What are Hybrid Bank Accounts?


Hybrid Bank Accounts or "Named sub-accounts" are a new type of bank accounts offered by Payments Instiutions and Electronic Money Institutions which are fast to open and easy to operate.

What are the current solutions on the market?

Currently, most businesses can open two types of accounts: 
1) A named SWIFT and SEPA bank account
2) Pooled or aggregate accounts

Named Bank Accounts

Named bank accounts are where the bank account or IBAN issued is under the name of the company or individual (the account holder).

Pros
Unique IBAN for each customer
Account is under the customer’s name 
Can receive and send payments under own name
Many payment processors and crypto exchanges require this

Cons
Hard to open if you are a non-resident or new business
Can be costly
Account opening time can take 1-3 months
Many industry and geographic restrictions





Aggregate/Pooled Bank Accounts

The bank account name is not under your company name but under the name of your ewallet or payments provider.

Pros
Easy to open 
Multi-currency
Can open from anywhere in the world
Very cheap - no signup or monthly fees

Cons
The account is not under your name
Must ask the sender or customer to enter client ID in the description/reference
Many lost payments
Top crypto exchanges will not settle into these accounts
Many payment processors will not send funds to these accounts




What are Hybrid Bank Accounts? 

Hybrid accounts (sub accounts) are a combination of the full bank accounts and pooled accounts. They bring some of the efficiencies and cost savings of pooled accounts, at the same time maintain the uniqueness of full or named bank accounts. 


How SWIFT wire transfers work

Hybird accounts are a new technology based on SWIFT wire transfers. Read more about SWIFT wire transfers here. SWIFT wire transfers are used for over 99% of cross border transactions and for transfering funds from one bank account to another. An important part of the SWIFT transfers is that the sender has to enter the exact details in order for the transaction to take place. For example:

Full Bank Accounts

Beneficiary Name or Account Holder Name:  Example Limited
Beneficiary Address : 6 Raffles Road Singapore 049909
Account Number: 01030555227
Account Currency: USD
Bank Name: Standard Chartered Bank (Singapore) Limited (Code: 7144)
Bank Address: 6 Battery Road Singapore 049909
Branch Code: 001
BIC/SWIFT: SCBLSG22


Pooled Bank Accounts

Beneficiary Name or Account Holder Name:  Ewallet pte. ltd
Beneficiary Address : 6 Raffles Road Singapore 049909
Account Number: 01030555227
Account Currency: USD
Bank Name: Standard Chartered Bank (Singapore) Limited (Code: 7144)
Bank Address: 6 Battery Road Singapore 049909
Branch Code: 001
BIC/SWIFT: SCBLSG22
Description/reference: Example Limited

Any mistake in these details leads to the payment being rejected. For example, if the account holder name is incorrect or the address is incorrect it will be rejected. For receiving payments, the bank account has to be under the name of the company otherwise the bank will auto reject the payment.



Hybrid accounts are a variation of SWIFT wire transfers.

In the old way of doing things, either a company had to open a bank account in a real bank, which is expensive and time consuming, or use the bank account of their ewallet provider, which is very inconvenient when invoicing customers. 

The hybrid method solves these problems by creating sub bank accounts on the main bank account. A sub bank account means that the ewallet provider is able to register all their customers (Example Limited) with the bank as sub-accounts.  In the hybrid model, the company uses the underlying bank account of their ewallet provider but in the beneficiary name / account holder name, including their name along with that of the ewallet provider. We modify the above example to explain the payment details for a hybrid account.

Beneficiary Name or Account Holder Name:  Ewallet pte. Ltd.-Example Limited
Beneficiary Address : 6 Raffles Road Singapore 049909
Account Number: 01030555227
Account Currency: USD
Bank Name: Standard Chartered Bank (Singapore) Limited (Code: 7144)
Bank Address: 6 Battery Road Singapore 049909
Branch Code: 001
BIC/SWIFT: SCBLSG22 

When you compare the details of the full bank account in contrast to the hybrid account you will see that the only details that have changed are that the beneficiary/account holder name contains both the ewallet provider and the customers name 

Now when the customer receives payments, there are no payments lost or confusion created for the sender. Also, as the customers have been registered with the bank, when the wire transfer comes in, they do not get rejected even though the bank account is officially under the name of the ewallet provider.  



Benefits of the Hybrid Bank Account 


1) Open bank account in a foreign country
Now you can open an international bank account from anywhere in the world. For example, if you want a bank account in Singapore in the past, you would have to travel to Singapore. Apart from traveling there, you would have to have a detailed meeting with the bank manager and spend hundreds of hours providing documentation. With a hybrid bank account, you can open this online with a full online onboarding process. These accounts normally take 24-48 hours to open. Now you have your account in Singapore at a top bank without the high cost or documentation. 


2) Open a bank account fully online
With a traditional large bank, you must visit the bank branch and meet the branch manager. With a hybrid account, you can do it fully online. The user needs to go through the online onboarding process. This includes uploading the ID and proof of address for individuals. For companies uploading the incorporation documentation. Once these documents are uploaded, the compliance department is able to immediately review and approve the account. The user has to verify their email and set up 2-factor authentication.


3) Your funds are safe at a top AAA bank
Previously, online accounts were created with not so reputable banks or payments institutions. With hybrid accounts, you get these from top banks like HSBC, Standard Chartered, and Citibank. This way you know your funds are held safely.


4) Incoming payments do not go missing
Unlike pool accounts where there are many problems faced with payments reconciliation. Funds that are sent to your hybrid account are immediately and instantly allocated to your online bank account. 


5) Hybird accounts can be opened by anyone in the world
Unlike normal bank accounts where there are many restrictions, hybrid accounts can be opened by people from all over the world with no limits. When opening foreign or non-resident accounts, companies and customers face bank challenges. Hybrid accounts bypass these challenges. 


6) Lower cost
Full bank accounts at Main Street banks are very expensive. Hybrid accounts get rid of these costs. Hybrid accounts have low onboarding and setup fees and also very low to no monthly fees.  


7) Multi Currency Accounts 
Hybrid accounts are also multi-currency. They can be used for receiving payments for all main currencies, like USD, JPY, GBP, EUR and many more. Thanks to the hybrid structure, these additional accounts do not cost extra but are part of your online banking system. 


8) Fast account approval within 24-48 hours
Once you have completed the online onboarding and uploaded all the documents, the account is approved or rejected within 24-48 hours. You can start using your account immediately after this. This is a huge benefit as compared to opening normal bank accounts which can take 1-2 months.


9) Lower documentation requirements
With opening bank accounts especially in a foreign country, you need a lot of documentation and also a well-established business. This can often be a challenge for new companies, startups, ecommerce and digital nomads. With hybrid accounts, these challenges are not an issue and this is a perfect way for new businesses and global businesses to get started without having to waste time talking to the bank. 


10) Send and receive payment from anywhere in the world
As these hybrid accounts are created at AAA-rated banks with very good banking infrastructure. payments are received and sent faster. Due to the good reputation of the underlying banks, payments can also be made and received from almost all countries.


Your funds are held at top-tier Banks

Key Features of Hybrid Accounts

Jointly Named Accounts

Your account is shared and jointly named with your payment institution or ewallet provider

Multi-Currency Account

The accounts are multi currency. This means you get a hybrid account for all major currencies.

Safety of Funds

Funds are held at top banks which means the funds are safe and well regulated. 

24-48 Hour Onboarding

Accounts are set up very fast with very little paperwork

Fast sending and receiving

Thanks to accounts being at top banks, the funds are received fast and also sent using the latest technology and safely by the big banks.

Accounts for all

The accounts can be opened by people from all over the world.