“What’s our bank SWIFT code?
This is one of the most common questions I have heard from my clients and colleagues in my career in corporate treasury.
In this previous article, we talked about the Important bank terms you should know as a small business owner. One of those terms was the SWIFT code.
Whenever a client requests your account details, there’s probably a section on that form for inputting your SWIFT code. What does it mean, why do they need it, and why is it so important?
In this article, I will answer all of these questions for you. And even show you how to get your bank’s SWIFT code the next time you fill out such an onboarding form.
Don’t miss this related article: 5 Proven Advantages of Online Banking for SMEs
What Is a Bank Swift Code?
Bank Swift Codes, often referred to simply as Swift Codes or BIC codes, are a series of unique alphanumeric characters assigned to financial institutions worldwide, including banks. These codes are part of the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system.
The organization facilitates secure and standardized communication between banks during international transactions. Think of bank Swift Codes as the international postal addresses for banks.
Components of a Swift Code
Bank Swift codes follow specific criteria, with the characters representing certain identifying details about the bank. Typically, it’d be something like AAAA BB CC 123, where;
- AAAA ‒ is the bank’s code
- BB ‒ is the country code
- CC ‒ is the location’s code
- 123 ‒ is the branch code
1. The Bank Code
The Bank Code identifies the bank or financial institution. It is a four-letter series with alphabetical characters A to Z. These are usually the first letters of the Swift Code. The bank code is mostly the shortened name of the bank.
2. Country Code
As the name suggests, this code indicates the country where the bank is located. For instance, Kenyan banks have KE on their swift code.
3. Location Code
Next to the country code is the location code, which usually indicates the bank’s head office in the country. Most Kenyan banks use NA/NX in their swift code, denoting Nairobi since most banks have headquarters in the capital city.
4. Branch Code
While this is optional, it’s still important. Especially with larger financial institutions with branches in multiple locations. Not all institutions do this. Some will have the same identifier for all their branches, while some have unique codes for every branch.
So, in addition to a bank’s head office, every branch will have a unique identifying character with 3 digits. If you are using the bank’s head office, then the branch code will be XXX. But if you have an account in a specific location, instead of XXX, you will input the code for that particular branch.
For instance, have you ever looked at your bank statement and realized it specifies what branch your account number is in? This is usually the location where you initially opened your bank account. Whenever you do a transfer, you have to indicate your particular branch. This acts as a more specific guide for financial institutions regarding your account number’s location.
Examples of Bank SWIFT Codes
Let’s step away from the theoretical part and use real examples of a few banks in Kenya.
- Standard Chartered Bank Kenya ‒ SCBLKENX
- Kenya Commercial Bank ‒ KCBLKENX
- I&M Bank Kenya Limited ‒ IMBLKENA
- NCBA Bank Kenya ‒ CBAFKENX
Instead of leaving it at that, let’s input a bank’s branch code. If we were using each of the above banks’ head offices, the complete bank Swift code would be;
- Standard Chartered Bank Kenya ‒ SCBLKENXXXX
- Kenya Commercial Bank ‒ KCBLKENXXXX
- I&M Bank Kenya Limited ‒ IMBLKENAXXX
- NCBA Bank Kenya ‒ CBAFKENXXXX
What’s Your Bank’s SWIFT Code
Now that you know how it all works, how do you find your bank’s SWIFT code?
Use Online Directories
The first option, and perhaps the quickest way to get your bank SWIFT code, is to search online. We all know that the internet is a trove of information. If you search your bank’s name and a query like, ‘bank SWIFT code for XXXX bank,’ you will get numerous hits.
On Your Account Statement
If you have a copy of your bank statement, look for the section with other account details, like the name and account number. Usually, the SWIFT code could be there. You can easily confirm whether the string of alphanumeric characters you see is the SWIFT code using the identifying details I highlighted earlier.
However, not all bank statements will have the bank SWIFT code as part of the account details. The e-statements I receive from my bank do not have the SWIFT code. If that’s the case, you can explore the next option. Contacting your banking partner.
Contact Your Bank
If you are skeptical about what you have, you can confirm with your bank the correct SWIFT code. Remember that wrong SWIFT codes will cause delays in your payments, affecting your cash flows. So, it’s better to take the time to ensure you are giving clients the correct SWIFT code.
Why Swift Codes are Important
Why go through the trouble of providing all this information? Well, as it turns out, SWIFT codes are important for a few reasons.
Facilitating Secure Transactions
Swift Codes facilitate secure communication between banks, ensuring funds are sent to the right destination.
Let’s assume you have a foreign supplier, and you need to pay for your products. With the Swift Code, your bank can identify the recipient bank, i.e., your supplier’s banker, and ensure the funds reach the correct account securely.
For instance, if you input a SWIFT code that does not exist, your bank will reject the transactions. However, be very careful when inputting these details because you might incur fees for rejected transactions.
What if the SWIFT code exists, but it is wrong? In that case, you have wired funds to the wrong individual or business. 🤭. Take a deep breath. Then, contact your bank ASIf. if the transaction has not been processed yet, you might be lucky enough for your bank to stop it before the funds are processed.
If the transaction is processed but the receiving bank notices they do not manage that particular account, the receiving bank will notify your bank. Your bank will then put the funds back into your account. Alternatively, you can get ahead of the situation and communicate with the receiving bank, explaining the situation and requesting a refund.
As mentioned earlier, Swift Codes’ alphanumeric characters must follow specific criteria. These identify not just the bank code but its country location.
Because of this, SWIFT’s international network helps ensure transactions conform to a standard format, minimizing errors and confusion.
To Ensure Cross-Border Compliance
Many international regulators often require banks to use Swift Codes. Besides compliance with these regulations, the measures are in place to help prevent fraud and money laundering.
With the SWIFT codes, banks and regulators can track the movement of funds between banks. This can help them trace the origin of such transactions.
Common Mistakes to Avoid When Using SWIFT Codes
Mishaps happen, even when you think you are being careful. Unfortunately, mistakes related to Swift Codes can lead to problems like delayed transactions, failed payments, and extra costs for such transactions.
Here are some common mistakes to avoid when using SWIFT codes:
Using Outdated Codes
Swift Codes can change over time. For instance, banks close branches now and then. That means your branch is no longer operational, and the SWIFT Code with the branch code is no longer valid.
It’s important always to ensure that you have the most up-to-date information. When dealing with clients, it helps to have a regular option of updating their vendor details. A good example is an annual exercise where they can update their details, including confirming their bank SWIFT code.
Even a single character mistake in the bank Swift Code can result in your funds going to the wrong place.
If this is a regular client, it helps to create them as a beneficiary in your account so you only have to enter the information once.
Swift Codes have a fixed length, as I showed you in our earlier examples. To avoid mistakes, ensure you enter the complete code.
Swift Code Alternatives
While Swift Codes are the most widely used method for international bank transactions, not all banks are part of the network. Some banks use a different identifier, which is also valid. These include IBAN (International Bank Account Number) and routing numbers.
These alternatives can be helpful in certain situations, so it’s worth understanding when to use them.