DEFINITION of 'Bank Wire'

A bank wire is an electronic message system, which allows major banks to communicate various actions or occurrences regarding client accounts. The wire represents a secure computerized messaging system that sends account information, notifications, and transaction requests between banks.

BREAKING DOWN 'Bank Wire'

While the bank wire does not affect actual transfer payments, such as a wire transfer, it will provide the financial institutions with knowledge of such events. For example, the purpose of a bank wire would be to notify a bank if a client has deposited funds into its account.

Bank Wire v. Wire Transfer

In contrast with a bank wire (although perhaps more well known) a wire transfer is an electronic transfer of funds across a network, which a global group of hundreds of banks administers. In particular, wire transfers can help people in different geographic locations safely transfer money to one another. During a wire transfer no physical money is exchanged between banks or financial institutions; instead, banks pass information among one other regarding who the recipient is, what her bank account number is, and how much money she is receiving.

International bank account numbers (IBAN numbers) help in the identification of the correct financial institutions in complex bank wire transfers. A wire sender first pays for the transaction up front at his bank. Then, the recipient's bank all necessary information from the initiating bank and deposits its own reserve funds into the recipient's account.

Bank Wire and Security

Cybersecurity threats are increasing with more online financial services, such as bank wires and wire transfers. Threats to a computer system are classified by the method used to attack.

Three common types of cyber attacks include:

  • Backdoor attacks: These exploit alternate methods of accessing a system, which don't require usual authentication methods. Some systems come with these backdoors by design, while others result from error.

  • Denial-of-service attacks: These prevent the correct account user from accessing a system. A common method of denial-of-service attacks is entering a wrong password enough times that the account is locked.

  • Direct-access attacks: These includes bugs and viruses, which gain access to a system and copy its information and/or modify the system entirely.

While any individual system is vulnerable to cyberattacks, larger entities, such as major commercial banks, along with other large businesses (e.g. Fortune 500 companies that deal with consumer data), along with government agencies and systems, are often key targets.

RELATED TERMS
  1. Wire Room

    A wire room is a financial institution's funds transfer operation, ...
  2. Mobile Banking

    Mobile banking is the act of making financial transactions on ...
  3. Routing Transit Number (RTN)

    A routing transit number is a nine-digit numerical code used ...
  4. Night Depository

    A night depository is a bank drop box where merchants can deposit ...
  5. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  6. Vostro Account

    A vostro account is an account that a correspondent bank, usually ...
Related Articles
  1. Insights

    How to Open And Access an Offshore Bank Account

    You don't have to be a master criminal or billionaire to open an offshore bank account. This article will walk you through the process.
  2. Personal Finance

    Cut Your Bank Fees

    Find out how to get the bank to pay you for using their services, not the other way around.
  3. IPF - Banking

    These Savings Accounts Have the Highest Interest Rates

    Don't expect interest from a bank savings account to make you rich. You can do better, however, than the paltry 0.08% average paid in 2015.
  4. Managing Wealth

    Review: Discover Checking Account

    Will having a Discover checking account save you money? It will save you fees.
  5. Personal Finance

    How the financial services sector differs from banks

    Learn about the difference between the banking industry and the financial services sector and how to distinguish financial goods from financial services.
  6. Insights

    The World's Top 10 Banks

    Learn more about the world's largest banks and how more financial power shifts eastward as China is home to four of the world's largest banks.
  7. Personal Finance

    Which Banks Pay the Highest Interest Rates on Savings Accounts?

    Online banks offer the best savings account interest rates. Not all banks offer the same features, so it pays to read the fine print.
  8. Tech

    Stop Scams in Their Tracks

    Find out how to protect yourself and your loved ones from financial fraudsters.
  9. Personal Finance

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
RELATED FAQS
  1. What are the 9 major financial institutions?

    There are nine major types of financial institutions. Understand the major types of financial institutions that exist and ... Read Answer >>
  2. How do you Fund a Forex Account?

    Forex traders are usually given several options when deciding how to deposit funds into trading accounts, learn how and what ... Read Answer >>
Trading Center