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In a new white paper, SWIFT unveils its vision for a customer-centric, “experience banking” model where customers are the trigger for banking services, and where banks link together the best components to create a consistent and seamless customer experience. Welcome to Correspondent Banking 3.0.

Correspondent banking 1.0 in the mid-1970s was about automating the telex via connections between a large network of banks. A more efficient 2.0 emerged in the late 1990s, based on centralised global transaction processing, using fewer but deeper relationships and tighter performance management.

In its correspondent banking 3.0 white paper, SWIFT asserts that pushing for further efficiency on the current model, while necessary, is not enough. The model is still too bank product centric, based on inherently inefficient multiple agreements.

Profits are under pressure as banks need to comply with more regulation and deal with increased competition. Meanwhile, we are bracing ourselves for another global financial crisis and economic slowdown. Combine this with the emergence of mobile payments and the cry from Corporates for more integrated solutions, and the need for significant innovation becomes clear.

Collaboration for The Future

To move towards this new model, four collaborative projects have been identified following 35 in-depth interviews held with banks by SWIFT during 2010-2011. Each of these projects was shortlisted based on the criteria that they are collaborative, new, achievable and significant for the industry.  The four projects are:

1. Enhanced business intelligence services to better identify new market opportunities, understand end-customer behaviour, and better monitor liquidity;
2. An interbank EBAM (Electronic Bank Account Management) central utility to more efficiently manage bank accounts and relationships;
3. A bank-owned global service for person-to-person payments, that is mobile enabled;

4. An international market infrastructure, to reach many small banks with low volumes, without the need for a correspondent bank relationship and account with each of them.

“The world is changing rapidly. To keep their payments franchise, banks must take charge of their destiny and lead the way,” states Luc Meurant, head of banking, supply chain and corporate markets, SWIFT.
 

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