The Advantages of Risk Sorting

While we are in the business of correspondent banking, a new and interesting trend continues to pop up.  Banks and Credit Unions that are subject to de-risking ask if it is possible to sort their customers by risk and send them to the appropriate correspondent. The answer is yes! 

First, the best defense is a good offense, so it is best to set things up before being de-risked.  If you only have one correspondent, consider adding a second or at least starting the process.  See our Buyers Guide for help.

Second, understand the risk tolerance of your correspondent(s).  Some might accept higher-risk transactions vs others, so make sure your relationships are appropriate to your risks.  In an ideal world, all of your correspondents will accept all of your transactions, but that may be too difficult to achieve. 

Third, route your higher-risk transactions to the appropriate correspondent.  If you have two correspondents, your core business is safe from de-risking.  

Do you offer BaaS?  In this case, it is imperative to have tight controls on what your BaaS client is sending you and that you have the right correspondent for the job.  

The key is to match the risk to the correspondent that can handle it.  This not only keeps other lines of business safe, but it also allows for better management of your high-risk customers.