Many expats are not very well prepared when it comes to making the most out of the banking opportunities that are available, nor in understanding just how important their expat banking experience will be for them.
There are three distinct phases involved with expat banking:
1. Initial phase – when you are preparing to depart your home country there is a need to ensure you have banking facilities in both countries. You need to ensure your bills back home will get paid and will support and protect your financial situation as an expatriate. In addition, you will need banking facilities arranged in the new country which will support your life there. For many expats this is complicated by major purchases such as a home and cars.
2. The Expat Phase – this is characterised by relatively stable banking needs, involving frequent and recurring bill payment in both new and home countries, and a great deal of regular foreign currency exchange of varying amounts. This is also when substantial amounts of capital tend to be accumulated and the issue of what to do with these sums also arises, leading to a requirement for investment and retirement services, as well as traditional banking products.
3. The Return Phase – expats experience a significant surge in banking requirements as they prepare to return to their home country. While many expats maintain accounts with their banks whilst overseas, many accounts and ancillary services are allowed to lapse but these will now be required and be ready for use after repatriation. It is very common for returning expats to “lose touch” with service developments in their home country – they just do not realise what is now available to them when they return home. There are also the issues of repatriating substantial funds accumulated whilst working overseas including savings and investments and the proceeds of the sale of property.
A major issue for expatriates is the lack of a relationship with a bank in their new country and the erosion of their relationship with banks and credit providers in their home country. It is important for expats to establish solid banking relationships, which in practice requires careful advance planning and establishing accounts with banking institutions who understand the peculiar needs of an expatriate.
A delicate balancing act needs to be established between your finances in the new and home countries. Bills still need to be paid on homes, mortgages, retirement plans and other expenses back home while maintaining credit arrangements in your new country. You need a bank back home that can support you while overseas. Bill paying in your home country is a major issue which many leave to relatives to manage, but in practice this rarely works out well and causes serious damage to credit ratings.
In your new country of residence, you will need a banking partner who does not take for granted that you understand local customs and practice. Some countries are also quite challenged in terms of banking services offered, so you may find many institutions do not offer, for instance, a credit card facility (common in many Eastern European countries). You need a bank which is able to combine local facilities and convenience, with a degree of sophistication to provide the level of banking service and products you have come to expect from back home.
Finally, the obvious need for foreign currency exchange and international money transfers arises. While many are unable to offer foreign exchange currency transactions on as favourable terms as a foreign currency exchange brokers, nevertheless, you will still need this facility. There will also be occasions when you need to move funds over international borders, and this can be costly and time consuming if you have a bank which is inexperienced or inefficient. Ideally, you are looking for two banks, in different parts of the world, who will work well together in your interests and who will support you, at home and overseas, while understanding the practical financial issues facing the expatriate.
