Different types of account your fintech customers might be using

If you are building, or have built a transactional banking fintech service, you should know about the different types of account your customers may be using. Here is a brief overview.

Learn more about different account types by downloading the latest white paper: How to Build a Transactional Banking Fintech Service

Local accounts

Local accounts are connected to a local payments schemes, such as Faster Payments in the UK, or ACH (Automated Clearing House) in the US. Local accounts enable low cost domestic transactions, rather than expensive international payments. Big marketplaces often require an in-country account to settle to, in order to avoid costly fees. Local accounts are usually not connected to SWIFT, in which case sending internationally is not possible.

International accounts

International accounts enable the customer to receive and send payments via SWIFT, and are sometimes connected to local schemes. Different bank details are required for sending money to an account based on the sending scheme, which you will need to make sure your customers are aware of, to avoid lost/rejected payments.

Virtualisation of accounts

You can create bank accounts for each customer horizontally, or you can create them vertically, building a hierarchical structure. With hierarchical structures you usually create:

  • House accounts
  • Sub-accounts linked to the house account

Virtual accounts in a hierarchical account structure mean that the sub-account number is used for a reference only and all customer balances are held in the house account. The virtualisation process is important when moving funds between accounts for your own liquidity purposes. With the house account model, no money movement is required if one of your customers pays another internally for example. When all accounts are created horizontally, either your system or your operations team will need to physically move cash. If you are interested in learning more, download a free white paper about virtual accounts here.

Issuing multiple accounts for customers

Your customers might need more than one account in their name. You’ll need to make sure your system (and your bank or NBFI) can, and are willing to, support this.

If you are planning to build a transactional banking fintech service, you will need to learn more about managing different types of account. Download our latest white paper, free of charge, to find out more. Alternatively you can contact us to speak to an advisor.