Managing Expat Personal Finances From a Distance

With international mobility on the rise, more banks are offering specialized services tohelp inpatriates and expatriates manage their personal finances.

Managing personal finances has never been an easy job — balancing a checkbook, paying bills, transferring funds between accounts, maintaining investments. Now, imagine doing all this while you’re on a three-year assignment in Japan and you still call the US “home.”

“There are many special considerations associated with conducting your personal finances while living abroad,” says Mary A. Skrabut, assistant vice president in the International Private Banking & Investments area at Michigan-based NBD Bank.

“Where, for example, do you have your salary sent and how do you pay bills in your home country? If you sell your home, where do you invest the money? If you rent it out, who accepts the rent payments? If you’re an expatriate living abroad, how do you maintain a good credit rating back in the States? If you’re an inpatriate on assignment in the US, how do you obtain credit when you have no credit history here?”

In recent years, a number of banks have begun to offer specialized services to help expatriates and inpatriates address these issues. Skrabut says NBD’s International Private Banking & Investments business started as a value-added service to the bank’s corporate customers. But as the global economy has grown, so has the need for the service.

“Expatriates and inpatriates are a very service-intensive group,” says Skrabut. “To accomodate their changing financial needs, banks are developing more personalized international services.” NBD, for example, assigns each customer a private banker who brings the resources of the entire bank together in one place. The private bankers currently handle both routine and complex transactions for expatriates in 54 countries. They also serve inpatriates who have made Metropolitan Detroit their temporary home.

Managing finances by phone, fax and cable

Expatriates often use many of same banking products while living abroad that they use at home, including a checking account, credit cards, ATM cards and debit cards. What is uncommon is how these products are delivered.

“We work with most of our expatriate customers by phone and fax machine,” says Skrabut. “We talk with them once or twice a month, giving them account balances, cabling funds from their US account to their foreign account or, occasionally, helping them with special situations or emergencies, such as paying the college tuition bill of a son or daughter back in the US. Many of the services provided to expatriates are done on an exception basis because of their unique situations.”

And expatriates do find themselves in some very unique situations. Skrabut tells the story of one expatriate customer who was trapped in Iraq for eight months during the Gulf War. “An Iraqi family hid this individual and eventually helped him get out of the country,” she says. “While he was trapped, we distributed funds to his wife, who had stayed behind in the States. She didn’t have access to the account where his salary was being deposited, and she had no other funds to live on.”

NBD private bankers help expatriate customers set up accounts and establish direct deposit of their salaries to their US checking accounts. “Often, customers will split this deposit between their US accounts and accounts at a foreign bank in their host countries,” notes Skrabut. If requested, the bank will also mail account statements overseas to its expatriate customers.

International banking services are a particular help to homeowning transferees. Most expatriates going on a long-term assignment will sell their homes before they leave the country. If they wish, NBD helps them invest the proceeds. If they opt to rent out their homes instead, the bank will accept the rent payments.

Perhaps of greatest concern to individuals on foreign assignment is the ability to pay their US bills on time. To respond to this need, many banks now offer bill payment services. “We make timely payments of credit card bills and utility bills on rented homes and vacation homes to help expatriates preserve their good credit ratings,” says Skrabut. Expatriates take advantage of the bank’s foreign currency exchange, and its availability of foreign travelers checks, as well.

When the US is the foreign country

The growth of the global economy has also seen an increase in the number of foreign nationals coming into the US on assignment. These individuals soon find that banking here presents its own set of problems, not the least of which is how the system works. NBD’s banking service to inpatriates begins with an education on local banking services and practices. During an orientation session, private bankers introduce the bank’s products to newly arrived inpatriates, help them set up accounts, and distribute welcome packages with maps, magazines and information about the region. Because nearly 70% of the bank’s inpatriate customers come from Japan, the bank has a Japanese translator on staff and provides a product booklet in Japanese.

Another common problem for foreign nationals in the US is the problem of obtaining credit. Stores in many locations require a major credit card even if you are just writing a check. But without a credit history, getting that card can be difficult. Along with its savings and checking accounts, ATM cards and certificates of deposit, NBD also provides credit products to new inpatriate customers. Margaret Mioduszewski, an assistant vice president in the International Private Banking & Investments area, says, “Inpatriate customers would normally be denied credit because they lack credit histories in the United States. We can offer credit cards, auto loans and mortgages to inpatriates because of the long-standing corporate relationships we have with their employers. Most of our inpatriate customers use these services.”

Inpatriates also take advantage of the bank’s investment services, including its mutual funds. “Some inpatriates continue to deposit money into CDs and other investments at the bank even after they’ve returned home,” says Mioduszewski, “because they believe the US is a stable place to leave their money.”

A benefit for companies and their transferees

In the long-run, specialized banking services benefit both companies and their transferees. NBD client Kathleen M. Kosmatka, a partner in charge of International Assignment Services at Deloitte & Touche in Detroit, says international banking services alleviate some of the administrative burden that would normally be on the expatriates and their companies. “These individuals are not calling the corporation when a personal financial need or problem arises, they’re calling NBD, and their requests are generally being handled more efficiently. This makes the expatriates happier, and lets them focus more on their jobs.”