In today’s rapidly evolving global economy, digital banks were born as one of the flexible and efficient financial management tools for offshore companies. In this guide, LNT Consulting will walk you through how digital banks work, highlight key differences between it and traditional banks, explore top banking options and provide a step by step guide to open an offshore corporate bank account.
What is a digital bank?
Digital banks are licensed payment institutions that partner with local traditional banks in different countries to provide the payment service for international clients. They provide a wide range of products and services to manage client’s finances seamlessly across borders such as Global Account, FX and Transfer, Debit cards, Payment Link and software integration.
Is a digital bank safe? Absolutely. To ensure that your money is secure, digital banks must follow a certain banking KYC process and they hold your money in leading global financial institutions. Rest assured that your funds are safeguarded in line with the local jurisdictions where digital banks operate.
Many of our clients are eager to understand the key distinctions between traditional and digital banks. Let’s find out:
| Key Features | Digital banks | Traditional banks |
| Physical branches | No | Yes |
| Banking fees | Lower than physical banks | Higher than digital banks |
| KYC compliance process | Online, and Simple | Stricter, face to face interview and physical presence is still need by some banks |
| ATM network | No | Yes |
| Customer service | Online support | Personalized support |
| Financial products | Limitation | Comprehensive |
| Applicants | Newly incorporated offshore company | Local or offshore company that have good financial strengths and history |
| Processing time | 7-10 business days | At least 1-2 months |
Best digital banking options for offshore company
There are several factors that should be taken into consideration once you open an offshore bank account. It’s crucial to know about the onboarding process, privacy, money secure, deposit requirements and customer experiences. Upon working with a lot of digital banks for many of years, we list out top reliable neo banks that you can consider below:
Airwallex
Airwallex is licensed and regulated in more than 10 countries: Australia, Canada, China, Hong Kong, Lithuania, Malaysia, New Zealand, Singapore, The Netherlands, United Kingdom, and United States. You can refer to their license number in each jurisdiction via this article: https://help.airwallex.com/hc/en-gb/articles/900001757106-How-is-Airwallex-licensed-and-regulated
They offer several financial products that are benefits for offshore companies:
- Open multi-currency local accounts without visiting a bank branch/office.
- Collect and make payment internationally, with zero transfer fees and market leading FX rates to 60+ places, where Airwallex has developed a local clearance system with banks.
- Offer virtual and physical visa cards with no international transaction costs and cardholder fees, get unlimited 1% cashback for all local and overseas card spend.
- Convert at bank beating FX rates to make payments globally and save on international transaction costs.
- Offer online payment gateway to clients (Visa/Mastercard/UnionPay/Alipay/ WeChat Pay/ Paypal, etc).
Payoneer
Payoneer is licensed and regulated in different jurisdictions including the United States, Europe, Canada, United Kingdom, Hong Kong, Japan, Singapore and India. See this link for more details: https://www.payoneer.com/about/security-center/
Below is the key advantages of Payoneer, compared with other players:
- They support both personal and business bank account opening, in more than 200 countries and territories. And customers can transfer funds between accounts for operational usage.
- Virtual and physical cards can be issued for both individual and business accounts, have card cashback for high spenders.
- Customized pricing for high-value customers.
- Request payment via online payment link, get paid from debit or credit cards.
- Low convert currencies hassle-free.
- Enjoy dedicated customer support in 24/7.
- Have Payoneer Checkout – A payment gateway solution that allows you to accept credit cards on your online stores with the lowest fee of 3.3%, negotiable for high-value merchants.
Wise
Wise is the leading global fintech that was launched in 2011, is regulated and licensed in more than 10 jurisdictions including the United Kingdom, Australia, EEA, Brazil, Canada, Hong Kong, India, Indonesia, Israel, Japan, Malaysia, New Zealand, The Philippines, Singapore and the United States. You can check how Wise is regulated in each territory via this article: https://wise.com/help/articles/2932693/how-is-wise-regulated-in-each-countryregion
Wise offers digital banking service for individuals and businesses, also known for its transparency, low fees, and efficient service. See more below:
- Open a multi-currency account, hold and manage balances in more than 50 currencies.
- Support debit cards to use overseas without foreign currency transaction fees, get 0.5% cashback.
- Easy to connect with accounting software such as Xero, Quick books, and more.
- Transparent fees, disclosed upfront to clients.
- Fast payment processing time, normally instant or arrive in 24 hours.
- Real mid market exchange rate, no hidden fee and no extra costs.
- User-friendly and clear platform, easy to use and follow, from opening an account to finalize the transfer process.
How to open a corporate account with digital banks?
Although the requirements to open a business account with digital banks are faster and more convenient than traditional banks, it’s still required to adhere to strict regulations and due diligence processes that are designed to prevent fraudulent activities. In this section, let us break down the banking process, highlight key points that you should pay attention to, and ensure a smooth procedure with the highest success rate.
Step 1: Research, compare banking options and select the best one
Choosing the best banking options that match your business needs is not easy, it should be taken under consideration by various factors such as bank’s fee, international transfer, transaction limited, borderless cards, integration with accounting software, APIs and customer support. It’s necessary to compare key features between different banks to choose the best-suited option. And don’t forget to check the banking license, how they are regulated to ensure that your money is safe and insured.
Step 2: Documents and information preparation
You’ll need to provide the following documents during the online banking process:
– Personal documents:
- Copy of passports of all directors and shareholders (>25% share capital).
- Copy of address proofs of all directors and shareholders (>25% share capital).
- Contact information (email and phone number) of the authorized signatory.
– Corporate documents:
- Certificate of Incorporation or Certificate of Formation.
- Article of Association or Operating Agreement.
- Confirmation on the company structure/ Certificate of Incumbency.
– Business profile and financial projections:
- Company website, LinkedIn profile or other social media platforms where you use to attract potential customers.
- Information of suppliers and potential customers, along with the business proofs such as invoice, contract, agreement or at least the email communication on service provided.
- Financial projection (expected transaction per month, incomes, expenses, operating countries, currencies needed, business cards, percentage of local and international transfer).
Creating a documents checklist is necessary to ensure the smooth application process.
Step 3: Submit the application and start the onboarding process
Kindly go to the website of the chosen banking, look for option “sign in” or “get started”. Then, complete all requested information in as much detail as possible. Basically, you’ll need to provide the below information
- Legal company name
- Company type
- Registered address
- Operating address
- Business activity
- Company website
- Target jurisdictions
- Monthly incoming and outgoing funds
- Personal identity information of director and shareholder (>25% share capital)
Step 4: Provide supporting documents for verification steps
After reviewing the application initially, the bank’s compliance officers may ask for additional documents and information to verify the business, including but not limited to:
- Any invoice, contract, agreement between the business with their supplier or customer
- Source of funds declaration – Proof of business or bank statement is normally requested
- Background information of the business owner, the Resume (CV) with detailed job experiences is sufficient.
- Verify the personal identity of company’s owners via the bank’s app
Step 5: Activate the account and start banking
Upon approval, you’ll receive a notification via email and phone number, confirming that your account is activated and ready to use. The bank will assign the account manager to guide you on how to use their banks, download the apps, receive and make payment locally and internationally, create the business cards or get started with the payment link.
In summary, digital banking solutions present an essential opportunity for offshore companies to manage their financial activities more effectively, providing several benefits such as cost efficiency, flexibility and customization, innovation and ease of use with online processes.
However, navigating the complexities of digital banking regulations, compliance requirements, and documentation can be challenging, especially for newly incorporated companies. By choosing a knowledgeable partner like LNT Consulting, clients can ensure a seamless, efficient process, minimizing delays and avoiding potential risks.
Disclaimer: LNT Consulting aims to provide up-to-date and accurate information on this website. However, this information is intended for reference only and should not replace professional legal advice. For guidance on your specific case, please contact LNT’s customer service.
