DMost fintechs are created out of frustration. About the fact that certain financial services are inefficient – and expensive. Michael Kent, one of the founders of the British transfer service provider Azimo, was one of these entrepreneurs. Even before Fintech was founded in 2012, he offered customers international transfers – at that time, however, in branches and not digitally.
"We were broken into, money was taken out of the till for marriage problems," says Kent. In short: the business was not efficient. Digitization has changed everything, just not in "our" sector, he says. But the success of Fintech was only possible with the smartphone, he emphasizes. Happiness also played a role. The timing was favorable and the established financial service providers were lazy. In addition to the top dogs Western Union and Moneygram for foreign transfers, more and more financial start-ups like Transferwise or Transfergo have ventured onto the market. However, Kent has remained loyal to the branches indirectly. Azimo customers can also collect their money in-patient.
Providers use unfavorable exchange rates
Thanks to the Sepa procedure, transfers within the euro zone are almost free of charge. However, transfers across the euro zone sometimes cost consumers a lot more. This is not only due to the reported fees, but also to the exchange rate surcharges of the providers. In many cases, transfer service providers use unfavorable exchange rates and are not based on the official reference values. Even apparently small deviations have a large effect overall. "Our exchange rates are adjusted every second," says Kent.
Azimo offers the first two transfers free of charge, but customers pay around 3 euros for each additional one. The recipients receive the money directly. The competition sometimes offers different prices depending on how quickly the money should be sent. If you want to transfer the amount immediately, you pay more; who can wait less. This is out of the question for Azimo, Kent replies. They want to enable quick transfers to all customers. For the provider, there is also almost no difference in costs between fast or slow transfers, he adds.
Dollar strength makes international transfers expensive
Kent does not see that foreign transfers will ever be free. Security costs money and requires compliance with the regulations. And the strength of the dollar compared to the euro also makes international transfers expensive. For example, if money is sent from Germany to the Philippines, the euro must first be exchanged for dollars and then dollars for Philippine pesos. Banks abroad still preferred dollar currencies. And if the costs or fees were to be completely eliminated in the future, consumers would still have to pay a price that their data.
Azimo had 3.5 million senders and recipients of international transfers last year, says Kent. The second most important fintech market after Great Britain is Germany. He wants to continue to focus on continental Europe. 125 billion euros would be transferred there annually, and only by private companies. But you don't want to go to America. The competition there is too big – and the regulation of European companies is very strict.
. (tagsToTranslate) Michael Kent (t) Foreign Transfer (t) Dollar