It’s back to school for banks serving higher ed
Colleges and universities need banks’ help with international receivables for study-abroad students.
Back to school — it’s a time for anticipation, excitement, fresh starts and new opportunities. This is especially true at colleges and universities this fall as they welcome students back on campus after a tumultuous year and a half. For many schools, this includes hundreds of thousands of international students who were grounded for the last school year due to COVID-19.
One of the pandemic’s greatest areas of disruption in higher education was international student enrollment. COVID concerns, travel restrictions and the uncertainty of what campus life would look like all severely limited study abroad plans. But that has not diminished the interest of students wanting to study internationally in 2021 and 2022.
That was one of the big takeaways from an independent report commissioned by Flywire about the state of global education in a “post-pandemic” world. The study polled more than 1,000 college and university students from Australia, Canada, China, the United Kingdom and the United States to better understand their attitudes about higher education in the wake of the pandemic.
Nearly two-thirds of the students surveyed said they were planning to integrate studying abroad into their higher education experience. New cultural experiences and the academic reputation of institutions abroad were cited as some of the key reasons for pursuing international education.
China was by far the leader in demand for global education experiences – three-quarters of the students surveyed said that studying abroad was or would be a part of their higher education experience, despite the ongoing pandemic. The U.K. and the U.S. were not far behind with 65% and 64%, respectively, while slightly more than half of Australian and Canadian students had plans to study overseas.
Why am I sharing this with people in the banking world? Because these international students make a lot of large-sum payments to their respective schools – and those payments are highly problematic for the schools and their finance teams.
Traditional international wire and bank transfers can be slow, costly and difficult to reconcile for both the schools and their students. Short payments, manual errors and a lack of transparency increase operational costs for the schools and frustrate students, who in many cases are in a new country for the first time. Schools processing significant numbers of international tuition payments are also likely paying more than they should for those transactions due to hidden fees and unpredictability around foreign exchange. The same goes for the fees paid by the students and their families.
Certain countries also restrict the amounts and nature of payments that can be made to overseas recipients and there are important compliance and anti-money-laundering considerations that need to be taken into consideration. It all adds up to big problem for your higher education clients.
Banking’s role in getting international students back to school
Many schools look to their banks as a trusted advisor and valued resource to help them navigate difficult payment and receivables challenges. And for those schools serving a large number of international students, this is one of those challenges they need their bank’s help with.
Banks are perfectly positioned to assist them. By offering a comprehensive receivables service with local currency transactions for payer and receiver — complete with 24/7/365 multi-language customer support — banks have an opportunity to elevate their service levels and increase their stickiness with the schools.
This demands more than “a way to accept payments” for the schools. It requires the ability to address the needs of both the schools (automated payment reconciliation) and the student payer (easy local digital payment methods). This eliminates many of the school’s operational challenges related to international payments, while also optimizing the payment experience for students and their families. And the banks themselves don’t have the operational headaches or the lower margins synonymous with correspondent banking.
And not least important, these services can also create profitable new revenue streams for banks.
Sharon Butler is EVP, global education, at Flywire.