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What is Multi-Banking? The Unified Treasury Approach

Unified Treasury
Diversification
Global Operations
Multi-Banking
By
Karolina Jarosinska
|
January 26, 2024

Operating as a cross-border business presents numerous financial and regulatory challenges. Establishing operations in a new country involves obtaining licenses, opening bank accounts, and navigating complex Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, in addition to stress-testing banking relationships to ensure liquidity resilience. Moreover, maintaining multiple banking relationships can reduce efficiency and increase costs.

This article explores the benefits of transitioning from managing multiple banking relationships to adopting a unified treasury system for multi-banking. Such a system offers treasury managers and CFOs a strategic advantage, streamlining operations and enhancing financial management.

Challenges of Treasury Management with multiple financial institutions

When a business expands into a new country, it often requires a bank account to conduct financial operations and conduct business. In reality, this means that every international expansion involves adding new accounts that must be managed separately. Consequently, there is little visibility into accurate cash flow and a lot of manual work required to consolidate the data. Besides manual treasury management resulting from multiple banking relationships, global businesses must comply with diverse compliance and regulatory requirements in every country and pay new account fees.
Compliance and regulatory challenges
In international markets, businesses have to grapple with diverse and ever-changing regulatory requirements that are hard to keep up with and have to undergo a KYC/AML process each time they onboard with a new financial institution. If you do not keep up with changes to requirements, you may lose not only your reputation but also your ability to operate in that country.
Fees
The fees associated with banking are not a surprise to anyone, and most financial institutions are upfront about them. Some fees, however, are not so obvious and may accumulate with multiple financial institutions and severely hamper your ability to conduct business.
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Monthly maintenance fees - these are usually waived when opening up multiple accounts with the same institution but a business needs to satisfy minimum monetary requirements to keep the fees down.
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Transaction fees and bank transfer fees
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Insufficient funds fee- This is different from overdraft and some financial institutions can penalise you for not having sufficient funds in your account which can be extremely risky when dealing with multiple accounts.
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Required minimums - The minimum amount required to open and operate a business account. If you fail to meet the minimum requirements, you can get fined and banned from accessing your account, which disrupts your business operations.
Credit score and lending eligibility impact
The opening of multiple bank accounts won't negatively affect your credit score, but accessing new credit lines will, since each requires a hard credit check. Additionally, lenders will not be impressed by a lack of visibility over funds or a lack of diversification. The sheer number of financial institutions you have to deal with can seriously tank your loan eligibility and your ability to grow your business.

The Need for a Centralised Banking Platform

The decentralised nature of global financial operations and multiple banking systems are commonly solved by spreadsheets. Manually aggregating and entering data is time-consuming and error-prone, which only adds to the problem rather than solves it. The Unified Treasury Systems, also known as TMS (Treasury Management Systems), is a technologically suited solution for managing global financial operations and multiple financial institutions. This platform enables substantial cost and operational efficiencies by consolidating all banking connections into one place.
Streamlined Compliance and Commercial Relationships
The implementation of a unified treasury management system simplifies the compliance and commercial processes required for onboarding and maintaining relationships with new financial institutions. With a streamlined approach, companies can enter new markets faster, reduce governance and compliance risks in new countries, remain agile in responding to market trends, and develop strong relationships with their suppliers.
Time & money savings
The time and costs associated with managing multiple banking relationships are significantly reduced when banking is centralised. Firstly, it eliminates the risk of accumulating fines and fees from multiple providers. The second benefit is that it removes the costs associated with correspondent banking. In practice, this means faster and more efficient payments, which not only make it easier for businesses to access capital and maintain relationships with customers and suppliers in the ever-changing global market. The efficiency gained translates into tangible cost savings and improved operational effectiveness.
Optimised Working Capital and Liquidity
Having real-time access to data consolidated from different banks, across all global operations, allows Treasury managers to focus on strategic tasks like forecasting and liquidity diversification. Optimizing working capital and reducing risk ultimately increases the company's loan eligibility.
Improved Credit Scores
Through a unified treasury, you can manage and mitigate financial risks more proactive and positively impact your credit score. With better financial health and higher eligibility for loans, the business is more likely to grow.

Fyorin's Unified Treasury and Multi-Banking Solution

The Fyorin solution addresses compliance, cost, and efficiency challenges related to managing multiple financial institutions and banking relationships. Using our platform, CFOs and Treasury Managers can efficiently manage their financial operations on a global scale, reduce liquidity risk, and cut costs.Our company isn't a bank, but rather a technology provider that gives you access to 220+ currencies through our extensive network of compliant, global financial institutions, so that you can hold, receive, send, and exchange funds with multiple institutions as easily as you would with one. Your funds are safe with the underlying provider, so you can reduce liquidity risk easily and get real-time visibility into your funds, across all currencies and institutions.

Fyorin, your global financial partner

Interested in transforming your treasury management function? Get in touch with us at [email protected]

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Karolina Jarosinska
Product Marketing Manager
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Karolina is the product marketing manager at Fyorin. She deep dives into topics like fintech, payments, unified treasury to extract the recent trends and insights and bring them to Fyorin's audience.

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