As the year-end draws ever closer, my thoughts will soon begin to turn to my annual trip to South Africa. As always, I look forward to catching up with key contacts – old and new – but the sense of excitement is greater than ever. From South African fund Brait’s acquisitions of New Look and Virgin Active over the summer, the Foschini Group buying Phase Eight, to retailer Truworths picking up Office late last month, South Africa is abuzz right now.
But there has been another important development overhanging the country in 2015, and that’s the continued devaluation of the rand. So for much of the year, the world of currency exchange – and more specifically the new digital startups in the field – have been on my radar more than ever.
It’s been fascinating to learn about the fast growing fintech startups, as well as other digital marketplaces and financial advice based businesses, our digital team have been working with during the course of the year. These companies are multiplying fast, and very soon the global financial landscape could change quite profoundly. Currency exchange is particularly exciting at the moment given the global scope of its potential.
Wherever there is consumer demand, innovation invariably responds. One of the first big disrupters was the Australian-based foreign exchange and payments company OzForex. The company now operates under a variety of specific brands including UKForex, CanadianForex and USForex. OzForex was launched in Sydney in 1998 and debuted its first online facility in 2003, coming to London as UKForex in 2005. OzForex has represented a global payments revolution for individual consumers and businesses alike, providing highly competitive foreign exchange rates.
The company has expanded rapidly over the last decade, processing AUD$13.6bn in foreign exchange transactions last year. Furthermore, the cutting edge technology now powers international transfer services including Travelex and Moneygram. OzForex is one of those rare examples of a company that identifies and meets a market gap so precisely that successful growth seems to happen almost entirely organically.
Beyond travel and business taking place across the globe ever more frequently, another aspect of the modern climate that has encouraged fintech developments is the increased number of people migrating abroad. The no-frills peer-to-peer money transfer service TransferWise was launched in 2011 by Estonian natives working between Estonia and the UK. The nuances of either having family abroad, or working between countries, is one that is demanding progressively more innovative financial interventions.
Much more recently, TransferGuru has taken a swathe of economic knowledge and technological development to curate an independent and transparent remittance fee comparison service. The offering is similar to FXcompared, which was developed out of sendmoneyhome.org in 2005, but TransferGuru is focused more particularly on smaller consumer transactions and works off the increasingly powerful model of incorporating consumer ratings and reviews.
The sharing economy has also infiltrated the currency exchange market. Newcomer WeSwap was launched in 2013 and already supports 16 currencies worldwide. The concept is to allow travellers to exchange currencies directly, avoiding the sometimes-extortionate fees charged by banks and other traditional exchange services. WeSwap provides a platform for travellers that could be likened to Airbnb or BlaBlaCar, and my prediction is that these kinds of disruptive exchange concepts are set to take off in a big way.
I’ve given a bit of an overview of the currency exchange and transfer landscape, but I’d love to hear your thoughts! Let me know what you think has the greatest potential in the space at moira@thembsgroup.co.uk and have a brilliant weekend.