01A consolidating euro clearing market
Share of the euro, the world's second currency behind the dollar (50.9%), according to Swift Watch.
Decline in correspondent banking relationships worldwide since 2011 (FSB).
Share of euro correspondents that have exited these markets.
Annual cost of a single US nostro account (Visa study, September 2023).
The market shows a paradox: the number of active banks is falling while volumes rise. Major clearers (JPMorgan, Citi, HSBC, Deutsche Bank, BNP Paribas) benefit from economies of scale and competitors' exits; local and niche players keep serving their domestic markets or higher-risk clients. Brexit has also forced many institutions to rethink their organisation and offering.
Mass exits from Africa and Latin America create difficulties for local economies, but also opportunities for institutions willing to invest in relationships and infrastructure.
02Revenues, costs and economies of scale
| Revenue | Components |
|---|---|
| Fixed | Transaction fees; account maintenance, network access and minimum billing fees (covering KYC costs); documentary and liquidity services |
| Variable | FX on behalf of clients, interest rate spreads, trade finance commissions, cross-border payments |
With high compliance costs, profitability is only achievable at significant volumes. Higher volumes reduce fixed IT costs, strengthen negotiating power over partners and corridors, and lower semi-variable costs (sales, network, KYC). Variable costs are mostly driven by non-STP processing: payment repairs, duplicates, sanctions and AML false positives. Hence the importance of investing in straight-through processing.
The move to ISO 20022 MX messages brings richer, structured data (beneficiaries, payment purpose, metadata), enabling finer filtering rules and fewer false positives.
03The players and new technologies
Around Tier-1 banks, regional banks and central banks (TARGET2, intraday liquidity, SEPA), Swift remains the backbone of the system. Swift gpi has brought end-to-end tracking, speed and fee transparency; sanctions screening, compliance analytics, pre-validation and the CSP programme complete the offering.
- Blockchain protocols: XRP Ledger, XDC Network, Stellar, Algorand, Hedera, Ethereum layer 2s; DeFi protocols and Chainlink oracles.
- Bank-led projects: Fnality (utility settlement coins), Partior (DBS, J.P. Morgan, Temasek), RTGS Global, Dloro Nostro; CBDCs such as e-CNY or e-Naira.
- Multilateral platforms: Swift, SEPA in Europe, PAPSS in Africa, reducing reliance on correspondent chains and supporting initiatives such as AfCFTA.
04Transforming the value chain
- The “One Leg Out” schemeA compliance and risk framework for payments where one leg sits outside the main jurisdiction: enhanced due diligence, real-time monitoring, information sharing, risk-based approach. It benefits RegTechs, KYC / AML providers and aggregators, but may intensify de-risking.
- Transaction pre-validationChecking data before a payment is sent reduces rejections, speeds up processing, improves client visibility and nostro account management.
- CollaborationShared KYC utilities, blockchain consortia, CBDC experiments, co-development with fintechs: reconciling compliance, innovation and financial inclusion.
Balancing compliance demands with the imperative of financial inclusion will define the future of this pillar of global finance.OpenbanQ, January 2025
Sources : OpenbanQ, The Future of Correspondent Banking 2025 — Challenges and Opportunities in the EURO Clearing landscape, January 2025, 33 pages (sources cited: Financial Stability Board, Swift BI Watch, National Bank of Belgium, Visa).