I’ve recently been asked to transfer money abroad (a donation) for a family member undertaking some charity work.
I was surprised to learn that there was no “Just Giving” (or similar) service to use to take payments and in fact I would have to use a bank transfer in order to donate. This provides a number of challenges:
1) Massive one off fees
I only wanted to send £20 – in the case of my bank there is a £9.50 one off charge to make the transfer.
3) Margin on currency exchange
Most banks will take a cut for transferring your currency into the local currency of the country you are sending money to.
2) Time to transfer
Transferring outside of the Eurozone can take upwards of 12 working days – a shocking amount of time by today’s standards.
With remittance payments at an all time high (India alone receives $70 billion a year) this is clearly a lucrative area for financial institutions.
Fortunately there are many International Foreign Currency Services that make sending money abroad much more efficient both in terms of cost and speed. In fact, services like World First don’t even charge a transfer fee if the amount is under £1,000.
I don’t send money abroad often but i’ll certainly investigate these services further as I can only see their popularity growing.
This situation raises the bigger question of how banks are being disrupted in almost every area. From crowdsourced loans, to cheaper direct debit providers to stock trading mobile apps like Robinhood, it really feels like the beginning of a shift in power to digital, customer focused organisations away from incumbent behemoths that have been slow to improve with the times.
It’s not always their fault. Banks are under heavy scrutiny and have so many legacy systems in place that innovation must feel like having a major surgery. It makes me wonder why more banks don’t just acquire disruptive companies as soon as they have momentum and run them as standalone units. Perhaps we’ll start to see more of this in the coming years as the “fintech” epoch begins pumping out billion-dollar companies.