The Virtual Network Bank Concept

Global Transparency in Banking Communication
The Virtual Network Bank Concept_HEADER
BELLIN author pictureAuthor: BELLIN

Today, more businesses than ever before are active on the global stage. Gone are the times when selling products and services abroad and opening up subsidiaries in other countries was the stronghold of large multinational groups only. At the same time, going global also requires the setup of a global banking structure. In many cases, companies expanding globally find that their existing banking network is not adequate to meet the needs of all markets. These companies face a considerable obstacle: finding a banking structure that will cater to both old and new markets.

How do I find the right bank?

Finding the right bank can be a time-consuming and complicated process that raises questions at multiple levels: how do I know which bank best meets my needs? What will this cost me? Are there any legislative or regulatory hurdles? Add to this the fact that you likely don’t speak the language in question. After all, not many of us routinely decipher the small print at the bottom of contracts issued by banks in Brazil. What’s more, once you’ve completed the laborious process of searching for a bank and put potentially lengthy negotiations behind you, you’re once again faced with a double challenge: connecting to the bank from a technological point of view, and dealing with all the administrative efforts that come with opening an account.

Banking communication: technical vs. administrative onboarding

Much has been said and written among experts about the technical onboarding process when it comes to working with a new bank. Here, companies have a host of options, ranging from standard communication channels, such as EBICS, to host-to-host connections or to becoming a member of the SWIFT Network – a possibility more and more corporates have been opting for. What most of these experts neglect to mention is the fact that the technical onboarding process is merely the tip of the iceberg, outweighed by far by the administrative framework. It can take months to open an account! Frequently, the exact scope of the bank’s services and contract terms and conditions are not transparent, and neither is the fee structure. The legislative and regulatory framework is often confusing and differs from country to country. Moreover, corporates and banks have to contend with the KYC process (Know Your Customer) which requires banks to obtain specific information from their corporate clients at regular intervals. It is often far from clear which data is needed and whom to contact. For both parties, this represents an enormous administrative effort – and the more international the context, the more complex the process.

The Virtual Network Bank concept: standardizing administrative onboarding processes

Given this tangled framework, how can we make banking communication transparent and efficient? How can we streamline the process of connecting to a bank? In this context, the concept of the Virtual Network Bank represents a groundbreaking new approach. By this, we understand a virtual network of banks which enables corporate clients to select banks in the countries they require and to assemble a portfolio that meets their needs. They can completely skip the time-consuming search for suitable banks: no matter where you want to go, the Virtual Network Bank Service has the right bank on offer in any country and for any profile – a bank that is already part of the network.

The key to improved transparency is standardization: corporates benefit from a standardized contractual framework, negotiated long before the company ever actively contemplated any business expansion. As in other setups, the company continues to be the account holder and has a contract with the bank; what makes the difference is that the terms and conditions of this contract are fully transparent up front. This distinguishes the Virtual Network Bank concept from the Virtual Accounts concept and helps avoid the legal obstacles associated with the latter. The same goes for the banking fee structure: thanks to standardized prices, corporates don’t need to fear any hidden costs – they know exactly what they’re signing up to. Likewise, the KYC process is completely standardized: you always know up front which information will be needed.

Maximum efficiency for corporates and banks

Standardization creates transparency, and together they generate maximum efficiency. Both businesses and banks are able to save time, money and effort. It is important to point out that the Virtual Network Bank concept significantly exceeds any consulting services traditionally offered in the context of the technical onboarding process. We’re not looking at a customized support service but at a standardized solution that fills an important gap: dealing with administrative onboarding issues. Corporates can say goodbye to having to put in endless hours in trying to find right bank and having to overcome countless administrative and legal obstacles. Instead, they gain access to an “off-the-rack” onboarding solution and a standardized portfolio. Whether it is the scope of an offering, the contractual framework, fees or KYC questions – the whole endeavor is enormously streamlined.

In saying this, corporates are not the only ones who can save time, money and effort and boost their efficiency. The Virtual Network Bank concept also delivers enormous advantages to participating banks. They no longer need a separate onboarding process for each company, with all the contractual negotiations and KYC requirements this presents. Furthermore, they have a chance to do business with a customer segment previously (as of yet) inaccessible. This translates to tremendous market potential.

A virtual network of banks, offering the right portfolio for every corporate and bringing about complete transparency and optimum efficiency for the onboarding process: this is the Virtual Network Bank concept in a nutshell. Because global business expansion should not held back by administrative hurdles – and companies seeking to conquer new markets should be able to hit the ground running!

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