How to manage beneficiaries on your banking platform?

When capturing and storing dynamic (frequently changing) data, it is vital that the information is correct and kept up date to ensure smooth, efficient and successful banking transaction processes for your customers.

Here are a few points to consider for managing and validating beneficiary information for your fintech service.

Storing beneficiary information

When your customers make a payment via your platform, they’ll need to provide the beneficiary information, or the bank details of whoever they want to pay. You will have to store this information on your system and transmit it to whatever bank or fintech is making the payment on your behalf.

Verifying new beneficiaries with 2FA

When your customers add new beneficiaries to your system you’ll need to verify their identity by enforcing 2FA (two-factor authentication), a measure taken to reduce the likelihood of fraud. This is usually done by sending a code via email or SMS to the customer on record, which they must into your platform.


Automating payments to avoid manual payments processing

Sending payments needs to be as automated as possible, to avoid manual work consuming the time of your operations team. To ensure payments don’t fail when submitting them to your bank, you have to capture the correct bank details from your customer.

Make this data capture dynamic depending on what currency/country and what payment scheme the customer wants to use to send the payment. For example, if you want to collect a sort code and account number for a GBP Faster Payment, but the same customer wants to send Euros to Germany you’ll need to collect an IBAN (international bank account number) and possibly also a BIC (Bank Identifier Code).

Verifying the information

You also need to check whether the information the customer entered is correct. There are basic ways to do this (checking length of account number for example) and more in-depth processes such as validating IBAN length per country or using an account number to generate the sort code and address.

You can sometimes rely on your providers to vet beneficiary information (and allow you to dynamically capture the data your side), but like most things financial, sometimes you can’t.

You might want to subscribe to services that allow for beneficiary validation, such as or SWIFTref. Generally a fintech has the following options to validate:

  • Capture max info

    This ensures success 99% of the time but is laborious and will reduce conversions from users to paying customers.

  • Capture min info

    This ensures success 99% of the time when a customer is serving a single market. High conversion rate but if the customers want to operate internationally – it will result in an awful user experience where customers who have submitted beneficiary data will have to update it time and again.

  • Dynamix info capture

    This is optimal but requires a huge amount of data and logic application.

  • Inference

    In many countries a fintech can infer alternate beneficiary details from the ones supplied. For example in the UK – if a customer offers a sort code and account number, you can infer what the IBAN might be based on those details. This is the ultimate experience but it is not broad enough to capture all aspects of payment validation.

We offer a wealth of information on this topic to get you up to speed with all you need to know about this topic.

Learn more about managing and validating beneficiary information, and many other processes involved in building a transactional banking fintech service.

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