Article
OCT 14 2024
Moving money in the age of global travel and commerce
The financial landscape is undergoing a significant transformation driven by globalization and technological advancements. Cross-border travel and international payments are at an all-time high, with more individuals and businesses engaging in global transactions. A McKinsey & Company report estimates $8.6 trillion in traveler outlays in 2024, representing roughly 9% of this year’s global GDP. And according to a report from Vantage Market Research, that total will include a projected $1.976 trillion in cross-border eCommerce spending. If financial institutions are correctly positioned, this presents a major opportunity to grab a piece of global travel and global eCommerce spending.
Rising challenger banks and fintechs have a head-start in capturing these consumers. According to Citi’s “Future of Payments Survey," nearly "60% of the financial institutions surveyed indicated they view fintechs as the greatest threat to their market shares.” These digital-first companies are at the forefront of offering multicurrency, prepaid solutions and competitive foreign exchange (FX) rates, appealing to a global customer base that demands convenience and transparency. For traditional card issuers, this presents both a challenge and an opportunity: Adapt to these trends, or risk becoming obsolete.
Innovating with currency offerings: a blueprint for card issuers
For card issuers to remain relevant, they must integrate currency solutions into their offerings to drive customer loyalty and accelerate growth. Here are three ways innovative currency solutions can enhance an issuer’s product offerings:
1. Enhance the digital experience with transparent FX rates
Customers expect a seamless, transparent, and digital-first experience. To meet consumer demands, start by making it easy for cardholders to access currency solutions as part of your suite of bank offerings. Whether on the web or through mobile, make sure to display FX rates for currency conversions. This transparency will build trust with customers, so they can make an informed choice, instead of being surprised later by hidden fees. By delivering this increased transparency, issuers are able to drive customer engagement and loyalty in the long-term, preventing the outflows of deposits to competitor fintechs. Finally, focus on creating a unified experience across online and mobile applications, so no matter where a customer goes, they know where to find their FX rates for their currency conversion needs.
2. Drive cross-sell opportunities with embedded currency solutions
Embedding currency solutions into card offerings unlocks a plethora of cross-sell opportunities. A multicurrency prepaid wallet, for instance, is a fantastic opportunity for issuers to offer currency conversion solutions, as it streamlines global transactions by enabling cardholders to load and use multiple currencies in a single card. Customers who engage with their multicurrency prepaid wallet are more likely to spend money in their wallet and be interested in related products and services such as travel insurance and travel loans for their trips abroad, or even investment products as they look to diversify their investments into foreign currencies. These products are just a few examples of how offering currency solutions can help create new cross-sell opportunities to drive revenue.
3. Harness technology for personalized experiences
Technology is the key to enabling issuers to provide innovative solutions and craft personalized experiences for customers. Leveraging innovative technology that takes advantage of modern cloud-native systems – which are accessible with API interfaces - issuers can quickly go to market, customizing the FX rates they offer to cardholders. With the right platform, financial institutions can choose which FX rates they provide – be it their own or someone else’s – and can reward loyal customers with more favorable rates. Card issuers can take it up a level by analyzing transaction and account holder data to offer personalized products and services. For example, a customer planning an international trip might appreciate a timely offer for travel insurance bundled with the ability to “lock in” FX rates. Harnessing the power of technology and data can help deliver customized customer experiences to build loyalty.
Key benefits for card issuers
Incorporating currency solutions into card offerings presents issuers with several benefits:
- Increased customer loyalty: Offering competitive and transparent FX rates builds trust and satisfaction to prevent customer attrition to rival fintechs
- Revenue growth: Multicurrency solutions can attract new customers, drive interchange fees through increased card spend, and create new cross-sell opportunities.
- Competitive advantage: Staying ahead of the curve with cutting-edge currency solutions ensures that the financial institution is able to stand out in a crowded market
Conclusion
As the financial world evolves, card issuers must evolve with it. By embracing innovative currency solutions, card issuers can stay relevant and thrive in a competitive environment. The benefits are clear: increased revenue, enhanced customer loyalty, and superior digital experience. Now is the time for card issuers to act and capitalize on these trends, ensuring they don't miss out on the opportunities that the future holds. Learn more how Fiserv can help.