Welcome to the new era of global finance. As our world becomes more interconnected, financial services need to match with the pace at which business and lifestyles are evolving. This isn’t just about convenience – it’s a fundamental change in how we manage and move money. It’s about getting away from slow, complex, expensive processes into, what we today know as, borderless banking. In this article, we explain what borderless banking is, how it translated into global growth and which solutions are currently leading the industry.
Understanding borderless banking
Borderless banking, as the name suggests, aims to erase the borders between different countries when it comes to moving money. Traditionally, currency exchange in banking will involve significant fees, whereas international transactions are very slow (can take a few days to show up in the receiver’s account). Therefore, borderless banking solutions aim to speed up this process and make it more cost-effective.
But, how can they do this? At the very core, borderless bank accounts avoid the use of traditional correspondent banking systems which are known to slow the whole process down. A good example of this is SWIFT (Society for Worldwide Interbank Financial Telecommunication) responsible for facilitating standardised communication between different financial institutions. Borderless banking bypasses it with the use of creative treasury management. For instance, instead of physically exchanging currencies or transferring cash, like SWIFT, it uses internal crediting and debiting accounts from different countries, mirroring such transactions.
Another important difference between traditional and borderless banking is how they invest their resources. The former tend to be well-established organisations with a variety of costs attached to them, such as physical bank branches and comprehensive customer support services. Many of these traditional banks use sluggish legacy systems that compromise their speed and accessibility levels. The latter, on the other hand, are much more interested in modern solutions. Fintech companies specialising in borderless banking have ditched old-fashioned systems and, instead, invest in newer, innovative tech. The majority of them are online companies, meaning they don’t have expenses associated with traditional banks.
An important thing to understand here, however, is that the two have different goals too. Fintech startups are driven by speed and accessibility. Their sole goal is to stand out from the competition and the only way to do that is through faster, better, more efficient and cheaper solutions than the others. For traditional banks, this is not as big of a priority, given that they have a diverse selection of income streams, including business loans or mortgages.
Fueling global growth
For businesses, borderless banking is a game-changer in global expansion. It completely dissolves one of the biggest financial barriers associated with entering new markets. It provides a streamlined way to accept and send international payments, allowing not just huge organisations but also small businesses to tap into new customer bases or talent pools worldwide. In other words, it opens up so many doors that were firmly locked prior to borderless banking.
This growth is also driven by tangible perks. Companies experience significantly reduced transaction costs and, therefore, improved cash flow. They can also simplify global treasury management by holding, viewing and managing their balances and multiple different currencies in one place with the help of smart APIs. This benefits the businesses as well as its customers, who have an enhanced experience of paying for goods in their local currency.
There is also a huge number of working professionals who take advantage of borderless bank accounts. Freelancers and digital nomads now have a simple and cost-effective way to receive payments from international clients without losing significant amounts in currency conversions and transfer fees. This means they can now collaborate with businesses outside of their own country, without having to worry about the financial side of things.
Top solutions for borderless banking
There are a number of borderless banking solutions available to choose from, depending on your unique needs and preferences. Here are some of the leading players in the space:
- Revolut: Positioned as a “financial super app,” Revolut offers a wide range of services for both personal and business uses. This comprehensive tool includes multi-currency accounts, international transfers, savings accounts, investments and other banking services.
- Wise: A prominent platform and one of Revolut’s major competitors, Wise is known for its transparent and low-cost international money transfers. It allows users (businesses and individuals) to hold and move money in dozens of different currencies.
- Payoneer: Especially popular among freelancers and ecommerce businesses, Payoneer is a cross-border payments platform that simplifies receiving payments from international clients and global marketplaces.
- Prometeo API: Differently to the above, is a fintech infrastructure that allows businesses to centralise all banking operations in one place. It connects 1200 financial institutions across 11 countries, consolidating all of your real-time banking data into one unified dashboard. This allows companies to significantly improve their treasury management and make informed strategic decisions, all while taking advantage of borderless banking.
Banking without boundaries
Whether you’re a business looking to conquer new markets, a freelancer with clients around the globe, a customer wanting to purchase something from abroad or simply a tourist on a holiday, borderless banking is a revolutionary solution that gets rid of financial barriers.