Correspondent banking is the connective tissue of cross-border payments, and it has been thinning for over a decade. The numbers are stark: the number of active correspondent banks worldwide fell by roughly 22 per cent between 2011 and 2019, even as payment volumes rose. In Latin America, active relationships declined by around 30 per cent since 2012. More value is moving through fewer connections.

What the decline means

When a relationship closes, the payments that used to travel through it do not disappear. They are rerouted, usually through a longer chain, with more intermediaries and more fees. For the originating institution, the corridor becomes more expensive and less predictable. For the beneficiary, the effect is felt as delay and a worse exchange rate.

The pattern is uneven. Large, high-volume corridors retain depth. Smaller, thinner or higher-risk corridors lose the relationships that made them straightforward, which is precisely where access matters most.

De-risking, not demand

The decline is not primarily a story of falling demand. It reflects de-risking: institutions deciding that the compliance cost, capital cost and reputational exposure of a relationship outweigh its revenue. When that judgement is made repeatedly across the network, the aggregate effect is a thinner map, even in corridors where legitimate business is growing.

Why resilience now matters more than reach

A thinner network concentrates risk. If a single hub or relationship is withdrawn, a whole corridor can lose its most efficient path. That has two consequences. First, access becomes a competitive question: institutions with more alternatives can serve corridors others cannot. Second, architecture becomes a strategic issue — whether connectivity should depend on many bilateral relationships or on a shared layer that participants join once.

There is a structural asymmetry underneath all of this: a business unit's assets can be ring-fenced so they answer only to that unit's own liabilities. Segregation does not add relationships, but it changes what is at stake when they are shared.

In short

  • Active correspondent banks fell about 22 per cent from 2011 to 2019.
  • Latin America lost around 30 per cent of active relationships since 2012.
  • Falling relationships reflect de-risking, not falling demand.
  • Rerouting means longer chains, more fees and more delay.
  • A thinner network makes resilience, not reach, the priority.

For the investment perspective on network structure, see /investors/.