Author:
Mark Thome, FX Consultant at Finzly
Foreign exchange revenue is often one of the most reliable profit centers in correspondent and international banking. So, when Foreign Currency Accounts (FCAs), sometimes called Multi-Currency Accounts, started becoming table stakes for commercial and business banking clients, a natural question follows inside treasury and international product teams: if clients can hold and move funds in foreign currency themselves, does that eat into our FX desk’s revenue?
It’s a fair question. It’s also the wrong one to be asking in isolation because the data, the client relationship dynamics, and the competitive landscape all have an impact far greater than and more meaningful to your FX operations and revenue.
A quick history of FCAs
Nostro accounts (the mechanism banks used to hold balances in foreign currencies with correspondent partners) have existed for centuries, especially across European banking networks. For most of that history, nostro accounts were an internal tool used by financial institutions to settle their own FX transactions, not something extended directly to commercial clients. Two things changed that:
- SWIFT and global electronic messaging made cross-border account relationships operationally viable at scale.
- The rise of online banking and modern core banking software gave institutions the infrastructure to extend nostro sub-accounts directly to clients turning an internal treasury tool into a client-facing product: the Foreign Currency Account.
What once required correspondent relationships, manual wire instructions, and significant overhead can now be offered as a self-service digital product. That’s a massive shift in who can offer international banking – and it’s why FCAs have moved from “nice to have” to expected, even among community and regional banks.
The short-term math vs. The long-term reality
Look at a single client, in isolation, over the 12 months after they open an FCA. In that window, some FX margin revenue genuinely does shift. Instead of converting currency through the bank’s FX desk on every transaction, the client now holds balances directly and transacts in-currency. The bank replaces some FX margin with account fees and transaction fees, often at a lower net yield per transaction.
But that framing only works if you freeze the clock at month 12 and ignore everything that happens next. What actually happens over time:
- Operational efficiency drives more offshore activity. An FCA doesn’t eliminate a company’s need for foreign exchange- it removes friction from operating internationally. Funds still have to be sourced, funded, and eventually repatriated. As the account makes offshore operations easier, companies tend to expand that activity, not shrink it.
- More offshore revenue means more banking activity. Growth in-country typically translates into more transactions, larger balances, and more banking relationships tied to that currency exposure, all of which flow back through the bank.
- Direct FX exposure creates hedging demand. Once a client holds real balances and exposure in a foreign currency, they now have currency risk . That’s exactly the scenario that creates demand for FX hedging products- forwards, options, and structured solutions, which is, stickier business than simple cross border payments.
In other words: FCAs don’t remove the need for FX. They change when and how FX revenue shows up, and they open the door to more sophisticated, higher-value FX business over time.
Firstly, the numbers back this up
The Bank for International Settlements (BIS) publishes a triennial survey of global FX market activity, and the trend line has been consistently upward, growing faster than inflation over the long run. Notably, the sharpest acceleration occurred between 2000 and 2010, which lines up almost exactly with the technology buildout that made foreign currency accounts possible in the first place.
The infrastructure that enabled FCAs didn’t shrink the FX market. It coincided with one of its biggest growth periods.
There’s a second, arguably more important reason to offer FCAs: client retention.
Clients with active offshore operations tend to be your larger, more sophisticated, and most valuable relationships. These are also the clients with the most banking alternatives. If your institution can’t provide FCAs and the supporting international banking services they need, someone else will – and you won’t just lose the FX transaction. You’ll lose the entire relationship, including deposits, lending, treasury management, and everything else attached to it.
That competition isn’t limited to other domestic banks anymore. It includes:
- Fintech and neobank platforms built specifically around international payments and multi-currency accounts
- Local in-country banks in the markets where your client operates
A common pattern shows up across the industry: a bank hesitates to invest in FCA capability because only a handful of clients have asked for it, and the build doesn’t seem to justify the cost for “just a few requests.” That reasoning treats each request as an isolated data point instead of a warning sign. In reality, client requests for FCAs behave like the visible tip of an iceberg – for every client who asks, there are typically others who simply move their business elsewhere without saying a word.
At Finzly, when we implement FCA capabilities for a client institution, actual demand consistently comes in close to 2x initial projections.
If your institution markets international banking products but doesn’t offer Foreign Currency Accounts, that’s an increasingly visible credibility gap. Nearly every U.S. bank above roughly $30 billion in assets now offers a full suite of international banking services, FCAs included – and that threshold keeps dropping as core banking technology becomes more accessible to mid-size and community institutions.
The real risk isn’t offering FCAs. It’s not offering them – and watching sophisticated clients quietly take their FX, deposit, and lending business to a competitor who will.
How Finzly can help you launch FCAs and expand your international operations
Finzly’s core and international banking technology enables financial institutions to launch Foreign Currency Accounts quickly, without the multi-year infrastructure buildout traditionally required. Banks that implement FCA capability with Finzly typically see client demand come in well above initial projections – and use that expanded relationship as a foundation for growing FX, hedging, and broader international banking revenue.
Talk to Finzly about launching Foreign Currency Accounts.
