The Long-tail of TCSP Banking partners

How many?!?

When we first started speaking to TCSPs about their banking relationships, one number kept surprising us: the sheer volume of banking partners a single TCSP maintains.

It’s not uncommon to see a mid-sized TCSP with 20, 30, even 40+ banking relationships. Larger firms can have significantly more. Each of those relationships comes with its own onboarding process, its own portal, its own statement formats, its own payment file requirements, and its own relationship management overhead.

That’s a lot of complexity for any operations team to manage. And the question we kept coming back to was: does it have to be this way?

But why?

There are genuine reasons why TCSPs accumulate so many banking partners:

• Client preference: Clients often come with existing banking relationships they want to maintain. The TCSP inherits the bank along with the client.
• Jurisdictional requirements: Structures operating across multiple jurisdictions may need local banking in each jurisdiction.
• Product specialisation: Some banks are better for certain products — trade finance, FX, custody, lending. A TCSP might use different banks for different needs.
• Risk diversification: Spreading deposits across multiple banks reduces concentration risk.
• Historical accumulation: Over years and decades, banking relationships accumulate. Banks merge, clients move, but the accounts often remain.

These are all valid reasons. But the result is a long tail of banking partners where the top 3-5 banks hold the vast majority of your balances and transaction volumes, while a long tail of 15-30+ banks hold relatively small, low-activity positions.

What are you missing?

That long tail comes at a cost. Here’s what you might be missing:

• Operational inefficiency: Every banking relationship requires maintenance — portal access, statement downloads, payment processing, reconciliation. More banks means more manual work, more processes, and more room for error.
• Weaker relationships: When your book is spread thin across dozens of banks, you’re not a strategic partner to any of them. You’re a small client that doesn’t warrant priority service, dedicated relationship management, or preferential pricing.
• Technology barriers: Establishing secure connectivity (SFTP, API) with each bank requires time and investment. The more banks you have, the harder it is to achieve meaningful automation across your full book.
• Compliance burden: Each banking relationship requires ongoing due diligence, monitoring, and reporting. More relationships means more compliance overhead.

Picture this

Now imagine a world where you’ve consolidated your banking partners to a focused, strategic set. Here’s what that looks like:

• Deeper relationships: With fewer banking partners, your book with each is larger and more meaningful. You become a priority client. You get better service, better pricing, and a seat at the table for new product discussions.
• Operational simplicity: Fewer banks means fewer portals, fewer formats, fewer processes. Your operations team can specialise and become highly efficient with a smaller set of banking partners.
• Technology enablement: With a focused set of banks, establishing SFTP or API connectivity becomes practical and cost-effective. You can automate statement retrieval, payment processing, and reconciliation across your core banking partners — delivering real efficiency gains.
• Stronger compliance posture: Fewer relationships to monitor and manage means your compliance team can go deeper on each, reducing risk and improving quality.

Consolidation doesn’t mean putting all your eggs in one basket. It means being intentional about which baskets you use and ensuring each one serves a clear purpose.

The TCSPs we work with who have taken a strategic approach to banking partner consolidation consistently report better service, lower costs, and improved operational efficiency. They spend less time managing banking relationships and more time serving their clients.

If you’re sitting with a long tail of banking partners and wondering whether consolidation could work for you, we’d love to have the conversation. At Flinq, we help TCSPs build efficient, connected banking ecosystems that work for them — not against them.