How does international banking work?

International banking or offshore banking is often a plausible solution for small business owners. By definition, offshore banking is banking done in a foreign country. Typically, the country offers favorable tax regulation; it even considered as a tax haven.

With those being said, there are some typical reasons for small business owners to use international banking services:

1. Your small business wants to secure hard-earned profits

You work hard to bring in healthy profits; it’s time for you to secure them, especially when your small business resides in a region with uncertain local economic situation.

2. You are dealing with overseas clients and partners

With an offshore banking account, you can access your money worldwide, making it an ideal solution for you to do business – wherever you are.

3. You want to explore opportunities to plan your small business finance better

Offshore banks allow you to have an account in multiple currencies. With those, you can avoid exchange rate fluctuation. What’s more, you can access your account from anywhere in the world, making it easy for you to secure opportunities easily.

How things work

The concept behind offshore banking is not that complicated, really. Let’s say that offshore banking is a set of products launched by a bank to cater those who have needs to do banking in other countries.

Offshore banking products can consist of offshore savings, offshore investments, forex services, International current account, and more. Typically, offshore banking supports online banking, so you can do transactions over an Internet connection.

International banks are typically for a company doing business internationally and wealthy people. But it’s good to know that there are banks catering to a wider group of people, enabling them to enjoy the benefits of international banking.

International banking: Pros and cons

International banking is certainly not the “ultimate” kind of banking. Just like any other banking products, International banking has its own set of benefits and drawbacks.


  • Offers competitive interest rates
  • Your account is less impacted by local interest rate fluctuations
  • Easy to access – internationally
  • Can accommodate you with multiple currencies option for better currency exchange rates
  • More financial planning and wealth building options via offshore investment, tax planning, and more.


  • Due to the issues of international banks (often exposed to money laundering, tax evasion and other illegal financial activities), the government will keep an eye on your account activity – closely.
  • You can still lose money, as the foreign currencies also fluctuate like domestic currency does.
  • Due to the location restrictions, physical access is not as easy as domestic accounts.
  • It’s often available for businesses and individuals with higher incomes.

Should I open an international banking account?

The answer is rather cliche – it all depends on your situation. If you are doing business internationally, opening an offshore banking account might be a good decision. Whichever decision you make, be sure you do your homework in choosing the right offshore banks. You don’t want to be involved with banks related to illegal activities!