Banking & LendingBanking & Lending GlossaryPart 2 of 13
The Core Glossary
26 terms from the Banking & Lending book's The Core part, each defined in a line and linked to the chapter that explains it.
- APY earned: the yield an account actually earned over a statement period, from the interest paid and the average daily balance, shown on the periodic statement (Interest, APY & Statements).
- Average daily balance method: interest computed by applying a periodic rate to the average of the period's daily balances; with the daily balance method, one of the two Regulation DD allows (Interest, APY & Statements).
- Bank Service Company Act: the statute making services a bank buys by contract, such as a hosted core, examinable as if the bank performed them itself (12 USC 1867) (Core Banking Systems).
- Batch core: a core that memo posts during the day and hard posts, accrues and rolls the business date in a nightly batch (Core Banking Systems).
- Block (deposit account): a reduction of available balance that lasts until someone releases it, as for legal process or fraud, as opposed to a hold that expires (Posting, Holds & Balances).
- Booking date, value date: when an entry posts to the books, and the date it counts from for interest, fees and availability; a backdated correction has a past value date and today's booking date (Posting, Holds & Balances).
- Change in terms: a change to a disclosed account term; adverse changes to consumer deposit terms need 30 days' notice (Reg DD) and significant changes to open-end credit 45 (Reg Z) (Products & Product Configuration).
- Coexistence: running two cores at once during a progressive migration, with each account's system of record held as data and every integration routing by it (Core Modernization & Conversions).
- Compounding: interest earning interest, at crediting or daily on accrued interest; the disclosed APY must reflect the frequency the account uses (Interest, APY & Statements).
- Conversion (core): moving an institution's accounts, history and obligations in flight from one core to another, usually over a weekend after rehearsals (Core Modernization & Conversions).
- Core banking system: the system of record for an institution's accounts, postings and general ledger, usually a vendor's product hosted by the vendor (The Banking Landscape).
- Crediting (interest): moving accrued interest into the account's balance, where it becomes spendable and, for tax, paid; rounding happens here, once (Interest, APY & Statements).
- Day count convention: the rule that turns an annual rate into a daily one: Actual/365, Actual/360, 30/360 or Actual/Actual (Interest, APY & Statements).
- End of day (EOD): the ordered sequence that closes a business date: hard posting, item fees, accrual, date-driven events, snapshots, GL proofs, files out and the date roll (Posting, Holds & Balances).
- Float: deposited items credited to the ledger but not yet collected from the paying bank; ledger balance minus float is the collected balance (Posting, Holds & Balances).
- GL mapping: the configuration that says which general ledger accounts each kind of activity on each product version debits and credits (Core Banking Systems).
- Grandfathering: leaving existing accounts on an older product version when the product changes (Products & Product Configuration).
- Hard posting: recording a transaction in the ledger with its journal entry, final except by reversal (Posting, Holds & Balances).
- Memo posting: recording an item that changes available balance before it reaches the ledger, such as a card authorization or a deposit under review (Posting, Holds & Balances).
- Posting order: the order a core posts a day's items in, which decides how many overdraw an account near zero; high-to-low ordering was the subject of the overdraft litigation (Posting, Holds & Balances).
- Product factory: the part of a core that defines products: rates, tiers, fees, limits, maturity, dormancy and GL mapping (Products & Product Configuration).
- Progressive migration: replacing a core in slices (by product, by component, or greenfield beside it) rather than in one big-bang conversion (Core Modernization & Conversions).
- Real-time core: a core that hard posts each transaction as it happens, keeping end of day for accrual, fees and statements (Core Banking Systems).
- Subledger proof: the daily check that the sum of account balances on a product equals its GL control line (Core Banking Systems).
- Subledger: per-account detail beneath the general ledger, which must sum to the GL's balances every day (The Banking & Lending Business).
- Tiering method A, B: Regulation DD's two tiered-rate shapes: the whole balance earns its tier's rate (A), or each slice earns its own tier's rate (B) (Interest, APY & Statements).