By David White, EVP Global Payments & KYC
This year marks a milestone anniversary for Bankers Almanac. It has been 175 years since the first publication of what was then titled “The Banking Almanac and Directory.”
Since then, the form and format of the “orange book” has evolved along with the banking industry. It is no longer a thick tome sitting on the desk of a banker, rather Bankers Almanac is a dynamic source of data and insight, informing the decisions of virtually every bank around the world, and providing payment services across more than 500 industries. It is used in 185 countries and every 2.2 seconds, someone, somewhere, conducts a KYC check using the tool.
As we mark this anniversary, we wanted to reflect on the development of the banking industry through the lens of the Bankers Almanac, and show how shifts in technology, innovation and the growth of payment volumes serve as a mirror back on a changing world.
A Changing Resource for Changing Times
The first Almanac was released in 1845, emerging into a world much larger than today. International travel was rare and ocean crossings took weeks. There were no standard ways to transport money across borders – early tourists often resorted to carrying gold coins.
Bankers Almanac therefore became the go-to method of finding and confirming contact information for banking institutions, initially in the United Kingdom and later around the globe, to facilitate the transfer of capital in one direction or the other, collecting information that had not previously been widely available.
Just before the first publication of the Almanac, the Bank Charter Act of 1844 had been introduced in the United Kingdom, signifying a turning point in the history of British banking. The Act marked the foundation of the position of the Bank of England as the UK’s central bank, which took control of issuing bank notes for the first time and began to regulate credit conditions.
In turn, the formation of this central bank restricted the powers of the many provincial banks, leading them to merge and form larger institutions. For example, in 1896 several banks in London and the English provinces united under the banner of Barclays and Co., a joint-stock bank that remains a household name today. Bankers Almanac recorded this evolution.
Similarly, the United States underwent a banking transformation in the years following the Civil War. Known as the “national banking era”, the period between the passage of the 1863 National Currency Act and the 1913 Federal Reserve Act marked the start of a focus on federal regulation and brought greater stability to the U.S. economy.
The early twentieth century saw banking innovation progress with the introduction of sorting codes and routing numbers to help identify bank branches and facilitate the manual processing of cheques. In 1911 the American Bankers Association made Accuity (then under different ownership) the official registrar of routing numbers, a role that it still upholds more than a century later.
As banking evolved, so too did the payment systems used to settle financial transactions. From gold coins, to bank notes, to cheques, and then to electronic payments – first offered as a service by Western Union as early as 1871.
Bankers Almanac reflected the industry’s changes by transforming into a worldwide information service on banks. Technology had a major impact, as the ever-growing book was replaced by a CD-ROM in the 1990s, and finally an online digital service during the dotcom era.
Today, a number of payment systems are available to facilitate the transfer of funds between financial institutions. Domestically, this is done through automated clearing houses (ACH) and real time gross settlement (RTGS) systems, while cross-border payments use the SWIFT network. All these systems require the right bank routing information to be provided by the sender, otherwise they risk the payment being delayed or rejected.
The international banking network has also become more tightly connected and regulated than ever. In tandem with this shift, Bankers Almanac has helped institutions navigate the risks of correspondent banking, serving as a source of due diligence information to ensure bank-to-bank relationships are transparent, safe, and compliant with the regulations.
Here to Stay
One hundred and seventy-five years into the parallel journeys between the banking industry and the product that chronicles it, Bankers Almanac is still the trusted source of intelligence. And with payment volumes increasing exponentially – global non-cash transaction volumes have reached over 500 billion driven largely by growth in emerging markets – it’s needed more than ever.
Bankers Almanac remains a stalwart of the evolving payments landscape. Ninety-seven of the top 100 largest global banks currently use the service and, through collaborations with industry organisations such as the Wolfsberg Group, the American Bankers Association, the National Automated Clearing House Association (NACHA), and UK Finance, Bankers Almanac has expanded beyond its initial form as a directory.
It is now an oracle of insight on payments and counterparty KYC, supplied to the banking community in a variety of formats – from an online reference tool, to data files and APIs that help to inform transaction routing and counterparty risk decisions in real time.
We are in the midst of accelerating change in the financial industry, with new technology, processes, and market entrants disrupting traditional relationships between banks and their customers. No doubt this development will continue as the full ramifications of the Coronavirus pandemic are felt around the world; indeed, the crisis has already accelerated a shift towards digital KYC, and forced businesses to fully embrace online services and payments.
Bankers Almanac will always be there to not only document the change, but even more importantly, to help drive the industry forward with new innovative ways of validating payments and determining counterparty risk, through automation and advanced analytics.
Its resilience will continue as we help to build an interconnected and trusted financial ecosystem with new offerings, innovations, and partnerships that keep Bankers Almanac at the forefront of this evolving industry.
Celebrating 175 years of Bankers Almanac – find out more here.