An in-house bank (IHB) — also called in-house banking — is an operating model: central treasury acts as the internal bank for group entities — internal accounts, funding and deposits, often FX, and usually a tight link to a payment factory.
It is broader than cash pooling. Pooling can feed an IHB; pooling alone does not create internal bank books. It is also different from a treasury center that only sets policy, from an SSC that only runs processes, and from a payment factory that only centralizes execution (payment factory vs in-house bank).
What the IHB does
- Holds internal current-account relationships with subsidiaries
- Prices and books intercompany loans / deposits
- Funds payment release (often via the payment factory)
- May run FX for subsidiaries inside policy
- Interfaces to external banks for concentration, investment, and backup liquidity under liquidity management
Documentation
A credible IHB needs intercompany agreements, an interest method aligned with transfer pricing, clear settlement-versus-funding rules, and board / policy authority. Weak documentation is how IHB projects stall after the banking setup looks finished.
Regulatory boundary
Pure group IHB activity in major hubs often does not require a banking licence. Regular third-party lending or deposit-taking can. Flag that boundary early.
Constrained markets
In China, many MNCs keep the IHB outside the mainland and fund onshore entities through approved cross-border channels, rather than assuming a freestyle onshore IHB.
Pick the real ask
Clarify whether you need (a) concentration only, (b) IHB books, (c) POBO/ROBO execution, or (d) all three — then map external bank products onto that design.