Question 1

What is business banking and how does it differ from personal banking?

Accepted Answer

Business banking covers the financial services provided to companies — from sole traders and SMEs through to mid-market corporates and global enterprises. It differs from personal banking in product complexity (multi-currency accounts, treasury, commercial lending, trade finance, corporate cards), in the depth of due diligence required (Know Your Business rather than Know Your Customer, with beneficial-ownership verification and sanctions screening across multiple jurisdictions), and in the integration surface — most business clients expect API connectivity and ERP integration as a baseline rather than an add-on.

Question 2

What is KYB (Know Your Business) and how is it different from KYC?

Accepted Answer

Know Your Business is the corporate equivalent of KYC: the process of verifying the identity, ownership, and risk profile of a business customer at onboarding and on an ongoing basis. Beyond verifying directors and Persons with Significant Control (PSCs), it requires verifying the corporate entity itself (registry data, incorporation documents), the ultimate beneficial ownership chain (often across multiple jurisdictions), source of funds and source of wealth, sanctions and PEP screening for every relevant party, and adverse media monitoring. The UK Economic Crime and Corporate Transparency Act 2023 has progressively strengthened these requirements, with mandatory identity verification at Companies House phasing in through 2025–2027.

Question 3

What is Basel 3.1 (Basel IV) and how will it affect commercial lending?

Accepted Answer

Basel 3.1 is the final tranche of the Basel III post-financial-crisis reforms — sometimes called "Basel IV" — applying in the UK from 1 January 2026 under the Prudential Regulation Authority's near-final policy statement. The most consequential changes for commercial lending are the revisions to the standardised approach for credit risk, the constraint on internal-model use through the new "output floor" (initially 50%, rising to 72.5%), and tighter operational risk and market risk frameworks. Practically, this requires banks to recalibrate risk-weighted assets across SME, corporate, real-estate, and specialised lending books — often increasing capital intensity for higher-risk exposures and pressuring pricing.

Question 4

What is ISO 20022 and what does the November 2025 deadline mean for cross-border payments?

Accepted Answer

ISO 20022 is the global standard for richer, structured financial messaging, replacing the legacy SWIFT MT format with XML messages that carry significantly more structured data (parties, addresses, remittance information, regulatory data). For cross-border payments, SWIFT's coexistence period for CBPR+ ends in November 2025 — after that, MT messages are no longer accepted for cross-border payments and ISO 20022 is mandatory. UK CHAPS migrated in June 2023; SEPA has been on ISO 20022 since 2008. The implication for business banking platforms is end-to-end data preservation: structured data must flow from corporate client → bank → payment rail → counterparty without truncation.

Question 5

What is a virtual IBAN and why do business banking platforms use them?

Accepted Answer

A virtual IBAN is a payment-routing identifier issued by a bank or EMI that resolves to an underlying physical account, allowing a single corporate customer to allocate distinct IBANs to different payers, subsidiaries, marketplaces, or reconciliation streams. Virtual IBANs solve the reconciliation problem at scale: incoming payments arrive pre-categorised by sender or use case rather than landing in a single pooled account that must then be split. They are widely used in collections, marketplace payouts, embedded finance, and treasury structures — but they bring a regulatory load around AML, fund segregation, and (in some jurisdictions) the requirement that the named account holder match the IBAN holder under Verification of Payee / Confirmation of Payee schemes.

Question 6

How do business banking platforms integrate with corporate ERP systems?

Accepted Answer

Business banking platforms typically integrate with corporate ERPs (SAP, Oracle, Microsoft Dynamics, NetSuite, Sage) through three primary channels: file-based integration using ISO 20022 pain.001 (payment initiation), camt.053 (account statements), and camt.054 (debit/credit notifications); host-to-host (H2H) connectivity using SFTP, EBICS in continental Europe, or direct APIs; and increasingly, REST API banking for real-time balance retrieval, payment initiation, and notifications. SWIFT for Corporates and bank-direct API banking are both relevant, with the choice driven by transaction volumes, geographic footprint, and the corporate's preferred treasury management system.

Question 7

What is embedded finance / Banking-as-a-Service for business banking?

Accepted Answer

Embedded finance for business banking is the delivery of bank-grade services — accounts, payments, lending, FX, cards — through a non-bank platform's user experience, with a regulated bank or EMI as the underlying licence-holder. Banking-as-a-Service (BaaS) is the platform layer that exposes these regulated capabilities through APIs to embedders. The business model has tightened considerably under recent regulatory enforcement (BaFin actions in Germany, FDIC actions in the US, FCA scrutiny in the UK on EMI safeguarding), with regulators expecting clear outsourcing controls under DORA, robust AML monitoring across the embedder's customer base, and unambiguous customer-facing disclosure of which entity holds the funds.

Question 8

What is required to launch a commercial lending product end-to-end?

Accepted Answer

Launching a commercial lending product requires capability across origination, decisioning, servicing, and collections. Origination needs digital application capture, KYB and director verification, document ingestion, and integration with credit bureaux and accounting data providers (Experian, Equifax, Companies House, Codat). Decisioning needs an underwriting workflow (rules and scoring), affordability and serviceability assessment using cash-flow data from open banking or accounting integrations, and limit-setting governance. Servicing needs disbursement, repayment scheduling, statement generation, covenant monitoring, and IFRS 9 / ECL accounting. Underpinning all of this: capital under Basel 3.1, conduct standards (Consumer Duty for SME segments where applicable), AML monitoring, and a complete evidence pack for the FCA and PRA.

Business Banking

Industry Challenges

Our Solutions

Business banking by the numbers

Frequently asked questions about business banking

Services We Provide

Solution Design

IT Strategy

Relevant Expertise

Let's solve your Business Banking challenges