The Rise of the Multi-currency Bank Account

In recent years, the world has become more connected than ever. 15 - 20 % of ecommerce transaction value is already international, a trend that is steadily growing. Consequently, banks are increasingly offering multi-currency accounts, enabling individuals and businesses to receive, pay, and hold different currencies within a single account.

Multicurrency bank accounts offer various advantages, the most obvious of which is convenience. Instead of opening and maintaining numerous accounts in different countries, people can consolidate all their funds into a single account. A multi-currency account provides the simplicity of one account and interface and gives an instant overview of financial status. 

Benefits for businesses 

Having a multi-currency account also has several benefits for firms that work across more than one currency. One key advantage is reducing cross-border transfer fees and transaction times - by allowing money to be held in the non-home currency. While there may be a small fee for converting between currencies within the account, this is less frequent and substantially less costly than converting in a single currency account. 

A multi-currency account also streamlines reconciliation and accounting by enabling payments to be received in the invoiced foreign currency. This means fewer total transactions to account for, and invoices and payments match more closely. Managing currency fluctuations also becomes a lot easier as businesses can convert currencies at any time, taking advantage of favourable exchange rates and avoiding unfavourable ones. 

Combining a multi-currency account with an FX forward contract further enables businesses to lock in future exchange rates when working with clients in a different currency. This allows for more accurate predictions of the final amount that will be paid and reduces the risk of unfavourable exchange rate fluctuations. 

With this type of account, companies also receive payments faster, which can be particularly helpful for eCommerce firms or start-ups that sell to customers worldwide. 

Paying employees internationally becomes much more manageable, as businesses can track all payments in one place and make payments directly to local bank accounts without expensive wire transfer fees.

The role of fintech in the rise

Fintech innovations have been instrumental in the proliferation of multicurrency bank accounts. By harnessing technology, fintech startups have delivered cost-effective and user-friendly banking solutions. A prime example is the numerous fintech firms providing digital wallets capable of accommodating multiple currencies, enabling customers to exchange currencies during transactions effortlessly.

While multi-currency accounts have the largest market share in Asia, with nearly all major banks in Hong Kong and Singapore offering them, their popularity around the world is growing. 

Nomo, the digital division of the Bank of London and The Middle East (BLME), backed by Boubyan Bank, is a significant player. This world’s first Sharia-compliant digital bank enables people to open current accounts in six different currencies and to exchange money instantly. It helps customers to pay in their local currencies in over 25 countries across Europe, the Middle East and the Americas, bypassing the high fees often tied to payment in foreign currencies.

As we see an unprecedented level of interdependence between people, communities, and nations – making the world feel more interconnected than ever before – banking is quickly adapting to this new landscape. The reality is that the world is only getting more and more international, and so too are the most innovative financial products.