The traditional correspondent banking network suffers from structural inefficiencies that inflate transaction costs and complicate compliance management.
Primary Drivers of Cross-Border Transaction Friction
- Multi-Jurisdictional Regulations: Different compliance requirements across borders force banks to perform manual anti-money laundering (AML) checks, causing transaction delays.
- Opaque Fee Allocation Trees: Intermediary banks deduct processing cuts along the routing path, meaning the final value delivered to the recipient can drop unpredictably.
- De-risking and Account Closures: Global commercial banks frequently terminate correspondent relationships with local banks in emerging economies to avoid regulatory penalties, reducing payment access for vulnerable regions.
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