Bank rationalisation sounds simple in theory. Fewer banking relationships should mean fewer portals, fewer processes and less administration.
For many corporate treasury teams, that can be a sensible goal. But for credit servicers and loan administration businesses, reality is often less cooperative. A newly won mandate may arrive with existing bank accounts, established banking relationships, particular structures and client preferences already attached.
That creates a very different operating challenge.
The organisation may want internal consistency, but the client environment can remain diverse by design.
Jeremy Slade is Head of Digital Solutions, Private Markets. He has more than 25 years of experience in financial services and has built and led businesses and commercial teams across Europe, Asia, the Middle East and the US. Having worked extensively with private markets and institutional investors, Jeremy brings a global perspective on how technology, banking and financial infrastructure are evolving.
A company managing only its own treasury estate has more freedom to simplify. It may be able to close redundant accounts, consolidate activity with fewer banks or redesign its processes around a smaller group of providers.
A third-party servicing business operates under different constraints.
The banking landscape may reflect the accumulated decisions of multiple clients, transactions, structures and jurisdictions. Some relationships may already be embedded in the way a mandate operates. Others may be retained because they suit a particular client or structure.
The servicer therefore does not always get to choose the banking estate it inherits.
That matters because every additional bank can bring its own portal, reporting format, payment process, access model and operational conventions. If those differences are reproduced internally every time a new mandate is onboarded, the organisation gradually creates an increasingly fragmented servicing environment.
The real challenge is not simply having many banks. It is allowing every bank to create another way of working.
This is where it helps to separate two things that are often treated as the same problem.
The first is banking diversity.
The second is operational diversity.
A servicing business may have limited ability to eliminate the first. It can still work on the second.
Twenty banking relationships do not necessarily need to produce twenty different internal ways of accessing information, supporting reporting or managing payment activity. The underlying banks can remain different while the servicing organisation creates a more consistent operating layer across them.
That is an important distinction because the objective is not to force every client structure into the same mould. It is to stop necessary external differences from creating unnecessary internal variation.
For a growing servicing business, that can make a significant difference to how easily new mandates are absorbed.
Mount Street provides a useful example. Its business supports banks, private credit funds, insurers and institutional investors across a range of asset classes, while managing several thousand bank accounts across dozens of banking partners globally.
That is not an environment in which simply reducing the number of banks is necessarily the answer.
Instead, the firm wanted to bring greater consistency to banking activity across jurisdictions, improve access to information and create an operating model capable of supporting further growth. According to the client story, Cobase was selected to bring multiple banking relationships together through a common platform while fitting into Mount Street's wider servicing environment.
The underlying banking relationships remain. What changes is how the organisation interacts with them.
That is a much more realistic model for servicers whose growth depends on accommodating client structures rather than forcing those structures into a single banking template.
The value of a consistent operating layer becomes especially clear during onboarding.
Imagine a new client brings ten entities and several banking relationships. None of those relationships is necessarily problematic on its own. But each one has to be incorporated into the servicing environment.
Teams need access to information. Payment processes have to be understood. Reporting needs to incorporate the relevant data. Responsibility has to be clear. The new accounts have to become part of the organisation's normal way of working.
In a fragmented model, each banking relationship can behave almost like a separate operational project.
Now repeat that process across multiple mandates.
The issue is no longer the absolute number of banks. It is the amount of internal complexity created every time the business wins new work.
That can become a hidden constraint on growth.
A servicing firm may be commercially capable of winning another mandate while its operational teams are quietly absorbing more portals, more manual workarounds and more exceptions.
The result is that revenue grows, but so does the effort required to keep the banking estate functioning.
Clients generally do not care how difficult their banking arrangements are for the servicer to administer. Nor should they.
They expect the servicing organisation to handle that complexity.
The question for the servicer is how much of it should be carried by people and how much should be absorbed by the operating model.
If every new banking relationship requires employees to learn another portal, create another manual process and maintain another set of workarounds, the organisation is effectively exporting external complexity directly into its internal operations.
That is difficult to scale.
A more consistent framework changes the equation. The client can retain the banking relationships appropriate to the mandate, while the servicing organisation reduces the degree to which those differences dictate its own internal processes.
Mount Street's experience points in this direction. The client story says that centralising banking connectivity and information helps new accounts and banking relationships to be incorporated with less operational complexity, while teams can access banking information more quickly and bring it into the wider servicing and reporting environment.
This is the stronger argument for centralisation.
Not that diversity disappears, but that the organisation becomes better at containing it.
There is an important caveat.
A more common banking environment should not be confused with centralising every decision or ignoring the differences between entities, jurisdictions and client structures.
Different mandates can still require different approvals. Different legal entities can have different responsibilities. Different jurisdictions can have different requirements. Those distinctions remain relevant.
The goal is not uniformity for its own sake.
It is to remove avoidable operational variation so that the differences that genuinely matter become easier to manage.
That is particularly important for servicing businesses. Their role is not to make every client identical. It is to support a diverse client base without allowing every new mandate to create another permanent layer of internal complexity.
A servicing operating model is only really scalable if the next mandate is easier to absorb than the organisation's accumulated complexity would suggest.
That does not mean onboarding becomes trivial.
It means the business already has an established way to incorporate additional accounts, banking relationships and information into its servicing environment.
The alternative is much less attractive: every new client adds revenue, but also another collection of bespoke processes that the organisation has to maintain for years.
For credit servicers and loan administration businesses, this may be one of the most important distinctions between growth and scalable growth.
The question is not whether the business can support many different banks.
It is whether supporting another bank still requires creating another way of working.
Cobase can help servicing businesses work across multiple banking relationships through a more consistent banking environment, giving teams centralised access to banking information and payment processes while allowing the underlying client bank relationships to remain in place.
For organisations that regularly inherit new accounts and banks as part of client mandates, that can help prevent external banking diversity from turning into equivalent internal operational complexity.