1. Home
  2. Bank Relations & KYC
  3. Evaluating Banks’ Overall Performance

What’s the future of correspondent banking?

The number of correspondent banking relationships has taken a sharp nose-dive in the past four years, with a decrease of 38% globally. This is partly driven by regulation but new payment models and 'emerging illicit payment corridors' are also factors, writes Accuity's Henry Balani in an article published on gtnews.com. He writes: “Regulatory drivers are certainly a significant factor in driving the decline. Over the past five years, the number of penalties for non-compliance with anti- money laundering (AML) regulations has increased. To date the biggest penalties levied have been BNP Paribas, fined US$8.9bn in 2014 and HSBC US$1.9bn in 2013 for various alleged money laundering offences, including the stripping of references to Iran in US dollar wire payments for clearing in the US.”

Balani also writes: “Globally, payment patterns are changing, with greater volumes of lower value payments crossing borders. Payment and lending roles, traditionally serviced by centralised banking functions, are now being disintermediated by emerging payment service providers and financial technology (fintech firms).”

Read more in the full article, here.

CTMfile take: This article really spells out the argument that the age of correspondent banking is coming to an end. New payment models offered by fintech start-ups are offering customers cheaper, more transparent ways of moving money across borders. Banks will have to partner with fintechs to remain competitive in the correspondent banking space.

Like this item? Get our Weekly Update newsletter. Subscribe today

Also see

Add a comment

New comment submissions are moderated.