1. Multibanking

2. Multibanking 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)

3. Multibanking 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

4. Multibanking 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 (MT ) but cannot send to other banks

5. Multibanking Reporting (cont)
Bank delivering service not responsible for
Non-delivery
Late delivery
Quality of information
Lack of privacy?

6. 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

7. 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

8. 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

9. 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

10. 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

11. Multibanking 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?

12. 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

13. Multibanking Swift Involvement
SWIFTNet – SWIFT’S Internet Protocol based platform. Secure and interactive
Messaging consists of
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

14. Multibanking Swift Involvement
MT101’s Credit Beneficiary a/c
MT101
Debit
Customer a/c
Customer
CM Bank
Beneficiary Bank
SWIFT
Local clearing
Receiving Bank

15. Multibanking Swift Involvement Multibank reporting
Customer
Corporate Electronic
banking system
Multibank reporting
MT940/1/2
MT940
Lead bank’s own customer A/cs at other banks A/cs at own
a/cs In country In country and o/s branches o/s
Lead CM Bank
SWIFT Network

16. Multibanking Swift Involvement
Corporate Access to SWIFT
MA-CUG
Bank 1
Co A
MACUG
Sponsor
Bank
SWIFTNet
Co B
Bank 2
SWIFTNet
Bank 3
Co C

17. 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

18. Multibanking Swift Involvement
So SCORE, Standardised Corporate Environment
Bank A
Bank B
SWIFTNet
Company A
Bank C

19. Multibanking Swift Involvement
SCORE
Company must be listed
Countries must support FATF
Companies must comply with corporate governance and reporting requirements

20. Multibanking Swift Involvement
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

21. Multibanking Swift Involvement
So what are cash management benefits?
Enhanced cash reporting
Bulk payments processing
Online payments initiation