Don't Think Your Clients Are Sending International Payments? Think Again.

Many community bankers underestimate the demand for FX wire transfer services among their clients.

However, the reality is that clients of community financial institutions are increasingly engaged in international transactions, whether it's importing goods for their small business, making investments abroad, or supporting family members overseas. By failing to offer FX wires, community banks risk alienating clients who require these essential financial services and are forced to go through larger financial institutions instead of their local branch. Recognizing this untapped demand presents an opportunity for community banks and credit unions to expand their service offerings and meet the evolving needs of those they serve while also capitalizing on a lucrative avenue for generating non-interest income.

Community banks can offer FX payments and earn non-interest income

Community banks have a unique opportunity to leverage their local expertise, personalized approach, and strong customer relationships to provide FX payments that cater to the specific needs of their clientele. By offering foreign exchange payments in-house, community banks can differentiate themselves from larger institutions and position themselves as comprehensive financial partners capable of addressing the full spectrum of their customers' banking needs. Furthermore, by charging competitive fees and leveraging efficient technology solutions, community banks can create a new revenue stream while simultaneously enhancing customer satisfaction and loyalty. Embracing the provision of FX wire transfer offerings not only aligns with the shifting demands of today's global economy but also reaffirms the vital role that community banks play in supporting the financial well-being of their communities. 

How clients are already using foreign exchange

Now, lets think about some scenarios where your clients or members are utilizing FX services.

1. International Business Transactions: Local Businesses may need to pay suppliers or vendors located in other countries . FX wire transfers allow them to make these cross-border payments. 

2. Personal Remittances: People often send money to family members, students or friends living abroad. FX wire transfers provide a secure and efficient way to send funds across borders for purposes such as living expenses, education, or as a gift. 

3. Travel Expenses: Travelers may need to exchange currency and transfer funds to foreign bank accounts to cover expenses while abroad, such as hotel bookings, transportation, and dining. FX wire transfers offer a convenient method for accessing funds in local currencies.

4. Purchasing Property Abroad: Individuals or businesses buying real estate or other assets in foreign countries may need to make large payments. FX wire transfers enable them to transfer funds to sellers or agents.

5. Loan Payments or Debt Settlements: Individuals or businesses with loans or debts denominated in foreign currencies may need to make regular payments or settle outstanding balances. FX wire transfers allow them to fulfill these financial obligations efficiently.

6. Salary or Wage Payments: Employers with overseas employees may need to pay salaries or wages in foreign currencies. FX wire transfers enable employers to transfer funds to employees' bank accounts in their local currency. 

In recognizing the increasing demand for FX wire transfer services among their clients, community bankers have an opportunity to enhance offerings and capitalize on a valuable revenue stream. 

These are lucrative income opportunities that small banks are currently missing out on, as big banks and foreign banks capture all the fees. Let's explore how small banks can start earning non-interest income through FX fees.

Non-interest income through FX fees

One of the key advantages of offering FX wire transfers is the potential for generating significant non-interest income. Community banks can charge fees for each transaction, which can be structured in several ways to ensure competitiveness while maximizing revenue:

1. Flat Fee Per Transaction: A straightforward approach where a fixed amount is charged for each FX wire transfer.
2. Percentage-Based Fees: Charging a percentage of the transaction amount, which can be attractive for larger transfers.
3. Tiered Pricing: Offering different pricing tiers based on transaction volume or customer relationship level.
4. Subscription-Based Model: Providing frequent users with a subscription service that offers a set number of transactions per month for a flat fee.

By implementing a thoughtful fee structure, community banks can make FX wire transfer services a reliable source of non-interest income, contributing to their overall profitability.

The fastest way to start offering FX wire transfer services

You shouldn’t have to be a big bank to earn money on foreign exchange transactions. Users of Fiserv’s Payments Exchange can start earning non-interest income on foreign exchange transactions with no upfront cost. Through a pre-integration with Payments Exchange, Acceleron’s FX marketplace facilitates better rates on any international wire by having multiple correspondent banks bid on client FX transactions so that customers get the best rate available, on average 50 percent lower.

Acceleron’s technology allows banks to convert U.S. dollars into the intended currency on the front end instead of letting foreign banks rake in the fees at the end of the wire process. Instead, community banks can capture these fees themselves, not only lowering fees for their clients but also increase their non-interest income. 

With the support of Acceleron's technology and FX marketplace, community banks can secure better exchange rates, capture additional revenue, and offer competitive, flexible services to their customers. By embracing these innovative solutions, community banks can not only increase their non-interest income but also strengthen their position in the financial landscape, ensuring they remain vital contributors to their local economies.

Acceleron builds patented software that allows community banks and credit unions to conduct international payment transactions profitably through a foreign exchange (FX) marketplace. Serving over 200 financial institutions and orchestrating  more than $1 billion in international payments annually, Acceleron helps small banks generate non-interest income and compete more effectively with high-fee big banks. Our solutions integrate seamlessly with Fiserv, ensuring quick implementation and smooth operation. 

Contact us to explore your options!