IP to IP Transfers

IP to IP transfers refer to the process of transferring funds from corresponding bank accounts or data between different financial institutions or systems by utilizing Internet Protocol (IP) addresses. The IP address is a unique numerical identifier assigned to every device connected to the internet, and it is used to route information between different systems. IP to IP transfers in banking involve the direct communication between two systems using their respective IP addresses to facilitate a financial transaction.

However, it's important to note that IP to IP transfers are not common or recommended in the banking industry for a variety of reasons, including security, reliability, and compliance concerns. The following points provide some context on these concerns:

  1. Security: IP to IP transfers can be less secure compared to established banking networks, such as SWIFT or ACH, which implement multiple layers of security, encryption, and authentication. Direct communication between two IP addresses may expose sensitive information to potential security threats, including hacking, phishing, or man-in-the-middle attacks.
  2. Reliability: The use of IP to IP transfers does not guarantee the reliability of the transaction, as there are no universally recognized standards or protocols in place for IP-based transfers in the banking industry. This may lead to potential issues with transaction processing, tracking, and reconciliation.
  3. Compliance: Banks and financial institutions are subject to numerous regulations and requirements, including Anti-Money Laundering (AML) and Know Your Customer (KYC) policies. IP to IP transfers may not adhere to these regulatory requirements, potentially exposing the involved parties to legal and financial risks.

Instead of IP to IP transfers, banks and financial institutions prefer to use established networks, such as SWIFT or ACH, and messaging standards like ISO 20022 to facilitate secure, reliable, and compliant fund transfers between different institutions.

What can be transferred from Bank to Bank?

Bank Assets:

  1. Cash & Cash Equivalents: These are funds that can be accessed immediately or almost immediately. They include physical cash, deposits with other banks, and highly liquid securities like Treasury bills.
  2. Investments/Securities: These are financial instruments that the bank invests in to earn a return, such as government and corporate bonds, stocks, and other securities.
  3. Loans and Advances: These are the funds that a bank lends to its customers, and they generate interest income. They can include personal loans, mortgages, commercial loans, credit card balances, and overdrafts.
  4. Fixed Assets: These are physical properties owned by the bank, such as buildings, land, equipment, and furniture.
  5. Intangible Assets: These include non-physical assets like software, patents, trademarks, and goodwill.
  6. Other Assets: These can include accrued interest receivable, deferred tax assets, and derivative financial instruments among others.

Bank Liabilities:

  1. Deposits: These are funds that individuals and businesses keep in the bank. They include checking accounts, savings accounts, and time deposits. They are liabilities because the bank has an obligation to return these funds to the depositors on demand or at a specific maturity date.
  2. Borrowed Funds: These are funds that the bank borrows from other financial institutions, the central bank, or through issuing debt securities.
  3. Debt Securities: These are bonds or other forms of debt issued by the bank to raise funds. The bank is obligated to pay back the principal and interest to the bondholders.
  4. Other Liabilities: These include items like accrued expenses, accounts payable, deferred tax liabilities, provisions for loan losses, and derivative financial instruments.
  5. Subordinated Liabilities: These are debts that will only be paid after all other debts if the bank goes bankrupt.

Bank Equity:

  1. Common Stock: This is the equity that owners of the bank hold. They have voting rights and may receive dividends.
  2. Preferred Stock: This type of equity has a higher claim on earnings and assets than common stock but usually doesn't come with voting rights.
  3. Retained Earnings: These are the net earnings a bank has accumulated over the years and chosen to reinvest in the business rather than distribute as dividends.
  4. Treasury Stock: These are the bank's own shares that it has repurchased from the market.
  5. Other Comprehensive Income: These are gains and losses from various investments and derivatives that haven't been realized yet.
  6. Minority Interest: This is the part of the net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.

Protocols for IPIP

  • FIX (Financial Information eXchange)
  • AS2
  • SNMPv3
  • Kerberos
  • LDAP over SSL/TLS
  • OAuth and SAM

If you want to know more about how to transfer funds to your accounts with us, please get in contact with Marie Mayer.