Do you really need a bank? Part 1
Unless you are living under a rock like me, you must have heard about many upcoming FinTechs that are disrupting the banking industry. TransferWise is one of them. I came across this company probably 2 or 3 years ago. At that time it doesn't offer much and I forgot about it almost as soon as I signed up. I revisited it recently and was pleasantly surprise how much have changed. For a start, Sir Richard Branson invested in it. So did Paypal founders Max Levchin and Peter Thiel. It now boast 7 million customers and is moving more than USD5 billion every month. According to the company, it helps save USD 4 million in bank fees every day! Ouch, that must have hurt for the banks.
Part of the savings come from a better exchange rate. Unlike bank, TransferWise offered users interbank exchange rates. This is the rate that banks traded at among themselves. TransferWise merely undercut the bank by forgoing the profit from the exchange rates by charging a small handling fee instead. No real breakthrough here. The innovative bit I think is where it helps save money by bypassing the SWIFT network when dealing with international remittance. This is through offering users local bank accounts in their own name. All this can be done online without leaving the comfort of your couch. I found that really amazing. I am now a USD bank account holder with the Communal Federal Savings Bank in the United States, a SGD bank account holder with the DBS Bank in Singapore and a Euro account holder with my own IBAN. Instead of international transfer where SWIFT charged an exorbitant amount of transfer fees, I can now make local transfer in these countries using these accounts with little or no fees at all. Great stuff. At least in theory.
So I tried playing around with the platform for a few days. Bouncing money around continents with my overseas friends just to test out the services. I am happy with the exchange rates and the transparent handling fees. The system was a tad overbearing for my temperament though as it was sending emails reporting the progress of every step along the way religiously. I can understand how some may find that useful. The one major complaint that I have is that the system seems to be consistently over promising the speed of delivery. Charging Euro through your credit card will take seconds. It took one day to credit my account. Sending Vietnamese Dong to your friend in Ho Chi Min will take just one hour. It took 2 days. Transferring USD from a United States account to my local United States account should be instant right? The email confirming the deposit came 1 day later. The money took another day to be credited. But when I saw the amount transferred is credited in full without any transfer fees, all is forgiven.
You can sign up for a free account with one free international transfer here using my referral. Another perk of signing up is that you can apply for a debit card to pay in local currencies when you travel. How cool is that?