Multibanking
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Multibanking
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What is Multibanking?
Using many banks for cash management
Use one bank as lead cash management bank
Use only lead bank’s electronic banking
All banks report balance and transactions into
lead bank (using MT940s)
Lead bank passes on information in standard
format
Use lead bank’s EB system to initiate payment
instructions to all banks (MT101,198 or 103)
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Multibanking
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Advantages of Multibanking
Able to use the best bank in each country
for local cash management needs
Only one EB system to manage all bank
accounts
Lower systems/software costs
May use best EB system or use third party
system
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Multibanking
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Problems with multibanking - Reporting
MT940 is an end of day message
Normally only one transmission available
per day
Intra-day reporting can be difficult or
impossible on a multibank basis
Most banks are able to do intra-day
updates internally (MT941 942) but cannot
send to other banks
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Multibanking
Reporting (cont)
• Bank delivering service not responsible for
– Non-delivery
– Late delivery
– Quality of information
• Lack of privacy?
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Multibanking
Problems with multibanking - reporting
• Some banks will not cooperate
• Extra cost – paying two banks for information
• Some banks cannot report via MT940s
– At all (a few)
– Automatically
– To a good standard
• May be better off buying independent software
– Poll parser
– May get intra-day or real-time information
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Multibanking
Problems with multibanking – payments
• Paying two banks to make a payment
• Need bilateral agreements in place
• Liability issues. There may be a lack of
clarity as to whom is responsible
– Logically
– Morally
– legally
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Multibanking
Problems with multibanking - payments
• Standard bank to bank message (MT103)
– Auto processing?
– Designed to debit sending bank’s nostro account
• MT198 message
– Old standard few banks can auto process
• MT 101
– Newer standard – not all banks can handle fully
automated
– Automated triggering of MT 101s based on MT940
series
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Multibanking
Problems with multibanking – Payments
• In some banks means all payments
received
– Fall into repair queue
– Processed with manual intervention
– Subject to delays- missed cut-offs
– Subject to input errors?
– Cost more to process than an auto payment
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Multibanking
• Multibanking – payments
• Not suitable for treasury settlements with
manual intervention
• Is it good enough for third party payments
• No end to end authentication
• No confirmation of execution
• Often no ‘non-urgent’ option
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Multibanking
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Problems with multibanking – payments
Who do we call when it goes wrong?
Who sorts it out?
Who pays the compensation
What is covered in the service level agreement
with lead bank?
What documentation will need to be signed
Who is legally liable for what?
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Multibanking
Swift Involvement
• Caveat
– not all banks are members of SWIFT
– Not all banks can send and receive all
message types (e.g. MT942)
• Message standards not always applied in
a consistent manner
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Multibanking
Swift Involvement
• SWIFTNet – SWIFT’S Internet Protocol based
platform. Secure and interactive
• Messaging consists of
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SWIFTNet Fin, store and forward
SWIFTNet Fin Copy, clearing and settlement
SWIFTNet InterACT, real time message exchange
SWIFTNet FileACT, bulk messages
SWIFTNet Browse, e.g. correspondent banks may
look at their Nostro a/cs
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Multibanking
Swift Involvement
• MT101’s
Custome
r
Credit Beneficiary a/c
CM Bank
Beneficiar
y Bank
MT101
Debit
Customer a/c
SWIFT
Receiving
Bank
Local
clearing
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Multibanking
Swift Involvement
Multibank reporting
Customer
Corporate Electronic
banking system
Multibank reporting
MT940/1/2
MT940/1/2
Lead CM
Bank
SWIFT
Networ
k
MT940
Lead bank’s own customer
a/cs In country
A/cs at other banks
In country and o/s
MT940/1/2
A/cs at own
branches o/s
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Multibanking
Swift Involvement
Corporate Access to SWIFT
• MA-CUG
Bank 1
Co A
Co B
Co C
SWIFTNe
t
MACUG
Sponsor
Bank
SWIFTNe
t
Bank 2
Bank 3
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Multibanking
Swift Involvement
• But a company may need to join multiple
MA-CUGs to cover all its banking needs
• Have been criticised as being
– High cost
– Administratively cumbersome
– Preserves a restrictive, proprietary
relationship
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Multibanking
Swift Involvement
• So SCORE, Standardised Corporate
Environment
Bank A
Company
A
SWIFTNe
t
Bank B
Bank C
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Multibanking
Swift Involvement
SCORE
• Company must be listed
• Countries must support FATF
• Companies must comply with corporate
governance and reporting requirements
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Multibanking
Swift Involvement
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Benefits for Corporates
Co can use SWIFT secure network
MA-CUG membership improves STP
Rationalised infrastructure
24/7 availability
SWIFTNet may be used as standard for bank
communications
• Browsing for intra-day leads to better global
liquidity management
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Multibanking
Swift Involvement
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So what are cash management benefits?
Enhanced cash reporting
Bulk payments processing
Online payments initiation
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