Offshore Banking Updated:
If you need to send payments abroad, where's your first port of call? Your bank? Probably not, as research from FXcompared Intelligence has revealed that over half of consumers prefer international money transfer services to their bank for such transactions.
The survey found that 26% of respondents had transferred money internationally at least once in 2014, with the majority (69%) transferring small amounts, typically less than £500, for purposes such as holidays. Perhaps unsurprisingly, 77% of those who transferred amounts above £500 did so multiple times a year, with one-time transfers typically being for small purchases.
Of those who had transferred money, just 42% used their bank – meaning 58% used alternate means. Most of the those (28%) used online-only money transfer providers, while 13% used storefront transfer services (such as Western Union or high street currency exchange providers) and the same amount used a specialist broker to send cash abroad, with the remainder (4%) using some other means.
Many consumers are savvy when it comes to making transfers, too, as although 56% would make ad-hoc transfers based purely on need, 31% would wait for the best exchange price. This shows that many are switched on when it comes to exchange rates, which perhaps explains why banks are losing favour.
Indeed, the figures went on to reveal that price was the most important factor when deciding the best mode for international money transfer: transfer fees rated the highest with 63% citing them as an above-average concern, closely followed by the rate of exchange (62%). Credibility of the service was also important (59%), as was the time the transfer takes (59%).
Other factors proved less important – only 40% of respondents rated the brand name of the service provider as of above-average importance, followed by advice on exchange rate movements (35%) and a personal relationship (31%). Diverse product offerings mattered most to just 25% of respondents. Perhaps unsurprisingly, age also has a lot to do with transfer preference, with 53% of those who used banks being over the age of 45, and 65% of those who used online transfer services being below 45.
So, just why aren't more people favouring banks? Well, given that price is the determining factor, it's little wonder – 31% felt that banks charge higher fees than online transfer sites, an assumption that's generally not far off. But, there's more still to be done to encourage ardent users of banks to consider alternatives for their money transfer needs, said Daniel Webber, author of the report.
"Many who readily use banks for international transfers desire service attributes that banks don't provide or are paying for service attributes that they don't consider a priority," he said. "A sizeable proportion of the UK population still trust their banks, and the question remains how many of these consumers the new players can win over."
Nonetheless, the "disruption of the UK international money transfer sector is now firmly under way," he added. "In a sector that was once dominated by banks and Western Union, there are now two other significant groups of players – the currency brokers and the online peer-to-peer players."
So, is it time you got in on the action? Opting for specialist brokers will often be far preferable to heading to your bank, even for small transfer amounts, because the costs involved will generally be lower. Find out more about international money transfer here, and compare currency exchange to see if you can save on your next transfer.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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