The fintech industry has exploded in recent years, slowly growing into niches once dominated by big finance. In the international money transfer market high street banks and wire transfer companies like Western Union are starting to find themselves undercut and outperformed by innovative startups. But what is it that gives these fledgling companies their edge?
Because they’re based online, tech-driven money transfer services simply don’t have the same operating costs as established rivals like banks. The rent, staffing costs and bills associated with maintaining physical branches are wiped out, delivering major savings that can be passed on to customers.
Traditional financial institutions have spent a lot of time and money developing, building and maintaining transaction systems. Their businesses are rooted in them – digital-first startups aren’t. That makes this an area where they can immediately reduce costs, for themselves and you.
Peer-to-peer international money transfer is one example of this. Rather than converting currency then sending it abroad, peer-to-peer services work by matching people making transfers around the world. This means your pounds, dollars or euros never need to go through the foreign exchange system, shortcutting a key cost for conventional providers.
It’s not just customers who recognise what tech-driven startups have to offer – investors and governments are also supporting their growth. In the UK alone, there’s the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), which offer tax relief to those helping build up these companies. Government-sponsored bodies like Innovative Finance similarly support them by developing a strong fintech community, as well as by accelerating funding.
This all adds up to a business environment that favours innovative companies, enabling them to deliver money-saving opportunities for clients across the globe.
In the digital age it’s not difficult to find a cheaper provider, whether you’re sending money overseas or buying a new phone contract. It can, however, be tricky to see which of those cheaper providers is right for you. In certain industries, that lack of clarity can let companies – even seemingly inexpensive ones – get away with overcharging.
In the international money transfer sector, being able to compare services is a significant advantage. Not only does it make it easier to find the right deal for you, it also means providers have to work harder to offer better value than their competitors. That’s where we come in. Our comprehensive international money transfer comparison tool puts established banks next to fintech startups, so you can see exactly what you’ll get from each, ranging from the speed of the transfer to how much you’ll get for your money.