Where to Next in the Evolving Story of International Money Transfers?


By Harry Scherzer, CEO, FutureForex 

Today, we live in a world of instant gratification. Everything, from entertainment to shopping, is available on-demand and nearly instantaneously. International money transfers are, however, one exception. Despite massive technological advances in the past few decades, they can still take days or even weeks to complete through traditional banks. 

Certainly, things have improved from even a few years ago. However, the fact that these delays still exist demonstrates that the sector isn’t anywhere near the end of its long evolutionary journey. As long as there are delays, customer frustrations, and cost uncertainty, there will always be room for further evolution. 

To get a sense of what that future might look like, it’s important to understand the historical evolution of international money transfers. What this evolution demonstrates is that the need for international money transfers will always exist, but that technology will make them faster, more secure, and increasingly efficient. 

A millennia-long journey  

International money transfers have existed almost as long as people have exchanged goods and services across borders. Ancient Jewish texts and Egyptian papyri refer to money changers, who exchanged currencies in return for a fee or commission and who were active before the Christian Era (BCE). By the 4th Century AD, meanwhile, the Byzantine government had a monopoly on currency exchange within its borders. 

By the 15th Century, bankers were the dominant players in the currency exchange space. Venice, then the world’s banking capital, led the way with the infamous Medici family opening up banks in other markets to facilitate currency exchanges.         

By the mid-19th Century, businesses had begun trading currencies and by 1880 the setting of the gold standard had birthed the modern foreign exchange system. For much of the next Century, exchange rates were largely pegged at fixed rates, with trading only allowed within a one or two percent range of the pegged rate. 

By the 1970s, the free-floating currency system we’re all familiar with today was in place. That decade also saw Reuters introduce computer monitors, replacing the telephones and telex used previously for trading quotes. That brought previously unprecedented efficiency to the banks and wire services that facilitated most international money transfers. 

With the rise of the internet and then high-speed broadband making things even more efficient, it seemed that instant international payments would soon be the norm. But that hasn’t been the case. 

The rise of fintech 

Small businesses and individuals, in particular, will know that there are still frequent delays in the international money transfer process. That has less to do with the speed at which money can be moved around the world (within fractions of a second) and more to do with how many processes within these transfers are still run manually. 

This is a particularly big issue with South African banks, which often require customers to fill in manual forms related to any transactions. Banks also require their customers to select the correct BoP codes (out of hundreds) and receive tax and Reserve Bank clearances, effectively forcing them to become an expert or consult one while adding further complications to the process. They also heavily fall down on customer service, meaning that customers struggle to get relevant help if there’s a snag at any point in the process, further delaying successful transactions. 

Fortunately, banks and other traditional providers aren’t the only international money transfer options in town. A new wave of fintechs is challenging traditional players and significantly enhancing the space on metrics like ease of transaction, in-house expertise, customer experience, and automation. However, the fintechs that are truly paving the way in the industry are those that combine exceptionally user-friendly technology with dedicated support from an expert, who is readily available to assist every customer at each step of the process.  

As a result, small businesses and individuals will increasingly be able to make international money transfers in a matter of seconds, painlessly. In a world where everything else is instantaneous, or very nearly so, this should always be the norm when moving money abroad.

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