Home Estate Planning A forex fintech is putting an end to hidden fees – high street banks should take note

A forex fintech is putting an end to hidden fees – high street banks should take note

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Millions of Brits face charges of almost four per cent when sending money abroad – a new app committed to ‘radical transparency’ is set to change all that, writes Harsh Sinha

Sending money abroad isn’t exactly sexy. Important, yes – thrilling, not so much. However, HSBC’s launch of Zing, a new currency conversion app, has brought fresh attention to a sector that is too often ignored.

While apps that enable users to spend, send and change money are nothing new, Zing’s commitment to ‘radical transparency’ makes it distinctive. Zing’s customers know exactly what they’re paying for the service, with Zing giving its customers the ‘real’ exchange rate (the one you see on Google) and charging an upfront fee. At Wise, we welcome this. Since we were founded thirteen years ago, we’ve done the same – and called for others to follow suit.

Allowing customers to compare the market and encouraging competition shouldn’t be exceptional. Yet it is. Every single major high street bank continues to mark up the exchange rate given to customers, thereby hiding their own fee. HSBC, remarkably, charges the highest hidden fee at 3.7 per cent. So while Zing’s customers gain from transparency, HSBC’s own 13.5m customers are left short.

This may sound like a niche problem, but it isn’t. Millions of Brits have international money needs, with 42 per cent of the country sending or receiving remittances each year. These remittances are crucial. Of those that send or receive money across borders, 52 per cent say the money they send is vital to their overseas family and community’s wellbeing – while 15 per cent rely on receiving remittances to support their day-to-day life in the UK. What’s more, 88 per cent of people holiday overseas – meaning the majority need foreign currency at some point. Small businesses are hit too: 28 per cent are put off from expanding overseas by the high costs of international banking.

In total, tens of millions are lost to hidden fees each year in the UK alone. However, hidden fees don’t just have a financial cost, they have a reputational and arguably societal one too.

Last month, the great and the good met at Davos. The summit’s theme was ‘Rebuilding Trust’, part of which involves repairing relationships between people and institutions, like banks. Transparency and fair fees play a vital role. There’s a reason why, despite everything else in his in-tray, President Biden has focused on fighting ‘junk fees’ across all industries. They have a wider impact.

Opacity across banks’ services only erodes trust. It convinces people that banks exist to make as much money as possible, at whatever cost. It’s part of the reason why only 22 per cent of Brits think banks give them a ‘fair deal’. It needs to change, people should be able to trust
their bank.

Zing’s launch is a good thing, but it barely scratches the surface. If HSBC, or any other major bank, really wanted to make a statement then they would bring the same level of transparency to their own customers. Clearly, there is a demand for this. The past decade has seen fintechs and neobanks thrive by offering something different. It’s no coincidence that Starling and Monzo are also transparent about their fees. It’s time for high street banks to catch up – and stop letting their customers down.

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