How do EMIs get to open local bank accounts in each jurisdiction for bordeless accounts?

[BerlusconiSchmidt]

How do smaller EMIs get hold on multiple local IBANs and bank accounts in all different countries?

For example even some smaller EMIs provide local bank accounts in different currencies like EUR,GBP, AUD, SGD, CHF, etc...

How can these EMIs open bank accounts in real banks in all these jurisdictions? I doubt they have a physical presence in each
and every single of these countries to show proof of presence in order to be able to set up a bank account.

Maybe, Wise and Revolut do, since they are quite large, but what about all the others?

They usually operate under one company name, so how can the local banks let them open an account in a country where they don't have legal and fiscal presence?

 

[fintechwizard]

They don't open bank accounts in each jurisdiction, those are "virtual ibans" which are not emitted by a local bank but by some other financial institutions which specialize in BaaS (Banking As a Service) for licensed entities

 

[ilke]

How do smaller EMIs get hold on multiple local IBANs and bank accounts in all different countries?

For example even some smaller EMIs provide local bank accounts in different currencies like EUR,GBP, AUD, SGD, CHF, etc...

How can these EMIs open bank accounts in real banks in all these jurisdictions? I doubt they have a physical presence in each
and every single of these countries to show proof of presence in order to be able to set up a bank account.

Maybe, Wise and Revolut do, since they are quite large, but what about all the others?

They usually operate under one company name, so how can the local banks let them open an account in a country where they don't have legal and fiscal presence?

There is no requirement (in most countries) to necessarily have a physical presence to open a bank account there.

Most of the time, the EMIs partner with a local bank or EMI or EMI-equivalent in that jurisdiction for the purpose of issuing vIBANs in your name, and then reconcile the funds to their pooled safeguarding account(s).

 

[Sols]

How can these EMIs open bank accounts in real banks in all these jurisdictions? I doubt they have a physical presence in each
and every single of these countries to show proof of presence in order to be able to set up a bank account.

By applying for accounts and being attractive prospects.

Maybe, Wise and Revolut do, since they are quite large, but what about all the others?

Most of them work with CurrencyCloud and similar platforms. As they grow, they might establish their own relationships for certain currencies, while still using CurrencyCloud for less popular currencies.

They usually operate under one company name, so how can the local banks let them open an account in a country where they don't have legal and fiscal presence?

Having a legal and/or fiscal presence is rarely required to open an account. It can make things easier, but it's usually not required.

 

[BerlusconiSchmidt]

Thanks for your answers.

I have been to over 10 countries in the past 3 months to try and open a business bank account in several European and Asian countries and the bank accounts were pretty much denied for the sole reason explained: you need to have some physical presence here in the country.

An Austrian banker specifically told me she wanted an ID of an Austrian employee in order to set up a bank account, even tho I am a EU citizen and can permanently reside in Austria if I wanted to.

So what's the trick these EMIs use to set up bank accounts in all these jurisdictions? I doubt they have employees in each of their currencies related countries.

 

[Sols]

I have been to over 10 countries in the past 3 months to try and open a business bank account in several European and Asian countries and the bank accounts were pretty much denied for the sole reason explained: you need to have some physical presence here in the country.

The banks are just using that line because they're not interested in you. Having a local presence is a soft requirement in most cases. It's a requirement that can be disregarded if other factors are favorable.

An Austrian banker specifically told me she wanted an ID of an Austrian employee in order to set up a bank account, even tho I am a EU citizen and can permanently reside in Austria if I wanted to.

Same reason as above. They just didn't see the value in bringing you in.

So what's the trick these EMIs use to set up bank accounts in all these jurisdictions? I doubt they have employees in each of their currencies related countries.

The trick they use is that they are attractive prospects.

Applicant #1: some rando showing up at the bank wanting a local bank account without any meaningful connection to the local economy. Revenue potential is low, risk is high.

Applicant #2: a foreign licensed financial institution of good repute interested in opening a bank account to have millions if not billions flowing through the account, with revenue potential on transactions, overnight interest, and currency exchange.

The bank tells Applicant #1 you must have a local presence. The bank invites Applicant #2 to sit down with the CEO of the bank for a discussion, and asks whether the applicant wants tea or coffee.

Another trick they use is being in the industry and knowing people. They don't walk into a branch of the bank or send an email to some generic contact inbox. Some of these companies have people on their payroll whose entire job is using their professional contact network to find and maintain banking relationships.

 

[ilke]

Thanks for your answers.

I have been to over 10 countries in the past 3 months to try and open a business bank account in several European and Asian countries and the bank accounts were pretty much denied for the sole reason explained: you need to have some physical presence here in the country.

An Austrian banker specifically told me she wanted an ID of an Austrian employee in order to set up a bank account, even tho I am a EU citizen and can permanently reside in Austria if I wanted to.

So what's the trick these EMIs use to set up bank accounts in all these jurisdictions? I doubt they have employees in each of their currencies related countries.

Such a response from the banks is definitely unfortunate, but I would 100% say the same as @Sols.

We can't compare apples and oranges and treat a licensed financial institution the same way as one normal transactional business. The scale, type of cooperation, and revenue potential for the bank are all different.

You have no reason to have an account in that specific country (most likely) because:
- your company is registered elsewhere and you do not have a registered presence there
- you are applying in a Eurozone country, which means there is hardly any difference to what banks in other countries could provide
- you may be running the company from there, triggering PE
- you probably do not have any major links to that jurisdiction.

That's all risky to the bank - but that doesn't mean it's fixed. If you're going to have 7-figure transactions, trade forex with the bank at a large scale, etc. - it always makes the relationship more valuable. After all, banks are also corporations that want to make money.