Transferring money overseas has always been a big topic in the UK. There are 2-3m British expats in countries like Spain, France, USA and Australia, and they need to transfer money from their UK accounts or vice versa.
There are also more than 8m foreigners who reside in the UK and need to move their money abroad.
Take the unique business landscape with London being the global capital of trade (even in spite of Brexit), and you get an undeniable need to transfer funds in and out of the UK.
The problem with transferring money abroad, whether as an individual or a corporate client, is that you are likely to pay a lot in order to facilitate that transfer.
UK banks charge anywhere between £10-£25 per transfer, but worse than that, the rate will embed a hidden fee markup of anywhere between 1.5%-5% of the total value of the transfer.
Perhaps because there’s such a great necessity for international money transfers in the UK, or because of the financially-savvy nature of Brits, there is also a huge demand for knowledge.
Brits are becoming increasingly aware of the fact they are paying a lot for each money transfer and want to find alternatives to banks.
How would you explain that 90% of the people who search for “transfer money abroad” are Brits based on data from Google Trends?
A lot of the Brits still don’t realise how much they pay for money transfers, but those who need to use the service frequently or to transfer large amounts of money overseas, are starting to find cheaper, better, alternatives.
One example of a growing company is Transferwise, already considered to be a decacorn.
Others companies that are more geared towards high-end transfers and small business is World First, which was selected as the top company for 2015, 2016 and 2017 on MoneyTransferComparison’s best company awards and boasts more than £6bn in transfers each year.
These companies are profitable but still manage to give much better rates to clients than banks, because they are more agile and lean businesses with much less regulation and bureaucracy overhead.
Unlike banks, most of these companies are private companies with anywhere between 100-500 staff.
If they facilitate transfers for £10bn annually with a markup of 0.5% they make £50bn a year.
Based on these statistics from GlassDoor UK, they are only paying approximately an annual salary of £40,000 on average, leaving them with a half of what they made to pay for their other expenses and collect dividends, while keeping clients happy.
Transferring money abroad for cheap is more feasible than ever before, and banks better look out before they lose this business altogether.
As awareness grows, fewer people will be keen to be willing to pay much more than they should on a bank transfer abroad.
