Correspondent banking

Correspondent banking occurs during cross-border payments. It is a relationship between two or more banks that allows a bank to provide financial services on behalf of another bank in a different country.  In this arrangement, the correspondent bank acts as an intermediary, facilitating international transactions and enabling banks without direct access to certain foreign markets to offer their customers global financial services. For example, if Bank A in Nigeria needs to transfer funds to a recipient in France, but it does not have a direct relationship with the recipient’s bank, it may use Bank B in Europe as a correspondent to complete the transaction.