In these few posts I would like to share my experience in using three new generation consumer money management services: Transferwise, Revolut and Bunq.
Beyond going through what these products make available I will also add some reflection on how technology is evolving money management and how these products are stepping stones towards a - hopefully - bright and empowered future for the consumer.
It’s been a very long time since the last time banks seemed to have any real interest or even show some degree of compassion towards their retail customers. If there are products that are never talked about with excitement bank accounts do belong to that category.
This is changing as a new generation of “product first/customer first” companies started to work on new takes on the concept of bank account and payments.
The picture was enriched by the possibility of Electronic Money Licensing which made it possible to offer bank account-like services in a simpler regulatory framework than the regular banking one.
This post will focus on Transferwise. Transferwise defines itself as “A cheaper, faster way to send money abroad”, practically transferwise can work in 2 ways, one is just a fund transfer operator with extremely transparent currency exchange fees and policies and second can also be upgraded to be an e-money multi currency account complete of a Mastercard debit card.
One thing that is striking about transferwise is the transparency on fees. As essentially the low fee is what Transferwise offers, it's always made very evident which fee you are paying and what is the exact exchange rate that is being applied to your transfer. A statement to the transparency is the fact that the home page allows you straight away to setup your payment and execute the transfer.
When I started using the service in 2017 another element that amazed me was the ability to determine exactly the amount being transferred in the destination currency, Transferwise makes this very easy while traditional banks just do not make it possible or can do it only through some complicated process.
Another great feature of transferwise is the ability of having banking codes in several different countries as an example you can receive local transfers in UK, USA, countries that use the EURO, Poland and others, this is a great value add because you can choose to either keep the amount received in the original currency or change it in any of the supported currencies at the time you prefer.
A key part of the Transferwise product is the card, this is a Mastercard debit card that you can use for payments anywhere in the world and will automagically either use your available balance in the local currency or convert the available balance of some other currency to the local one, this saves a lot of money in fees and predatory exchange rates when you travel. The card together with the mobile applications are a very safe and advanced toolkit for travels and managing life across countries.
As an expat with a multi national family Transferwise made my life better in a few ways but especially allowed me to think better about my currency exchange needs, I used to incur a lot “forced” currency exchange just because it was impractical or impossible to have accounts in the “right” currency and receive transfers directly on those, now I can pay, send and receive transfers in several countries and enjoy the possibility of holding funds in whichever currency I find most appropriate.
Speed and awareness are some other features of Transferwise you are always informed in real time of the status of your transfer and payments through push notifications and in app information. I remember worrying several times while waiting for the long international transfer times where funds would leave my bank stay in a nowhere land possibly for a week and then having to verify with recipient directly that the funds actually made it through, now I know exactly when funds leave my account and when they get to the recipients, which thanks to Transferwise happens usually much quicker (i.e. a transfer from Germany to the UK can arrive in the same business day).
With all what was described so far Transferwise does constitute a significant progress for consumers, hidden fees, limited and expensive possibilities to hold multi currency accounts, long processing times were a burden for travelers and for anyone who had their lives and families spread across countries.
Often multicurrency accounts from traditional banks are built for investing and speculation and not for living in a multi currency multi national reality, this is where transferwise stance is radically different.
An additional point of view that is worth considering is that Transferwise can give access to currency risk mitigation to a category of persons that before could not pursue such strategy practically, for small amounts (to be reminded that transferwise is not a fully fledged bank so your funds are not protected as in a bank) transferwise makes it super easy to hold some savings in a range of currencies, this is quite important again for anyone who needs to make payments or in general have commitments in different currencies, you can keep money in the “right” currency so that you do not have to deal with surprises given by the movements of the exchange rates.
As digital product Transferwise is a high quality product, it really feels like having a global multi currency electronic wallet at your fingertips with real time tracking on transfers and payments. It feels like magic compared to the traditional options.
I think the app could be better from a usability standpoint, it’s not very intuitive in some aspects and after I recommended it to a few people I actually had to do quite some explaining on how to work with it and I think there’s a lot of room for improving the user experience making it un-banking like.
One last interesting thing, once you have a Transferwise account you can use it together with some modern banking providers like Bunq and N26 to ensure cheap and fast international transfers. In this way transferwise becomes a sort of currency exchange engine that powers international payments executed from your bank account.
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