If we look at the reasons why FinTech has been able to mount a successful challenge to traditional banking and financial services industries, taking a slice, albeit still a very minor one, out of their profits pie and achieving the kind of company valuations that suggests there may be plenty bigger slices to come (think TransferWise, Azimo, or Nutmeg, for example), three things stand out very clearly about the provision of professional services in the financial sector:
Professional services – are services that require a professional – i.e. the average person in the street lacks the expertise or the knowhow to conduct the business themselves;
In order for a customer to have to engage professional services, there must be a money saving involved– i.e. it’s cheaper to use a professional than to do it ourselves
We seek the help of professionals when the technology in question is too complex to be made publicly available
– the cost of personally acquiring the necessary technology is prohibitive
In all 3 of the above scenarios, FinTech has been breaking down the barriers. It’s similar to how many of us might use a mortgage broker. When we first buy a home, a mortgage broker will sit down with us and draw diagrams, discuss rates, talk about where they see inflation going, and the chances are we will decide to pay them a substantial fee to negotiate with a mortgage provider on our behalf. As first time buyers, it gives us peace of mind.
By the time it comes to renegotiating our mortgage, however, many of us feel confident enough to engage with the mortgage supplier directly. Remembering the 3 points above, we have gained the required level of knowledge to confidently negotiate for ourselves, we can save money by cutting out the middleman, and there are no overly complex calculations or technical obstacles standing in the way of our completing a deal either online, or over the phone.
This is exactly what The Money Cloud is doing for overseas payments; giving us the tools necessary to cut out the middleman. In the past we would ask our bank to give us a rate, and the bank would approach a broker on our behalf and obtain a favourable rate; not always the best rate (why take the time to perform an exhaustive search when you know your customer is obliged to take whatever rate you quote them), as well as applying a charge for safe delivery of the cash.
Likewise a Western Union or MoneyGram will levy a charge at both ends of the transaction, meaning both sender and recipient are losing out. Again, the advances that FinTech has made in building sophisticated platforms with intuitive, easy to use UI and UX, means these kinds of charges are now avoidable. The Money Cloud say that, on average, customers using their site will save 5% compared to completing the transaction at a retail bank.
Price comparison has been one of the most successful internet business models of all time, bringing transparency, competition and free specialist advice to any number of industries. Everything is geared towards finding the customer the best possible deal. Thanks to The Money Cloud, this is now true in the field of overseas payments.
The only professional intervention that is required is the policing of the site. The Money Cloud ensures that only the best brokers, with the highest levels of integrity, who are FCA Authorised, are given permission to be part of the site. The Money Cloud are unique amongst recent FinTech payment start-ups in that the founders have over 10 years’ experience of the international remittances market;
A government commission to conduct a study into the size of the UK market, enabled founders Emmanuel Addy and Huw Jenkins to work with agencies including the World Bank, Department for International Development, the Commonwealth Secretariat and governments and diplomatic missions from Africa and Asia. (In case you are interested, deliverable foreign exchange is in the region of $177 trillion per annum!)
Emmanuel and Huw have built relationships with the brokers they use on the site over a period of 7-8 years; all of their UK based brokers are regulated by the Financial Conduct Authority and overseas brokers are also subject to stringent checks and regulation. The Money Cloud covers 144 countries and territories, and plans to expand their international footprint, potentially opening offices in Africa, Asia and the Americas to ensure that they can continue to offer the best, and the safest services.
There are of course many different reasons for using the site. For expats, or those moving abroad for the first time, payments might cover the purchase of a new house, educational tuition fees, opening a bank account in a new country, or simply ensuring that they have enough cash to cover a lengthy stay abroad. For businesses, there might be staff based overseas to pay, goods to purchase that are available exclusively, or at a cheaper price overseas, taxes, or currency hedges i.e. completing a forward transaction to lock in an attractive rate.
What The Money Cloud does very well is to ensure that up-to-the-minute guides are available for download from the site covering all of its different use cases. Paying suppliers, overseas holidays, overseas property, repatriating funds; it’s all covered, and explained in such a way that the layman can easily get to grips with the nuances involved.
The site is free to use and is free of advertising. It’s income comes from a commission from its financial partners from any profit generated from the transaction by a registered trading customer. As far as the Money Cloud is concerned, there is no need to hoodwink the customer into thinking that the processes involved are more complicated than they really are. The beauty of the site is that its only focus is on ensuring its customers are getting the best deal available.
Historically the Financial Services industry has been slow to adapt to new trends and disruption has been rare. It took the global stock market collapse of 2008 to convince the industry that change was not only possible, it was being demanded by customers all over the world, and now it has responded in kind. The demystification of financial services began as some of the banks more outrageous practices were laid bare and shown for what they really were. Dishonest, profit driven deals being done in the knowledge that the customer had nobody else to turn to.
This has now changed beyond recognition; more than $12bn was invested into FinTech services in 2014, with growth of more than 200% year on year. In the UK there are now more than 44,000 people working in FinTech, which has attracted $450m of investment over the past year, creating a sector worth over $20bn. The talent that has been attracted to the sector are the type of people who view progress, not profit, as the key driver behind their business models. Nobody wants a return to the bad old days of pulling the wool over the customer’s eyes. Thanks to sites such as The Money Cloud, customers have access to the same deals as the professionals, and thanks to the availability of free impartial advice, they are taking full advantage.
The Money Cloud deserves acclaim for doing what all good start-ups do; identify a problem, in this case the lack of transparency in the international remittances market; solve it, by providing an easy to use platform that aggregates and compares foreign exchange brokers and allows consumers to approach them directly rather than through and expensive professional agent; and put itself in a position to scale fast, thanks to a fundraising of nearly £500k completed with London based VC FIG as lead investor. Throw in a decade’s worth of research and experience, a desire to serve the customer, not the bank, by providing all of the relevant information, and a tech savvy platform that is easy to navigate, and you have a recipe for success. The future of FinTech looks to be in safe hands.