Much has been said in the media about the need to make banking, and more specifically international remittances (or as consumers know them, “payments”) more transparent. Governments are not denying that this is required, and in Europe, legislation has been passed to support it. However, despite the efforts of some countries to improve transparency it is not enough… and in some cases, little if any progress has been made.
Whilst the need to meet legal and regulatory requirements is understood, it is also important that consumers… customers… understand all the costs associated with sending money overseas, to friends, to family.
Our informal consumer research indicates that people do not realise that retail margins may be applied to exchange rates; they believe the brands when they claim, “zero fees”. They also keep returning to the same brand and rarely shop around to see if they can get a better deal elsewhere.
The title of this blog is “Are Our Banks Doing Enough?”. However, it really should be “Are Service Providers Doing Enough?” It is not just the Banks that should be more transparent when providing payment services, but also the new FinTechs and other brands within this sector… but perhaps that is a fight for another day.
An Ideal World
With the current spotlight on CBPR2, more specifically Article 3b, much is being discussed at the highest level – the flow of funds between countries; the impact COVID has had on those flows and the service providers; and what governments should be doing to support this sector. However, the focus for the remainder of this blog will be banks from a consumer’s perspective – it’s really not that complicated and nor are the fixes, even for companies facing the problems caused by legacy systems – where merging of companies can mean that IT departments are trying to apply modern technology to older environments.
BUT if brands can amend the text on a screen, then they can also offer better information to their customers.
What do customers need?
Based on consumer research, customers may not know what they don’t know AND especially where banks are concerned, may not feel they should expect any more information than they are being given. They should just trust their bank.
So, looking at the customer journey, it follows roughly the same steps:
1. Enter recipient information – who is the money going to?
2. Enter the amount you would like to send
3. The bank informs the user how much it will cost to send the money
4. The user can then choose to proceed with the payment.
How this is presented, and how detailed the supporting information is can vary massively. However, we believe that the introduction of a standardised Review Page (prior to step 4) would be a significant step forward to total transparency and could potentially be put in place as a quicker fix whilst governments and regulatory bodies focus on the wider issues within this sector.
How this should look? That’s a discussion for another day!