How Fintech Is Revolutionizing International Money Transfers For Expats

From experiencing new cultures to exploring diverse career opportunities and new business ventures, working in another country comes with a lot of excitement and adventure. But being able to freely receive and send money across borders is a persistent issue for those living and working abroad.

Limited credit options, unstable exchange rates, high transfer and service fees, unnecessary delays, hidden charges, and the overall lack of transparency often prevalent in traditional banking systems are some issues that have, for the longest time, made international money transfers a frustrating experience for expats.

Thanks to the advent of and recent innovations in fintech, expats can now move money freely, quickly, and more affordably across borders, thoroughly enriching their experience abroad.

Today, we take a closer look at fintech – the innovations and tools – and how expats are leveraging fintech for their international money transfer needs.

First, what are those needs?

The Unique Money Transfer Needs of Expats

Various factors, such as socioeconomic conditions in the country of residence or reason for working abroad, contribute to the money transfer needs of expats.

Generally, these needs are encapsulated in the following:

• Remittances: Most expats often send money to their families, businesses, or organizations in their home country.
• International payments: This may include mortgages, rent, tuition, or other bills they plan to cover using the money they earn abroad.
• Multi-currency accounts: By virtue of living abroad, expats usually own multiple foreign accounts, which can be frustrating to manage across different banks. Hence, there is a strong demand for single accounts that allow expats to access and manage multiple currencies effortlessly.
• Reliable money transfers: There is an absolute need for a money transfer platform that expats can trust for speed, affordability, and transparency.

Any money transfer service and service provider that meets all these needs is easily well-valued and appreciated by expats, especially if the service addresses the unique hurdles limiting money transfers from their country of residence.

Fintech companies are getting more and more popular across the globe for helping expats meet these needs, leading to a noticeable shift from traditional banks to fintech.

What Is Fintech and Why It Matters

Fundamentally, financial technology (fintech) refers to innovative technologies designed to streamline and facilitate the provision and delivery of money transfer services electronically.

Financial technology companies (fintechs) are service providers dedicated to using technology and cloud-based services to offer a wide range of financial services, including money transfers, to their customers.

Where traditional banks are more about physical locations and standards that require customers to map out a substantial amount of time and money to complete a transaction, fintechs prioritize bringing convenience, speed, and affordability to customers’ fingertips – via their mobile devices.

By being tech-driven, offering agile money transfer services, and making customers’ convenience a priority, fintechs are leading a revolution that is transforming how people move money across the world.

In a bid to keep up, traditional banks are trying to digitize a bulk of their services, too, but they are still a long way from catching up with fintechs, which are continuously innovating.

According to a new report from the Boston Consulting Group (BCG), fintechs’ level of transparency and greater focus on innovation are some key drivers leading the shift from traditional banks. Consequently, traditional banks are losing significant portions of their market to fintechs.

Key Innovations Fintech Offers Expats

Let’s have a look at some of the key innovations attracting expats to fintech:

Lower Fees and Better Exchange Rates

Transparency in pricing, a big issue that traditional banks are still struggling with today, is a problem that fintech services addressed from the onset.

It also doesn’t help that traditional banks convert exchange rates at high premiums. And according to the IMF, wire transfer fees could take up to 7% of the transaction amount.

Reputable fintech money transfer services provide clear pricing models that state in clear terms what you are paying for while also accounting for real-time updates in exchange rates. These features allow you to take advantage of the best exchange rates and also compare prices across platforms to get the lowest fees.

Speed and Real-Time Transfers

Bank wire transfers could take between 1 to 5 business days to complete, even if you are sending money across neighboring countries – not that distance should matter.

With fintech, international money transfers are basically instant whether you are sending money from one end of the world to another.

Generally, when an expat uses a fintech platform for cross-border money transfers, the recipient gets the money within minutes. On some occasions, the money may take a few hours, depending on prevailing conditions, such as bank holidays or delivery methods.

More so, compared to bank transfers, which may be limited by banking hours, fintech platforms are more accessible and reliable, as they are available 24/7.

Multi-Currency Accounts

Recall that living and working abroad often means owning multiple foreign accounts, which can be tedious to manage.

Most renowned fintech services offer expats a single wallet/account that is capable of holding and converting multiple currencies, including USD, EUR, and GBP.

For expats, this means having better control of their transactions while avoiding high exchange rates and conversion fees.

Mobile Apps and Seamless Interfaces

Fintech services thrive on digital agility. And this fact is well-expressed in the provision of mobile apps with intuitive interfaces that give expats all the power to manage their money transfers via their smartphones in minutes without requiring external support or instruction.

International money transfer apps offer numerous features to enhance customer experience, including real-time tracking and notifications, keeping you informed about the status of the transfer.

Regulatory Compliance and Security

Fintechs are spearheading the utilization of advanced encryption, threat detection, and security protocols in the global money transfer market. The application of AI, machine learning, and blockchain technologies in fintech services has also gone a long way to improve KYC/AML compliance in real time.

These factors are instrumental in boosting customers’ confidence in fintech as a more reliable alternative to informal and cash-based transfer systems, which are typically unsafe.

Conclusion

Financial technology is a breath of fresh air for expats.

In less than two decades, fintech has radically transformed the international money transfer market, breaking barriers of frustration with traditional banking systems and shifting power and control to customers.

The level of transparency, speed, and cost savings fintechs offer have been reported as being substantial enough to disrupt the banking sector, leading to traditional banks losing chunks of their market share to fintechs.

When it comes to fintech vs traditional banks, fintech is clearly the better choice. And with continuous innovations in the fintech sector, it is going to remain the far better option for expats in the foreseeable future.