The rise in global migration is accompanied by an equal rise in international money transfers, as cross-border remittances become the norm with folks sending money back home.
The Allied Market Research indicates that the value of the international money transfer (or global remittance) market is expected to reach $1.33 trillion by 2032, and with a 1.6% increase in 2023, amounting to $857 billion, that looks achievable.
As expected, different players in the field are trying to take a share of this market, and FinTech solutions and traditional banks are right at the top.
Consumers are sometimes stuck on who to go with: who offers seamless international money transfers? Who is more affordable? Who can you rely on for very quick transfers?
This article explores the various factors surrounding Fintech platforms and traditional banks in the international money transfer industry.
But before we dive in, what is international money transfer?
What Is International Money Transfer?
International money transfer simply refers to sending money across borders—from one country to another.
Traditionally, people relied on banks for their international money transfers through wire transfers, especially SWIFT.
Thanks to rapid technological advancements, the world has seen a substantial shift from traditional bank transfers to the more modern and accessible solutions that Fintech platforms offer.
Unlike traditional banking systems, Fintech platforms allow you to easily send money across the globe, even to places that traditional banks have yet to access.
Let’s take a look at these international money transfer options individually.
Traditional Banks in the Money Transfer Space
Wire transfer is the most common method of international transfers by traditional banks.
International wire transfers are often processed through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.
SWIFT transfers are generally considered costly due to the numerous fees attached, including:
- Outgoing transfer fees, sometimes between $25 and $50, charged by the sender’s bank.
- Incoming transfer fees, sometimes up to $30, charged by the recipient’s bank.
- Currency exchange fees, charged for converting the transfer into the recipient’s currency.
These fees vary greatly across banks. And if your SWIFT transfer encounters some error or doesn’t go through, your bank may charge you a fee to check the status of the transfer.
Generally, international money transfers through traditional banks are considerably reliable. However, the speed and accessibility need improving.
These issues are some of the problems that Fintech solutions set out to address, laying the foundation for a new era in the money transfer space.
Fintech Solutions for Money Transfers
Fintech platforms allow businesses and individuals to send money across borders instantly, reaching the depths of even the most rural areas effortlessly.
Top global money remittance services like BOSS Revolution offer multiple international money transfer options to ensure that you get money across to your loved ones wherever they reside.
They also keep the entire process digital to guarantee faster, cheaper, and seamless transfers.
The Financial Brand reports that about 53% of consumers surveyed rely on digital apps for global money transfers, with about 57% of banks losing about 5% of market share to their Fintech competitors.
It all makes sense, as the benefits offered by Fintech platforms are hard to ignore
- Lower fees: They offer lower fees that traditional banks don’t come close to.
- Speed: With a reliable remittance service provider, you can send money to anywhere in the world within minutes.
- User experience: No queues, commuting, or delays. You can complete your transfers conveniently through mobile apps and digital platforms.
- Global reach: With multiple options to guarantee accessibility, many fintech companies serve more countries, regions, and communities than most traditional banks ever would.
For most consumers, these benefits make choosing Fintech platforms a no-brainer.
However, let’s look at Fintech vs. traditional bank options side by side for a more informed comparison.
Fintech vs. Traditional Banks: A Comparison
We can agree that Fintech platforms are generally faster, more accessible, and more efficient than traditional banks.
Even so, it still makes sense to assess both across common factors for contextual pointers on why one could be better than the other.
Thus:
- Cost: Where banks, in the U.S. for instance, could charge as high as $50 for international money transfers, Fintech platforms offer much lower fees. Top Fintech services like BOSS Revolution offer a $0 fee on your first transfers from the US depending on the transfer destination.
- Speed: Fintech international money transfers take a few minutes to complete, while international bank transfers can take up to five working days.
- Convenience: Everything you need to do to send money abroad through a Fintech service provider is conveniently possible through your phone. With banks, you might have to visit a branch, and where online access exists, they are often not as straightforward as that of Fintech platforms.
- Security and trust: Understandably, traditional banks have a more bankable trust factor, especially banks with a long-established reputation. To meet this challenge, well-established Fintech platforms often use advanced encryptions and security measures to guarantee safe and secure transfers.
- Customer support: How often have you been told to visit a bank branch to resolve an issue? That’s never the case with Fintech services, which often offer 24/7 online support to resolve issues in real time.
Who Is Winning the Battle?
Fintech companies revolutionizing cross-border payments are shaping how businesses and remittances will be conducted in the coming years. Experts at Foley & Lardner highlight the growth in the Fintech industry as a clear indicator of its global influence.
For consumers, the faster transfers, lower fees, convenience, and digital transformations that come with Fintech companies make them the obvious winner in the Fintech vs. traditional bank debate.
However, traditional banks are not without their limits. If you are keen on transferring large amounts of money or processing B2B transfers, traditional banks are generally preferable.
Conclusion
Fintech companies are reshaping the international money transfer industry, eliminating the delays and high transaction costs associated with traditional bank transfers.
More so, they’re pushing traditional banks out of the international money transfer market with their more convenient service and are becoming the better option for consumers.
Still in limbo about what service to use for your international money transfers?
Take some time to compare your local bank’s wire transfer service with that of top international money transfer platforms.
Author: Sean Maguire
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See Also:
How Wise Platform is changing Global Money Movement | Disruption Banking
How Fintech Roadmaps Are Revolutionizing SME Financing in 2024 | Disruption Banking
