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Can this company democratize currency transfer for SMEs?

SME currency transfers SME currency transfers

Hot Topics interviews the CEO and co-founder of CurrencyTransfer.com, Daniel Abrahams, about SME currency transfers and the fintech explosion.

Tell us a bit about CurrencyTransfer.com?

Sending money abroad with a bank is expensive, opaque and highly time consuming. We cut hidden costs by up to 85%.

CurrencyTransfer.com is the world’s fastest growing online marketplace for international money transfers, allowing individuals and business clients to compare and book the best exchange rates, chosen from a curated panel of FCA authorized Payment Partners.

What problem are you solving?

Hidden bank fees and convenience – it shouldn’t take more than three clicks to shop around and book a great business foreign exchange deal.

Foreign exchange is one of the last areas of financial services where the end business owner, CFO or private client typically doesn’t know what they’re paying. You wouldn’t leave a grocery store not knowing what you paid. It occurred to us foreign exchange transfers should be no different.

Stevan always says in every industry where there is inefficiency (transportation, travel) you see marketplaces disrupt. We chose foreign exchange to attack!

Why do SME businesses (Small and medium-sized enterprises) get a raw currency deal?

Quite simply, it’s a great moneymaker for banks and something they want to keep hold of. SMEs make $5.6 trillion in transfers worldwide, increasing by close to 10% annually. Despite the enormous market size, businesses are underserved and hugely overcharged by banks.

If you are BP, Coca Cola or Adidas trading hundreds of millions a year in FX, you can access competing price feeds and the sharpest rates from banks. Why shouldn’t the ‘small’ guys too?

We aim to offer the same fantastic, preferential exchange rates large corporations get and democratize this down to the everyday SME. We truly want to take international transfers for small to medium sized businesses out of the dark ages.

Who is your target market?

Our sweet spot client is an SME with over £500,000 a year in annual foreign exchange turnover. The minimum transfer size on our platform is £1,000 GBP equivalent, so we look to target companies who have a regular need to make and receive international payments. We aren’t in the remittance game; it’s a platform with tools and features built for large transfers.

We have clients in over 10 countries and 18 industries, including: Importers, Tour and Travel Operators, Charities, Tech Firms and any international entities that make transfers between offices.

We’ve recently opened up to high value private client transfers too. Many British expats and overseas property buyers are benefiting from our service.

Which developments in fintech are you seeing right now?

We’re seeing many banks invest in FinTech and acquire companies, pretty much as a way of hedging. They are not stupid and can see some of their lunch is being eaten. Startups can move faster than banks and get to a million users in no time. For an innovation manager at a bank, this should be equally terrifying and exciting. FinTech startups may always need banks for core services, and banks will increasingly lean on startups for their talent and execution capabilities.

Would you take investment from a bank?

No fewer than 5 banks that have a FinTech fund have approached me. We wouldn’t rule out investment from a bank, but would always want to preserve our principles of 100% price transparency, brand positioning and choice.

You have offices in London and Tel Aviv. How would you compare the two ecosystems?

London is a global financial hub, not just for FinTech but also for finance and banking at large. I think we still find the best knowledge and finance experience from Wall Street or Canary Wharf, albeit not always the best talent for certain types of roles.

Israel has more startups per capita than anywhere in the world. It’s accolades and contributions to technology rival the Valley. Tel Aviv also has an ever-growing VC scene, which is fuelling some really impressive FinTech success stories. The DNA of an entrepreneur here is so special. FinTech companies in Israel need to think global from day one, as the local market is limited. You only have to look at eToro, BillGuard, Behalf and Payoneer, all significant companies doing great things.

Marrying these two ecosystems will play a core role in our growth strategy.

How much of the current fintech boom do you think is down to the increased trust that the public have in Internet companies over the tradition banks?

Today, 71% would rather go to the dentist than listen to what banks are saying. With all the scandals and billion dollar fines, trust in your average bank is eroding.

For FinTech companies without mainstream brand recognition, it’s a massive challenge. However, today’s millennial trust tech companies as much as their parents once trusted the bank. I think trust grows with scale and traction. You can have the best customer experience in the world, but you also need to do a darn good job in making sure your customers trust you in safeguarding and delivering client funds. FinTech startups will always be competing with legacy banks on this point. The bigger you get, the easier it becomes.

How do you go about building trust with your potential customers at CurrencyTransfer.com?

CurrencyTransfer.com is a curated marketplace; we only aggregate live rates from FCA authorized and regulated Payment Partners. That means no agents or small payment institutions. We are proudly not whole of market, and reject 90% of new applications from Foreign Exchange suppliers looking to join the marketplace.

All client funds are safeguarded in segregated client accounts, separate from the day to day running of an FX companies business.

How do FinTech companies do a better job on a user experience level compared to banks?

I think we tend to understand the customer more than legacy banks. At CurrencyTransfer.com, we don’t design to confuse with complex charges and payment structures. In our case, all fees and charges are built into a great exchange rate. We also go above and beyond, showing the mid-market rate next to the final dealing rate side by side. On a messaging level, I think FinTech upstarts try to get rid of complicated and unnecessary jargon.

Are fintech payment systems much more vulnerable than traditional payments to fraud and how do you guard against that?

Fraud is a nightmare scenario for FinTech companies, particularly when the product is cash. One bad move and you can be gone. It’s so important not to be tempted to cut corners for the sake of ‘user experience.’ At CurrencyTransfer.com, there will always be friction between an amazing onboarding experience and ensuring only the right type of client profile trades on our marketplace.

We go above and beyond to ‘know our customer,’ and spend heavily on fraud detection, optimizing verification and approvals. We have to know our customers and ensure funds are being settled from appropriate accounts by clients we have verified. Even if it means asking for that extra document.

What are your plans for 2015 / 2016?

We will aggressively grow our sales, product and marketing teams in London and Tel Aviv. Expanding to new markets and offering exotic currencies on the platform is a huge focus for us right now.

What advice would you give to a new FinTech startup?

Firstly, hustle your innovation like crazy and make it simple to build trust and confidence in your product. Secondly, identify and market against your common enemy. But do it respectfully. This could be banks or brokers. Lastly, for FinTech startups, it has to work if you are doing transactions. This isn’t Instagram or Snapchat where if the thing breaks, it isn’t critical. However, once you have sufficient confidence ‘it works’ don’t be embarrassed by the first version. Just get it out there and iterate fast.