Globalisation has allowed more and more people to move in and out of countries easily for work and living purposes. This has increased the need for strong cross-border banking options. More financial companies and banking intermediaries are emerging to cater to your needs for international transfers to your home country or vice versa.
As the number of expats is increasing worldwide, so is the demand for international baking options facilitating cross-border payments. In our article, we will understand how international banking for expats works.
What is international banking and its significance?
Cross-border or international banking refers to a service wherein you can send money between two bank accounts belonging to two different countries. There has always been an option to facilitate international payment due to the onset of globalisation. Still, with the recent increase in more and more people moving abroad, many financial companies have now started providing this facility hassle-free. It is one of the most important things that expats check when moving from one country to another since they often send money back home.
Expats have increased by at least 41% since 2000, and the number is only expected to increase. There are several offshore wealth management opportunities that expats are utilising, along with the fact that international financial transactions are said to increase by over 1/3rd of what it is currently by 2026.
Currency exchange fluctuation: a boon or bane?
When expats send home money or transfer their earned income into their home country’s account, the first challenge they fight off is the currency exchange rate fluctuations that may sweep off a part of the money transferred. One can fight this challenge by waiting for a more stable market period to transfer their income to another country’s bank account.
However, some expats make use of the exchange rate fluctuation and shift their money to a more stable currency to safeguard their income. This process first was not as easy as it is now. It was not only expensive but time-consuming. However, now, with the emerging financial institutions that completely support cross-border transactions, converting one currency to another has become inexpensive and less time-consuming.
Do traditional banks offer international banking?
Yes, most traditional banks have now started offering international banking services like –
- Secure systems to transfer money from one country to another.
- Third-party partnership with financial service providers that help in speeding up the process of international transactions.
- Expat accounts and services that are tailored and designed to make international transfers and making services seamless.
- Most of these traditional bank accounts now offer a Euro, dollar or other major currency bank account that makes banking, transfers and payments between all Eurozone member state super simple and quick with the Single Euro Payments Area integration.
Which banks offer international transfers?
There are several banks belonging to different countries offering international transfer services. Some banks that are only present in the home country offer the service by amalgamating with other international banks, whereas some multinational banks like HSBC, Citibank, Deutsche Bank, BNP Paribas, Barclays, Bank of Montréal, China CITIC Bank and more offer expat-specific services between the international accounts in these banks or between two banks present in different countries.
Challenges with expat-specific services
- International transfer fees
The first and most significant challenge that expats face while transferring their money from one country to the other is the associated transfer fee that takes up a considerable chunk of the income itself. Since cross-border payments involve two different currencies, they are complex and include transaction costs, service costs and even exchange rate fees which can add up to quite a bit.
- Time
Time is the second constraint in expat-specific service since it takes quite some time for money from one country’s bank to get transferred to another country’s bank. Even though the systems have been developed and advanced to reduce this time, it still takes some days, and same-day transfers are still not very handy as of now.
International banking and fintech
Fintech has a major role to play in advancing international banking systems across the globe. A fintech company is a financial technology company that provides all financial services like the traditional banks but with more advanced technologies to make the process hassle-free. It specialises in digital services like cross-border transfers through smartphones at cheaper costs and quicker delivery.
The past few years have witnessed a boom for fintech companies, which is why so many fintech organisations have emerged and are booming right now. These companies are expanding their services to offer individual customers all the services that traditional banking offers but with better facilities and technology.
Some firms focus on specifying particular services like loans or international money transfers, whereas some companies are establishing themselves like traditional banks. Hence, the latter companies offer a robust and borderless account with other offerings like debit cards, mobile banking, credit cards, bill payment options, mutual funds, PPF accounts and more.
To start international transfers, it is best advised to take help from a financial expert and follow their recommendations.