The structural conflict at the centre of correspondent banking is not technological. It is economic. Banks earn revenue from their balance sheets. They lend deposits, capture FX spreads, and retain funds for as long as it is economically rational. Clearing, the act of releasing funds quickly and predictably, competes directly with those economics.
This is not a criticism of banking. It is a description of how the model works. An institution designed to lend has a structural incentive to hold deposits. An institution designed to clear has a structural incentive to release them. When the same institution does both, clearing becomes subordinated to balance sheet priorities. The result is unpredictable settlement, trapped capital, and a correspondent banking network that is shrinking by design.
Lorum was built to resolve this conflict. Not by improving the existing model, but by building a different one.
The clearing mandate
Lorum operates as a specialist correspondent institution with a single mandate: move third-party funds between accounts, currencies, and jurisdictions with certainty and speed. There is no lending book. There is no competing deposit base. There is no balance sheet incentive to delay settlement. Every revenue line is tied to the act of clearing, not the act of holding.
The infrastructure spans 30+ markets through direct access to local payment rails including Fedwire, ACH, SEPA, SEPA Instant, Faster Payments, CHAPS, and UAE IPP. Platforms connect through a single API integration and clear in USD, EUR, GBP, AED, and additional currencies without establishing local entities or managing bilateral banking relationships in each jurisdiction.
Six regulatory licences across multiple jurisdictions underpin the network. The model is designed so that adding a new market does not require a new banking relationship. It requires a configuration change within an existing integration.
Why the name matters
In correspondent banking, three Italian terms define whose money sits in an account:
- Nostro ("ours"): funds a bank holds at another institution. The bank's own capital, deployed abroad to facilitate clearing.
- Vostro ("yours"): funds another institution holds on behalf of that bank. The mirror image of nostro, seen from the other side.
- Loro ("theirs"): funds held on behalf of a third party. Neither the bank's money nor its counterpart's. The client's money, held in custody.
The distinction is not academic. Banks optimise for nostro. Their capital, their liquidity, their balance sheet priorities. The entire correspondent banking system is organised around this principle. An estimated $5 trillion sits trapped globally in nostro and vostro prefunding as a direct consequence.
Lorum takes its name from loro. The mandate is to hold and move funds on behalf of others, not to deploy them for the institution's own benefit. The name is not branding. It is an operational commitment: custody, clearing, and fiduciary management of third-party funds, with no conflicting incentive.
The custody model
Lorum provisions named accounts in each end customer's name, with individual KYC profiles and a direct contractual link between the custodian and the account holder. This is structurally different from the pooled omnibus model used by most correspondent banks, where client funds sit in a single account under the platform's name and are tracked through internal ledgers.
The named account model establishes a direct informational link to the end customer at the point of clearing. When a regulator or insolvency practitioner needs to identify who owns which funds, the answer is visible in the account structure itself. There is no dependency on a third-party ledger reconciliation process.
This architecture satisfies safeguarding requirements that are tightening simultaneously across jurisdictions. The FCA's Supplementary Regime, PSD3's segregation-at-receipt mandate, and the GENIUS Act's reserve requirements all converge on the same principle: structural separation over ledger-based tracking. Lorum's custody model meets these requirements by design, not by process layered on top.
100% reserve, no lending
All client funds held by Lorum are backed one-to-one by liquid assets. There is no fractional reserve. There is no rehypothecation. There is no commingling of client and operational funds. The model eliminates the counterparty risk that arises when a custodian deploys client deposits into lending or securities.
For platforms managing operational float, payroll disbursements, marketplace settlements, or trading client assets, the custody model determines counterparty risk exposure. A 100% reserve model means the platform's clients are not exposed to the custodian's credit risk or lending activity. The funds are there because the architecture guarantees it, not because internal risk management happens to be working on any given day.
Cash management services include wholesale FX at institutional rates, automated liquidity sweeps across currencies, and real-time position visibility across all markets. The infrastructure is designed for platforms that need their clearing provider to be solely focused on moving funds, not on competing for yield from the same capital.
Who Lorum serves
The infrastructure serves four primary platform categories, each with distinct clearing and custody requirements. Payroll and EOR platforms need deadline-driven, multi-currency settlement with fiduciary obligations and salary-compliant local rails. Fintech and PSP platforms need banking access that does not depend on correspondent relationships that are becoming harder to maintain. Trading and investment platforms need client fund segregation with T+1 settlement certainty. Marketplace platforms need seller fund custody with regulatory-grade separation between platform and seller funds.
The common thread across all four is the requirement for infrastructure that is designed for clearing, not adapted from lending. The rails are not the constraint. The incentives of the institution operating them are. Lorum exists because the infrastructure should be designed accordingly. Not nostro. Loro.
