Pub. 10 2020 Issue 1

17 ISSUE 1. 2020 International Payments to Grow Your Customers By Jay Kenney, SVP, Regional Manager D IGITAL BANKING IS BIG, OF COURSE, even for community banks. One specific area that could pay off nicely for your bank is international payments. This is one field where, for many years, the biggest banks have captured and retained customers more than community banks. Given how much commerce is conducted online, this needs to change, and we can help your bank learn how. Doing so can boost customer capture and retention and drive more fees to your bottom line. According to a recent report from the global consulting firm McKinsey, the next five to 10 years will bring a world where many more people and corporate entities will reg- ularly use international payments. Not just large corporations, but also retailers, small and medium-sized businesses, and individu- als will access a range of providers. Even with increased pricing pressures, new models and new providers, banks will con- tinue to play an important role in cross-bor- der payments. Here, community banks may have a bigger chance to get involved. The report suggests that successful competitors will understand their overseas transaction revenue models, client relationships, upgrade support, explore collaborative solutions, and establish a clear role in the value chain. Driving profitability in the coming years may include a variety of international payment strategies. Community banks may want to consider expanding offerings to capture this business opportunity. For example, your bank might adopt a focus on supporting foreign business subsidiaries and their local workers and families, or businesses here doing business overseas. In addition to more vanilla transactions, you might want to seek out niche pricing too. These might be in difficult-to-serve trade corridors or in industries where the payment lets the business exist, such as digital content. Geographical clustering in regions where international payments are active is another potential strategy. Pricing for relationship and data may also make sense. You will want to consider monetizing the entire relationship with a customer, including accounts, lending and data — rather than aiming to derive profit margins primarily from international trans- action fees. Banks can use international transactions to defend customer relationships too, using such propositions as international payments that are as fast as domestic ones, with predictable pricing. The more convenient international transactions can be, the better, of course. With the availability of international payment services, you are better able to support your customers with their growing business. For additional information on international payments or to continue this discussion, please contact Jay Kenney. w Jay Kenney SVP, Regional Manager Phone: (213) 247-5096 jkenney@pcbb.com pcbb.com Dedicated to serving the needs of com - munity banks, PCBB’s comprehensive and robust set of solutions including cash management, international services, lending solutions and risk management advisory services.