We live in a digital world where every system needs to be updated, even the global financial system. Thanks to technology, the world is now united and location-free.
Every day we online purchases that are in a different currency, and since traveling is now available more than ever before, people need a banking system that will help them control their finances better.
This is where the idea of multi-currency banking started to emerge. Nowadays, the world doesn’t make much sense if you cannot convert your money to a different currency. Some of us even work remote jobs in a different country and get paid in a different currency.
Fortunately, the multi-currency update is here and it brings so many benefits for both individuals and business owners.
Understanding Multi-Currency Banking
Before we can dive into the benefits of the process, let’s find out more about what multi-currency banking actually is. Most people think that multi-currency banking is only an account that can hold multiple currencies, and they are wrong.
This is a much more sophisticated system that allows individuals or businesses to conduct transactions, mitigate currency risk across different currencies, and help them manage their funds more accurately.
With traditional banking, we have currency conversion fees, which can be big enough to eat a significant portion of our profits, which is why multi-currency banking makes sense with its competitive exchange rate and greater control over currency fluctuations.
So, no. It is not only for holding multiple currencies, it is also a system that allows you to properly manage multiple currencies.
Benefits for Individuals
1. International Travel and Transactions
Individuals benefit from multi-currency banking, which streamlines foreign travel and transactions. Instead of dealing with the inconvenience of currency translation and fluctuating exchange rates, customers may save various currencies in their accounts and utilize them immediately for international payments and withdrawals.
According to Statista, worldwide tourist expenditure will reach $7.7 trillion in 2022, illustrating the growing demand for seamless currency management when traveling.
2. Diversification and Risk Management
Furthermore, multi-currency accounts provide diversification benefits by allowing investors to diversify risk across many currencies.
This is especially crucial during times of currency volatility when having a mix of stable and changing currencies can assist reduce financial risks.
The foreign exchange market, with a daily trading volume of more than $6 trillion, emphasizes the significance of adequate risk management measures for currency exposure.
Benefits for Businesses
1. Global Expansion and Market Access
For businesses, obtaining a multi-currency account is a real game changer, especially when doing business on a global scale online. By having multiple accounts companies can operate seamlessly in international markets.
2. Cost Savings
Businesses can save a lot of money from currency exchanges only by opening a multi-currency account. They will also get better rates and lower financial risk, and the entire process will contribute a lot to cost savings and improved profitability.
Individual Perspective
Let’s take Sarah, as an example. She is a graphic designer living in the UK and frequently gets payments in several currencies as she works with clients from other locations in Europe, the United States, and Asia.
Therefore, Sarah receives payments in several currencies, but unlike a traditional account where she must convert the amount received in British Pounds, with a multi-currency account she can manage multiple currencies without worrying about conversion costs.
So, this process not only helps her manage her finances better and in a simpler way, but it also helps Sarah minimize her wasteful costs on exchange fees which at the end of the day leaves more profit for her.
Business Perspective
On the other hand, we have businesses, that cannot work without a multi-currency banking system like Genome finance platform, especially when doing business globally.
For example, if we take a new startup company with operations in London, Silicon Valley, and Singapore that is largely reliant on worldwide suppliers and consumers, a multi-currency bank account is a must-have.
The first and most important reason is because it opens new business opportunities, and therefore new revenue streams that weren’t possible before. Can you imagine landing a client just to find out that you cannot be paid due to banking or currency restrictions? Well, a multi-currency bank account eliminates these problems.
On the other hand, we have the optimization of cash flow, lower FX-related expenses, and a simpler finance management solution that will boost the growth and expansion potential of any company that is doing business globally.
Emerging Trends and Innovations
The multi-currency banking scene is constantly evolving, owing to technical improvements and shifting market factors. Here are some significant trends influencing the future of multi-currency banking:
Blockchain Integration: Using blockchain technology in multi-currency banking improves security, transparency, and efficiency in cross-border transactions.
AI-Powered Insights: Artificial intelligence (AI) technologies are being used to give real-time insights and predictive analytics, allowing users to make more educated decisions about currency management and risk reduction.
Mobile Banking Solutions: The proliferation of mobile banking apps with multi-currency functionality allows customers to manage their accounts while on the go, providing convenience and flexibility.