The value of cross-border payments to banks may lie beyond the transfer margin.

International remittances are normally assessed as a payments business. The usual measures are volumes, transfers per active customer, average ticket size, fee and foreign-exchange income, payout costs and exception rates. These are critical KPIs to track, but they should not obscure a bigger question: can an international payment help a bank establish or deepen the customer’s primary financial relationship?

For many migrants international money movement is a regular part of personal cash management. Salaries are earned in one country and family obligations are met in another. Students receive funds from parents overseas. Professionals relocating internationally may transfer savings in stages before establishing a stable domestic financial position.

A bank involved in those flows has an opportunity to do more than process the transfer. Whether it captures that opportunity depends on where the customer’s money originates, where it is held between transactions and which institution becomes the account used for everyday financial activity.

A large market, but not one undifferentiated business

The World Bank estimated that officially recorded remittances to low- and middle-income countries would reach about US$685 billion in 2024.

Sources  World Bank, estimate of 2024 remittance flows to LMICs

Pricing also varies considerably between corridors and delivery methods. World Bank Remittance Prices Worldwide reported a global average cost of approximately 6.36% for sending US$200 in its Q3 2025 reporting. Many digital customers pay much less. The figure averages every service the World Bank tracks, and account-to-account transfers on busy corridors often cost far less than cash-heavy routes. Banks themselves are the costliest channel in the World Bank’s data, averaging 14.99% in Q3 2025 against 4.72% for money transfer operators, which is a large part of why specialists have taken share.

Sources  World Bank, Remittance Prices Worldwide, Q3 2025

The G20 has targeted an average remittance cost of no more than 3% by 2030, with no corridor above 5%. In parallel, its targets address speed, access and transparency, including the disclosure of the complete cost and currency-conversion charges. The Financial Stability Board’s monitoring and subsequent BIS analysis have shown that progress for end users remains limited despite considerable work on standards and infrastructure.

Sources  Financial Stability Board, G20 targets for cross-border payments; BIS, Enhancing cross-border payments: state of play (2025)

This is why remittance strategy has to be set corridor by corridor. A bank with customers sending funds to India, the Philippines, Mexico and parts of Africa is dealing with materially different domestic rails, payout methods, recipient preferences, compliance costs and FX conditions. In some corridors the business is almost entirely digital account-to-account. In others, recipient cash access or mobile-wallet payout remains decisive.

The competitive position is similarly mixed. Specialists such as Wise and Remitly can have advantages in pricing, local payout integration, onboarding and transaction tracking. Banks have other assets: the funding account, a regulated customer relationship, domestic payment access and the ability to offer a wider range of financial services. Which side comes out ahead depends on the corridor and the customer.

A remittance funded from a bank account tells a different story

Payments Canada’s research shows how ordinary cross-border transfers have become in everyday banking. In a 2024 publication based on a consumer survey, one in five Canadians reported sending money internationally at least once in the previous twelve months using a Canadian bank account. The same research identified costs, FX uncertainty, transaction limits and delivery time among the principal customer concerns. It’s a measure of habits; the size of the Canadian market is a separate question.

Sources  Payments Canada, international payments survey (2024)

Consider two customers making the same monthly transfer overseas. One uses a specialist application funded by card while maintaining salary and savings with another bank. The second receives salary into the bank account used for the international transfer, pays bills and uses a bank-issued card. The bank might earn much the same fee from each. Only one of them is really a banking customer.

The second relationship potentially produces retained balances, card transactions, bill-payment activity and a clearer understanding of recurring obligations. It may be more resilient to competition because the transfer is part of a broader account relationship. The bank also has the opportunity, as the customer’s circumstances change, to offer appropriate lending, savings or investment services.

So I find it useful to separate owning the transfer from owning the funding relationship. One is a product question; the other is about customer strategy. Banks shouldn’t assume that someone who uses their international-payments feature sees them as their main bank. What matters is where regular inflows arrive and how much of the customer’s financial activity remains with the bank. The trend is running the other way: many customers now unbundle, keeping their salary with one provider and sending money with another. A bank has to make the bundled option worth choosing, mostly on price and transparency.

Different customers, different value propositions

For a migrant employee, salary receipt and outbound transfers are often closely linked. The bank that handles both can become the customer’s regular transaction account. The bank may not earn a large transfer fee, particularly on a highly competitive corridor, but it can benefit from sustained activity if the account becomes primary.

International students have a different starting point. Funds may arrive from abroad rather than leave the country. Parents could use a partner bank or remittance service to fund the student’s domestic account. The account then supports rent, tuition, utilities and ordinary spending. Some students will later enter the domestic workforce and develop broader banking needs. Others will leave the country. A bank must understand that difference before projecting customer lifetime value.

For freelance and platform workers, international transfers are relevant only for some customers, but regular payout flows offer a similar relationship opportunity. The account receiving earnings has a better chance of becoming useful for payments, savings allocation and eventually financial products adapted to irregular income. Cross-border payments become one feature of that wider cash-flow relationship: useful to some of these customers, irrelevant to others.

Where banks should partner rather than build

Some banks still treat remittance as if offering it meant owning a global payout network. That hasn’t been necessary for a while. A bank can own the customer interface and funding account while using multiple licensed providers for international payout. Those providers may deliver to bank accounts, cards, cash locations or mobile wallets, depending on the corridor.

In practice, that means orchestrating several providers instead of tying the bank to one. Routing can reflect delivered amount, beneficiary reach, success rates, settlement obligations, cut-off times and availability. The bank can retain control of customer disclosures, transaction history, complaints and compliance policies while the provider supplies local reach and settlement capacity. And product teams shouldn’t call a corridor real-time until funding and payout have both been tested end to end, including when things go wrong.

This architecture has commercial limits. Routing between providers does not eliminate correspondent banking requirements, liquidity needs, sanctions controls or differences in local regulation. The BIS has identified interoperability, legal differences and the coordination of domestic payment systems as continuing constraints on cross-border payments. Some problems cannot be solved solely through an additional API layer.

Sources  BIS, Cross-border payment technologies: innovations and challenges (2026)

Using several providers won’t always lower costs, either. Volume commitments, FX spreads, prefunding, guarantees, dispute management and reconciliation can offset gains from competitive pricing. The business case must be built at corridor level with overall context rather than on a headline tariff.

Customer economics must be measured separately from payment economics

If remittance is to support banking acquisition, it needs two P&Ls in the analysis. One measures the international transfer operation: revenue, partner charges, compliance expense, losses, treasury requirements and support. The other measures incremental relationship value attributable to the service.

The second measure should include the proportion of users who establish primary salary accounts, retained deposit balances, card and bill-payment activity, tenure, net interest or fee contribution, and subsequent take-up of suitable products. It should also deduct acquisition incentives, servicing costs, fraud losses and the probability that the customer would have joined the bank without the remittance offering.

The real question is what it costs to win and keep a customer with the service, compared with what it costs without it. Where a cheaper transfer does not increase primacy or retention, the subsidy may simply transfer value to customers who were already going to transact.

Banks also need to avoid confusing frequency with loyalty. A customer may send money every month but move the entire flow away when a competitor offers a better FX rate. Lasting relationship value is more likely when international transfers are integrated into everyday banking: accessible balances, beneficiary management, predictable delivery, transparent pricing and satisfactory handling of returns and exceptions.

A more realistic place for remittance in banking strategy

Remittances are not uniformly attractive to banks. Some digital specialists may continue to outperform them on price and payout execution in specific corridors. In other cases, a bank may have sufficient account depth and distribution to make cross-border payments a profitable service in their own right.

The mistake would be to evaluate a remittance proposition only on a transaction-level margin when its intended purpose is customer acquisition, or conversely to justify a weak payments business with an untested lifetime-value assumption. Each needs its own evidence.

For banks seeking relationships with internationally mobile customers, the more important question is where international flows fit into the customer’s wider financial activity. If the bank can receive income or overseas funding, manage day-to-day payments and provide competitive international transfers from one relationship, the customer has a reason to use the account regularly. That is where a deeper banking relationship can start.

The harder part is reaching these customers early. By the time most start looking for a bank, they have already dealt with an employer, a university, a relocation firm or a digital platform. That’s where distribution partnerships come in, and it’s the subject of the next post.

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