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Zing May Make Remittance Easy, Cost-effective

Nironjan Roy

by tbhad
After introduction of SWIFT (Society for Worldwide Interbank Financial Telecommunication), foreign remittance and international fund transfer become very easy, quick and secured process. Worldwide financial transactions were going well without major interruption and setback which enormously raised the turnover in terms of both number of payment and volume as well.

As more and more technological advancement came to use, complexity, threat and risk factors started rising what compelled the banks globally to put more controls and security measures. Consequently, more compliance features including KYC (Know Your Customer), DD (Due Diligence) and EDD (Enhanced Due Diligence) were applied as a part of robust compliance, for which banks had to extensively invest in technology, human resource, and security measures, what eventually increased remittance fees.

Since foreign remittance market was an exclusive opportunity for commercial banks, they tried to exploit the market by charging exorbitant fees. This expensive remittance offered by banks, categorically discouraged the customers in using banking channel for remitting money. Moreover, some large banks were accused of violating sanctions and money laundering offense by the regulators, particularly Fed (Federal Reserve of USA), which imposed billions of billions dollar fine on many internationally reputed large banks.

In consequence of bearing massing financial penalty, most large banks got scared of carrying out cross-border transaction and thus resorted to de-risking policy. Such de-risking policy of large banks eventually made cross-border payment most complicated. Because of these, remitting money turns the most expensive and challenging process. Most people, especially common people lost interest in sending money through banking channel.

The international remittance market was then taken over by some financial technological companies. In early 2010, a group of financial technology companies came up with new products for transferring money using various Apps.

The people found the means of foreign remittance at significantly lower price than the conventional bank charge. Many financial technology companies include Wise, Revolut, WorldRemit were pioneer in offering very low-cost foreign remittance facility, challenging large bank’s monopoly in this area. These financial technology companies started charging very insignificant fee on each remittance but maximised their profit by enormously increasing the volume.

Financial technology companies came as big challenge to the large banks. Again, remittance fee is not the only earning generated from cross-border payment processing transactions, as certain interest income is also earned on the fund held during the transition period.

So, all large banks could not easily accept losing their stronghold in global remittance business and therefore, immensely invested in developing new product to compete with financial technology companies. Finally, success came as big banks were developing their remittance products which were very competitive to the financial technology companies and HSBC Holding Plc is pioneer in this area.

It is learnt from local media report that HSBC has introduced in the UK market a specialised service what it calls Zing, which will provide easy, convenient and very low-cost international fund transfer service. HSBC expressed their optimism that their new service will be able to compete with the facilities provided by many financial technology companies. It is further learnt that HSBC initiated this measure about two years back. The same report indicated that HSBC is going to introduce this product worldwide within March 2024, so it is expected that Zing, HSBC’s easy and low-cost internationally money transfer facility, will be available for the customers’ use.

HSBC Bank is not alone in this measure. Standard bank previously introduced PagoFx which was similar in nature for offering low-cost internationally fund transfer facility, but this product did not last long. One of the largest banks in the world, JPMorgan Chase and Co has also introduced similar product called, Chase UK three years ago. Like, Zing, Chase UK offers fastest money transfer facility globally.

So, walk-in customer or those who do not maintain checking or savings account with the bank, may not have access to using Chase UK for remitting money worldwide.

However, low-cost remittance product developed by HSBC or other large banks is undoubtedly new challenge for financial technology companies, but these companies will not sit idle. Wise, one of the financial technology companies, has spent about 13 years with employing more than 800 engineers for developing internationally fund transfer Apps. Revolut Ltd, another financial technology company, had to work since 2015 and in their company, more than 8,000 people had been working to serve 40 million fund transfer customers globally.

Global cross-border payment transaction has reached USD 180 trillion worldwide in 2022, which generates revenue to the tune of USD 165 billion. It is obvious that cross-border payment will remain as one of the most attractive and growing business.

So, foreign remittance which has now been the most complicated and expensive transaction, is presumably going to be very easy and cost-effective. Millions of expatriate Bangladeshis working in different parts of the world may breathe a sigh of relief with the introduction of HSBC Bank’s Zing. Bangladesh Bank and other commercial banks may directly discuss with HSBC and prepare for taking this service for making foreign remittance easy and cheap for expatriate Bangladeshis.
The writer is a Certified Anti-money laundering specialist and banker, Toronto, Canada.
Email: nironjankumar_roy@yahoo.com

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