Offshore banking is becoming a more popular way of protecting and diversifying assets nowadays. In fact, people aren’t only using it for their personal assets. Corporations are also opening offshore accounts because of the protection and other benefits like lowered tax burdens (depending on the country), top-notch security systems, high-level privacy, and higher savings overall.
Despite that, the ever-changing behaviors and increased demands of consumers are putting a lot of pressure on the industry. As a result, many are forced to adopt changes to accommodate their customer’s changing needs.
What is Offshore Banking?
Simply put, offshore banking refers to the use of banking services abroad or outside the consumer’s country of residence. International business owners usually have offshore accounts, as this makes it easier for them to get access to their assets when doing business transactions worldwide.
For instance, if you’re mainly based in the United States, and you frequently do business transactions in Europe, once you open a financial account in one of the banks in Europe, that is considered an offshore account.
Offshore banking wasn’t as widespread in the past. But now, you can open offshore accounts almost anywhere. In Europe, people with golden visas are also opening offshore accounts to take advantage of tax benefits, asset diversification, and more. In particular, countries like Switzerland and Singapore offer a wide range of offshore investment advantages and options.
5 Trends Shaping Offshore Banking
If you’re still on the fence about offshore banking, here are six trends that are currently shaking up and changing the world of offshore banking today.
1. Open Banking
Open banking has been on the rise for years, and in 2021, it will likely continue to take part in shaping offshore banking in the future. The concept of open banking involves allowing a third-party financial service company to gain access to all the consumer’s banking accounts so that they can do their transaction all in one place.
With open banking, the consumers would only have to download an app. They allow the app to access their bank accounts, including offshore accounts. They can track and manage the money that goes in and out by just using their phones or computers.
While many financing institutions were on the fence about open banking before because of the security risks it poses, more and more banks, including offshore banks, are embracing the strategy to gain a competitive advantage over other companies. By partnering with open banking specialists and providers, banks and other financial institutions can offer a better user experience for their clients. Open banking can provide hassle-free transactions, improved security, and faster onboarding for users.
2. More and More eCommerce are Embracing Offshore Banking
As the digital era continues, we see more and more eCommerce stores opening shops and making their services and products available abroad. With the use of financial technology, they can accommodate foreign transactions, which allows them to make their services and products available abroad.
Setting up an offshore account for corporations allows them to streamline their transactions. They can accept payments regardless of the currencies, and the companies can access their accounts wherever they may be in the world.
Furthermore, with this increasing demand, many banks are also opening branches in other countries and regions. Not only will this allow them to expand their reach, but it also allows them to accommodate the needs of their existing customers and make banking even more accessible to them.
3. More Diverse Payment Options
As offshore banking continues to embrace trends like open banking, unique opportunities like contactless payment options are also bound to rise. In fact, more than 50% of U.S. consumers are now embracing at least one form of contactless payment. The rise in the numbers can be attributed to the COVID-19 pandemic, which forced people to explore “tap and go” payment options to reduce the chances of disease transmission.
Now, people won’t have to physically go to the banks to get the cash they need. Since many offshore banks may have also adopted digital banking, consumers can easily access their offshore accounts no matter where they are in the world. In fact, according to an article by Penny Crosman in American Banker, card and phone payments could be replaced by wearables and biometric payments by the year 2025.
That said, it’s also more likely that many companies will adopt the new rising technology.
4. Blockchain Technology
Security was the main reason why cryptocurrencies before Bitcoin failed to realize their value. But when Satoshi Nakamoto developed the first blockchain database, it changed the whole landscape of cryptocurrency.
Blockchain technology takes on the form of a digital ledger where every transaction is recorded as blocks. These blocks are then linked together to create a blockchain and secured using cryptography. The way blockchain is secured essentially makes it more resistant to any changes and fraud.
For that reason, more and more offshore banks are taking advantage of the high level of security it offers. Many are starting to implement it in their banks to provide a more secured banking transaction to their consumers.
5. AI Chatbots
Artificial Intelligence (AI) chatbots are also taking over the world of offshore banking these days. With it, consumers can ask questions, report an issue, and consult without the need to show up at the bank’s branch abroad physically.
Although a computer powers it, AI-powered chats can keep the conversation flowing naturally. Others may not realize that they’re talking to a computer. It’s just like talking to a real person. They can answer questions, guide you through the steps in solving an issue, and even transact on the consumer’s behalf.
The integration of AI-powered chats on offshore banking has shown a tremendous improvement in the banks’ customer service. Chatbots can be programmed to provide personalized services to the consumers, providing suggestions on how they can better protect their assets, invest funds, and more. All this arguably led to increased customer satisfaction, which is an important factor for success in service-based companies.
Bottom Line
FinTech trends continue to change the landscape of banking these days – especially offshore banking. As more people embrace these changes, their expectations will likely continue to change as well. With that, the finance sector will, again, have to adapt and improve. New trends will surface, and for finance companies to stay competitive, they have to be on the lookout for these so that they can change their strategies accordingly.