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Fintech Startups Are Eating Away At Traditional Bank Dominance

This article is more than 8 years old.

The way consumers and businesses perform money transfer transactions continue to transition from traditional methods to new players.

According to a recently released report by FXcompared.com, it is now the case that only a minority of consumers in the United Kingdom prefer traditional banks over newer, more innovative transfer services.

This is part and parcel of a larger fintech revolution occurring across global capital. The propagation of new technologies has brought disruption to international money transfer methods and the results are already beginning to be felt. Traditionally, international money transfer has been the domain of the banking industry.

The main alternatives to the banks were store front money transfer services such as Western Union or high street currency exchange. This is no longer the case. A poll of 2,000 individuals in the United Kingdom conducted by FXcompared.com reveals that only 42% respondents used their personal bank to transfer money.

While maintaining a plurality of money transfer consumers, a full 58% have forsaken the banks for a variety of alternatives. Store front money transfer services now come in at a distant third, tied with money transfer brokers, with only 13% of consumers opting to use them. At second place and with 28% of consumers claiming to use them, online-only money transfer services have emerged as the banks biggest competitors and their prominence in the field is poised only to grow.

Despite its diminished prominence in the care of consumers, brand name recognition is still dominated by the traditional banks. 80% of the respondents polled recognized the name HSBC and 79% recognized Barclays.

Among non-banking transfer services, Western Union was the best known with 71% of respondents claiming recognition. Travelex, likely due to the fact that it is located in airports throughout the world, was recognized by 43% of respondents, closely followed by Moneygram with 38%. Transferwise, the most well known of all the online peer-to-peer transfer services, garnered very little in the way of brand notoriety, with only 7% of respondents claiming recognition. To see why preferences are changing check out Part Two of this article.