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Multi-Banking Technology

by Jonathan Ashton, Global Head of Channels, Barclays

As companies increasingly look to diversify their counterparty risk exposures by banking with a larger number of financial institutions, this approach is being greatly facilitated by technology. Before the arrival of SWIFT for Corporates, multi-banking was synonymous with diverse formats and inefficiencies. Today, companies choosing to adopt this approach are doing so in a much more streamlined and efficient way – and technology is making this possible.

Models of multi-banking

One way in which companies can achieve multi-banking is by choosing a mono-bank relationship offering behind the scenes access to accounts at other banks. For example, a company might instruct Bank A to make a payment from an account held by Bank B in Spain. Bank A would then go into the SWIFT network in order to instruct Bank B to make the payment on behalf of the client. In this arrangement, the company is not multi-banking through its own access point but is using a single bank which can work with multiple banks on its behalf.

This arrangement continues to be a possibility for companies looking to access the benefits of multi-banking – but increasingly, larger corporations are choosing to communicate with multiple banks themselves. While it is technically possible to undertake multi-banking using proprietary banking systems, this approach is fraught with inefficiencies. A company working with 15 banks in this way will be grappling with multiple formats, security tokens and platforms. Fortunately there is a ready-made solution available that companies can plug into when looking to adopt a multi-banking model.

Multi-banking via SWIFT

For companies choosing to adopt a multi-banking structure, technology is a key enabler. The most important development in this area is the ability for corporations to connect to their banks via the SWIFT network – but this is not the only initiative which can support multi-banking.