SWIFT identifies new ways for banks to simplify payment routing data
SWIFT has published a paper discussing opportunities for banks to streamline their internal routing practices.
SWIFT has published a paper discussing opportunities for banks to streamline their internal routing practices. The paper highlights how some banks used the transition to the single euro payments area (SEPA) as an opportune moment to simplify their internal routing practices – and how upcoming initiatives may present similar opportunities.
The arrival of the Business Identifier Code (BIC) and International Bank Account Number (IBAN) were key tools in standardising payment transaction formats for SEPA. However, the approach taken by different banks in adopting BICs and IBANs varied considerably. While many took the straightforward approach, others took the opportunity to clean up their account numbers and bank codes first.
In practice, this meant implementing centralised account management and payment processing, rendering obsolete the practice of internal payment routing to branches. The paper explains that some banks have opted to replace multiple BICs with a single BIC serving the entire institution, leading to a significant reduction in the number of BIC codes used in SEPA payments over the last couple of years. At the same time, the IBAN-only rule has recently moved the responsibility for providing a BIC from the consumer to the bank.