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What Is a Financial Institution Number?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 31 August 2016
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    Conjecture Corporation
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A financial institution number is a type of number that makes it possible to identify a specific bank or other type of financial institution during the process of conducting some type of interbank financial transaction. In many nations, the financial institution number is an integral part of what is known as the routing transit number, a series of characters that helps to identify not only the actual institution but the branch location where the customer account is housed. The purpose of these numbers is to simplify the process of processing transactions between banks, allowing deposits and withdrawals to be managed in a timely manner.

The length of a financial institution number will vary, depending on banking standards used in a given nation. In many countries, this number will be no more than three digits. The placement of the bank number within the longer routing transit number (RTN) will also vary from one country to the next. For example, the number normally appears at the beginning of the longer RTN for institutions based in the United States. By contrast, in Canada the number will normally appear after the check number and the portion of the transit number that identifies the specific branch.

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One of the benefits of using a financial institution number approach is that banks can readily identify the institution from which funds will be received or that are slated to receive payments of some type. The combination of the number sequence identifying the institution combined with the sequence that identifies the branch location helps to focus the completion of the transaction by identifying where in the institution’s network the transfer must occur. When the actual customer account number is added, processing the appropriate series of debits and credits can be managed with a minimum of effort. The efficiency of using the institution number in tandem with other relevant identification numbers is apparent when processing wire transfer and other forms of electronic funds transfers between institutions.

In order to manage transactions such as paying bills online, it is important to include the institution number along with other identifying information. Failure to do so means the transaction will ultimately fail, with the recipient never receiving the funds and the sender never seeing the amount of the payment deducted from the bank account. In terms of printed checks, the financial institution number appears as part of the routing number, making it easy to discern the series of digits that identify the institution and make sure the check is processed properly.

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