New multi-bank solutions for a global banking dilemma

You would have thought we’d have gotten further
Ever since the East India Companies of the 17th century, business around the world has been growing more and more international. Customer and supplier relationships are to an ever increasing extent occurring across the borders, often with very broad patterns linking into several markets, the result of modern multinational corporations.

Still many of the multinationals are given no choice but to handle their global payment needs either as plain international payments or on multibanking/referral basis unless they take a quantum leap and go local. We, the international banking industry, have not followed the advance of our corporate customers in a global context anywhere near the level we have done so in a domestic context. We need to realise that our customers have global payment needs that deserve domestic attention.

On the bank side we are all experiencing income pressure on the transactional business. We can no longer afford to give our multinational customers away to local banks and lose out on making the most out of it. Just handing over the transaction margin as well as the liquidity is a waste of money, which cannot be justified.

All of the above points in the same direction - banks need to take the game to a new level. We need to go global in order to satisfy our customers’ new requirements. It is no longer enough to be able to simply refer our customers to a partner with a good luck. The MT101/MT940 setups of the past just do not cut it anymore. The value delivered is weak both on the referring bank side and for the customer.

Better options are available
The alternative is not new; it has been in the market for quite a few years living a quiet and unrefined life. It is often referred to as the re: account-model, basically meaning that customer accounts are opened in the name of user banks but in reference of the customers. Several banks offer it throughout the European landscape. Banks offer services in partnerships with other banks in a region where they might have limited presence themselves. The partnership can be set up as a white label solution.

The solution adds both width and depth to the customer proposition. Account opening can be made in just a few days instead of the weeks required for traditional referrals. The customer can get access to a completely different range of products than with traditional multibanking¬/referral setups. This while being able to stay in a consolidated banking relationship with their main bank that is educated and fed local market information through a tight partnership with the provider bank.

In addition to the obvious benefits for the customer, there is also a substantial upside for the user bank as liquidity, pricing, interest terms and customer ownership stays with them. The only comparison really is a fully fledged branch network, but even that will not guarantee the same quality, as it is neither easy nor cheap to mimic the experience gained by a local bank with decades of experience in a region

Adding even more width
Partnerships between banks, especially for the cross-border business has always been a natural way of supporting the clients with the needs that global business demands and we will see more and more developments in this area going forward.