Mn 30067 Multi Banking

7/29/2019 Mn 30067 Multi Banking

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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 standardformat

• Use lead bank’s EB system to initiate paymentinstructions 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 availableper day

• Intra-day reporting can be difficult or impossible on a multibank basis

• Most banks are able to do intra-dayupdates internally (MT941 942) but cannotsend 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?



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



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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



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



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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



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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



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Multibanking

Swift Involvement

• MT101’s Credit Beneficiary a/c

MT101

Debit

Customer a/c

Custome

r

SWIFT

CM Bank

Receiving

Bank

Local

clearing

Beneficiar

y Bank

M ltib ki



15

Multibanking

Swift InvolvementMultibank reporting

Customer

Corporate Electronic

banking system

Multibank reporting

MT940/1/2

MT940/1/2

MT940

MT940/1/2

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

Networ

k



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Multibanking

Swift Involvement

Corporate Access to SWIFT

• MA-CUG

Co A

Co B

Co C

SWIFTNe

t

SWIFTNe

t

MACUG

Sponsor

Bank

Bank 1

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

Company

A

SWIFTNe

t

Bank A

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

• 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

• So what are cash management benefits?

• Enhanced cash reporting

• Bulk payments processing• Online payments initiation

Date post:	04-Apr-2018
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Mn 30067 Multi Banking

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