At its simplest, correspondent banking is the provision of services by one bank (the correspondent) on behalf of another (the respondent), enabling cross-border payments and trade finance.¹ While this textbook definition is accurate, it risks understating the broader importance of these services today. Reliable, accessible and affordable correspondent banking underpins participation in the global economy by supporting individuals, SMEs, large corporates, charities and financial institutions.

Despite this role, success has too often been measured by narrower benchmarks: how many payments can be processed, how quickly funds are delivered, and the immediate commercial return. This inward focus has coincided with a steady decline over the past two decades in the number of active players and corridors, averaging a drop of around 33% across regions.² A central driver has been de-risking – the practice by financial institutions of restricting or terminating relationships to avoid perceived exposure – which has undermined global trade by cutting off small businesses from international suppliers, reduced households’ ability to send and receive remittances, weakened local economies, and impacted longer term localised financial literacy.

These pressures highlight a simple truth: correspondent banking is too important to be judged only by speed, volume or revenue. Its value lies in enabling global access – and protecting that access requires a different approach. The first step towards next-generation correspondent banking is therefore not necessarily to reinvent the model itself, but to reframe the mindset behind it. This requires a recognition that risk is not a brake – nor a factor to be indiscriminately avoided – but a strategic enabler; one that, when embedded from the start, enables access, underpinned by resilience and sustained through innovation. But what does this look like in practice?

Correspondent banking is at an inflection point: as the G20 Roadmap for enhancing cross-border payments intensifies, the pressure is on institutions to improve the speed, cost, transparency and accessibility of international transactions.³ Under this umbrella, the sector is poised to enter a new phase of evolution.

The global shift to the ISO 20022 messaging standard has laid strong new foundations that promise greater transparency, richer data, and faster processing across the ecosystem. At the same time the industry is testing how emerging technologies could reshape the way money moves across borders. One example is Project Agorá – a public-private collaboration launched in April 2024, led by the Bank for International Settlements (BIS) and the Institute of International Finance (IIF) – which uses distributed ledger technology to explore how a more integrated and efficient digital ecosystem for wholesale cross-border payments might look, moving beyond today’s messaging-based model.⁴

“Resilience lies not in retrenchment, but in staying engaged and adapting to new technologies and risk management capabilities”
Matthew Probershteyn, Head of North America ICM, & Head of ICT ECO and Vanessa Meister, Chief of Staff, ICM, Deutsche Bank

This evolution brings both opportunities and risks, with longstanding concerns, such as money laundering and terrorist financing, now being compounded by new challenges. For example, banks must be able to identify emerging patterns, spot risky corridors and monitor unusual activity in an environment where emerging technologies, such as artificial intelligence (AI), act as both a defence and a potential threat.

Managing all of this requires embedded resilience at the core of correspondent banking, but the balance between innovation and risk management is still uneven. Resilience lies not in retrenchment, but in staying engaged, adapting to new technologies and risk management capabilities, and ensuring correspondent banking continues to serve the global economy.

This means leading innovation with it hard-wired into an organisation’s DNA rather than being reactive from the sidelines. Embedding AI into workflows for improved efficiency and client service, as well as working with partners on technologies that could reshape cross-border finance are positive steps forward.

That only succeeds when risk management is integrated at every stage – a shift that is now beginning to take shape. Where risk was once cast as a barrier to progress, today it has become the ballast: providing stability so institutions can act quickly and confidently. Instead of sitting at the end of the process, risk teams now work alongside strategy, product, sales, technology and innovation from the outset. This leadership skillset is not simply to approve outcomes, but to help shape them by translating ambition into action while safeguarding trust.

In this new scenario, risk management is not about isolated controls or static frameworks, it becomes an ecosystem. The focus shifts to educating stakeholders, making risk accessible, and ensuring the entire institution understands what is at stake – and how to move forward safely, sustainably, and at speed (a point made in the 2024 flow article ‘An ecosystem approach to limit de-risking’).

Once silos are dismantled internally, attention can shift outward to forging interbank alliances where competitors also act as partners. Resilience in this model is measured not by what any single institution can withstand – or internal dashboards or transaction counts – but by how the ecosystem evolves as a whole.

There are plenty of areas where such collaboration makes sense. In KYC and regulatory compliance, for instance, each bank faces the same requirements. The emergence of KYC utilities has demonstrated how pooling knowledge, resources, and even infrastructure can drive better compliance outcomes, cut duplication, lower costs and, ultimately, improve access to critical services.

At Deutsche Bank, for example, we have expanded our dbX Advisory platform to help financial institutions strengthen their risk management and employ a common risk appetite as we partner to combat financial crime. The framework combines practical measures – from sharing best practice with clients regarding specific KYC approaches and transaction monitoring capabilities, to advising on sanctions risk management, sharing trends related to screening and new technologies, and highlighting geopolitical hotspots requiring enhanced due diligence. This approach sets Deutsche Bank apart as this new age approach to correspondent banking has to be fortified through trust and resilience.

The principles of access, resilience, and innovation are not abstract ideals but rather the foundations on which the future of correspondent banking depends. Access ensures individuals, businesses, and communities remain connected to the global economy. Resilience keeps that access reliable, even under pressure, by fostering collaboration and trust. And innovation enables us to anticipate what comes next, embedding new technologies and models that extend reach and relevance.

But none of these principles can stand alone. What will define the next generation of correspondent banking is not speed, volumes, or technology in isolation – but how institutions coordinate and adapt to change.

Sources

¹ See fatf-gafi.org
² See bis.org
³ See fsb.org
⁴ See bis.org