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Saving money on international transfers by shunning the banks
| Published: | 26 Jul at 6 PM |
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Tagged: Money Transfer, Currency, UK, Germany, Money, Working Abroad, Exchange Rates, England, Currency Transfers
The 21st century is set to be the century of the expat, with more and more millennials opting to leave their home countries in order to further their international careers.
As the number of expats working overseas at all levels grows, so do the amounts transferred between currencies and countries. The amount of money being sent across national borders is growing year by year as more and more people realise the world really is their oyster. Until recently, cross-border banking was a chore as well as a necessity, but traditional banks as well as forex companies are having to adjust to take advantage of the rising trend. Since the year 2000, the numbers of people living outside their countries of birth has soared by 41 per cent, with cross-border financial transactions often struggling to keep up with demand. By 2022, it’s forecast these transactions will have increased by around 33 per cent to a total sum of £218 trillion each year.
Expatriates living and working overseas send money home for several reasons, with maintaining their families back in the home country the most pressing. Investment is another reason, and the processes nowadays are faster, cheaper and easier than in the past. Traditional banks offer services to facilitate money transfers using secure systems including Swift, and expats can now open accounts tailored to their needs as regards forex transactions. However, some banks, including Barclays in the UK and its Barclaycard, are cracking down and arbitrarily closing expat accounts not linked to a UK residential address, thus causing huge problems for customers based overseas.
However, there are enough expat-friendly banks to take on disenchanted Barclays’ customers, with HSBC, BNP Paribas, Citibank, Deutsche Bank and the Bank of Montreal just five of many, with offshore banks yet another answer. Unfortunately, the major problem with using a bank for cross-border currency transfers is the cost, usually referred to as ‘service fees’, ‘transaction fees’ of ‘exchange rate fees’. In the past, banks have been heavily criticised for their lack of transparency about such fees, although a few are now attempting to demystify their charges. The second problem with using a traditional bank is the time it takes to make a basic transfer, with several days the norm.
One new kid on the money transfer block is fintech, a term used to describe financial technology companies offering up-to-the-minute cross-border transfers via tablets and smartphones. The services are faster and less expensive and are in direct competition with traditional banks. Started as business services, fintech transfers are now available to individuals and are being welcomed as a viable alternative to traditional banking. Services vary between companies, with the majority sticking to loans and international money transfers, but a few are actively setting up as rivals to banks and providing borderless accounts with mobile banking, bill payment processes and credit cards. Perhaps the best-known to date is TransferWise, with its cross border transfers costing up to eight times less than the banks.
As the number of expats working overseas at all levels grows, so do the amounts transferred between currencies and countries. The amount of money being sent across national borders is growing year by year as more and more people realise the world really is their oyster. Until recently, cross-border banking was a chore as well as a necessity, but traditional banks as well as forex companies are having to adjust to take advantage of the rising trend. Since the year 2000, the numbers of people living outside their countries of birth has soared by 41 per cent, with cross-border financial transactions often struggling to keep up with demand. By 2022, it’s forecast these transactions will have increased by around 33 per cent to a total sum of £218 trillion each year.
Expatriates living and working overseas send money home for several reasons, with maintaining their families back in the home country the most pressing. Investment is another reason, and the processes nowadays are faster, cheaper and easier than in the past. Traditional banks offer services to facilitate money transfers using secure systems including Swift, and expats can now open accounts tailored to their needs as regards forex transactions. However, some banks, including Barclays in the UK and its Barclaycard, are cracking down and arbitrarily closing expat accounts not linked to a UK residential address, thus causing huge problems for customers based overseas.
However, there are enough expat-friendly banks to take on disenchanted Barclays’ customers, with HSBC, BNP Paribas, Citibank, Deutsche Bank and the Bank of Montreal just five of many, with offshore banks yet another answer. Unfortunately, the major problem with using a bank for cross-border currency transfers is the cost, usually referred to as ‘service fees’, ‘transaction fees’ of ‘exchange rate fees’. In the past, banks have been heavily criticised for their lack of transparency about such fees, although a few are now attempting to demystify their charges. The second problem with using a traditional bank is the time it takes to make a basic transfer, with several days the norm.
One new kid on the money transfer block is fintech, a term used to describe financial technology companies offering up-to-the-minute cross-border transfers via tablets and smartphones. The services are faster and less expensive and are in direct competition with traditional banks. Started as business services, fintech transfers are now available to individuals and are being welcomed as a viable alternative to traditional banking. Services vary between companies, with the majority sticking to loans and international money transfers, but a few are actively setting up as rivals to banks and providing borderless accounts with mobile banking, bill payment processes and credit cards. Perhaps the best-known to date is TransferWise, with its cross border transfers costing up to eight times less than the banks.
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