortgages and retail services banks

Building a Robust core banking system for One of Europe’s largest mortgages and retail services banks


One of Europe’s largest mortgages and retail services banks.

Business Context

The bank had a strategic vision of expanding its operations to more countries in Europe. As part of this, they decided to start a new full-fledged retail bank in a Euro Currency area in just over a year.

To help the cause, the bank acquired the branch network of a utility company with assets in the form of consumer loans. With a sizable potential customer base and a readily available branch network in choice locations across the country, the bank intended to open as many as 50 new branches in the next twelve months. The objective was to have a full fledged retail bank with lucrative personal current accounts.

The parent bank had a robust core banking system for their retail and business banking operations. They decided to implement the same system for the new bank as well, as it has been time tested and provided a decent performance. Nonetheless, the core banking system had to be interfaced with all other essential systems to bring into being a full fledged bank. Interfaces had to be made for Clearing, Tax, General Ledger, Control and Settlement, Regulatory Reporting, Risk, Single Customer View, Cheque Book processing, Letters Statements and Certificates.

Some of these functions were absolutely crucial for the functioning of the bank and without those in place, it would not have been possible to commence the operations on schedule.

HCL Solution

HCL organized several sub teams to develop the required interfaces. HCL provided the domain experts and functional specialists to analyze the requirements and to create the functional specification documents. For a few documents prepared by the bank, HCL’s domain experts added value through close interaction for clarity, leveraging upon the best practices absorbed during similar exercises in the past. The following activities were carried out by the HCL team.


The core clearing functionality already available was to be retained and further enhanced with the necessary bi-directional interfaces to the core banking system. The four main processes that were interfaced smoothly for the bank to function effectively were Paper Out, Paper In, Electronic Out, Electronic In.

Single Customer View

Core banking system would hold the master account balances for Personal Current Accounts but would maintain a ‘shadow’ view of other accounts of the customer in the legacy system. This ‘shadow view’ would update the available balance, taking into account cleared items passed from Transaction Manager to CBS.

Transactions are provided as follows:

  • Generated by on-line CBS channels (e.g. TM, SM) or,
  • Provided to CBS during the day from other systems (e.g. clearing feeds)

At the end of each day, CBS will pass a file back to the other product systems containing details of the transactions. HCL will have to format and interface the feeds to achieve a single customer view at all times so that bank always had the information of the overall position of its exposure to a customer.

Control and Settlement

The Control and Settlement defines the accounting and settlement for payment processing, for both externally generated and internally generated payments. The work involved building an intersystem reconciliation for ensuring that all the flows of transactions between the legacy system and core banking system were correctly captured and posted to the respective accounts to which the transaction pertained. The reconciliation system was to be responsible for ensuring that adequate Business Controls are put in place to ensure the integrity of any transfers of data where financial value is involved.

General Ledger

The accounting flow takes place from CBS to Oracle General Ledger through a system called OST. The development was to take care that the required flow from the CBS takes place and the necessary reports and reconciliations details are correctly produced.

CBS has a General Ledger component that forms the interface between CBS and the GL. Every transaction posted in CBS must send information to the GL, and this is done via the GL component. Transaction details are posted to the GL component for the following types of entries:

  • Principal Balance movements
  • Interest, Fee and Tax Accruals - month end
  • Interest, Fees, Tax Raisings - as they happen
  • Statistics, such as the number of accounts, fee waiver and risk weighted value

To enable reconciliation between CBS and the GL it was proposed that Oracle values are compared with an independent account based ‘reconciliation’ extract from CBS. Other extracts such as pre-notified interest and fees extract was to be combined and reformatted for input to OST.

ISC Interface

Core Banking System will create several extract files at the end of the each business day which will be processed by ISC suite of programs. ISC will generate file of letters, statements and certificates for Papyrus to print on the A4 size paper/ Pre-printed Stationery. All statements, except interim statements, will be archived by Papyrus in the Archive/Reprint System, which will be retrieved to reprint those statements.

This was a painstaking work as the numerous fields of data that comes out in the extract had to reach the correct physical destination in the paper output of different types of communication. This required the full knowledge of the functionality of each piece of data to ensure that it lands in the correct slot in the output.

Regulatory Reporting Basel II

On the first day of the month, a snapshot of data was to be taken from CBS EURO extract files, consisting of the required fields and any additional non-required fields for the personal current accounts. This extract was to be forwarded to the server as two files, one for Retail Book and one for Retail account. The extract was to be loaded on to third party software that is used to generate BASEL II reporting. But the data that is loaded to the third party software had to undergo change so that it is received and processed by it. Responsibilities was to match the data, convert data and add to the look up table.


Risk Interface had to address Liquidity risk and Asset Liability Management and data requirements for the following from CBS into a third-party system:

  • Monthly Regulatory Liquidity to Finance (Treasury Operations)
  • Monthly Prudential Liquidity to Finance (Treasury Operations)
  • Net Asset Liability Gap
  • Monthly Raw Liquidity
  • Annual Historical Stressed Review

The feed from CBS had to be interfaced with Insight, which in turn channelled data to other systems that helped in managing and mitigating risk.


  • Seamless integration with the existing systems

Key Technology


  • Cobol
  • DB2
  • JCL


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