Strategy and structure of international funds transfer systems

International funds transfer and the associated foreign exchange require the co-ordination of the payments process across national boundaries. Historically a dominant business standard emerged called the Society for World-wide International Funds Transfer (SWIFT). This relies on co-operation between all banks within this society and there is an accepted code of conduct covering the expected behaviour of each bank. To support the SWIFT standard complex networks of correspondent banking relationships have evolved and it is common for even a fairly small bank in one country to have hundreds of such arrangements with banks around the world. Based on original case research in Europe and America, the current array of banking structures are analysed with respect to business network theory from the strategy and IT literatures. It is demonstrated that the apparent diversity between different banks can be simplified by considering generic international banking structures. Five generic banking structures are presented and defined with respect to product market globalisation, strategy, market network structure, information technology, and organisational history.