What is FXcompared Intelligence

| Wednesday, October 1st, 2014

Introduction to FXcompared Intelligence

FXcompared’s research and insight arm, FXcompared Intelligence, aims to improve awareness and understanding of the international money transfer space by providing open and transparent research about the market and trends worldwide. Our primary focus is on foreign exchange flows made by individuals above remittance levels (over US$500) and Small and Medium Enterprises (SMEs). A wealth of information has been collected on the higher and lower ends of the forex market, but there are very little data on transactions by individuals and SMEs. This is what we mean to address.

How large is this market?

The Bank for International Settlements (BIS) - an international organisation of central banks -estimates that in April 2013, non-financial customers (i.e. excluding financial institutions and investors) accounted for average total foreign exchange turnover of US$465.1bn per day. Of this, an average of US$191.6bn per day was sent across national borders. Large-scale corporate and government transfers - for example, related to international trade, transfers by non-financial government agencies, and corporate sales and investment - represent the vast majority of these flows.

At the other end of the spectrum, considerable data are also available on remittances; these typically consist of smaller person-to-person (P2P) money transfers, compensation of employees and credit. Although the average transfer is relatively small, the overall volume of global remittances is growing rapidly and exceeded US$500bn in 2013, according to data from the World Bank. Nonetheless, this only represents roughly 4% of the total volume of foreign exchange transfers in 2013.

FXcompared Intelligence is focused on understanding what drives the remaining 96% of these exchanges.

Located between these two ends of the market, individuals and small businesses represent an important - and growing - volume of foreign exchange transfers. Most often, these are related to international trade by SMEs, property purchases, retirement, the lifecycle of an expat and payment for foreign healthcare costs and school fees, among others.

However, with myriad money transfer businesses active in this sector, and in the absence of a single, centrally-cleared market for international payments, it is difficult to ascertain the true market size. Based on BIS numbers, FXcompared Intelligence has identified the top 75 countries in terms of daily foreign exchange turnover. Working with our valued partners in the field, FXcompared Intelligence aims to better understand the volume, direction, drivers and frequency of these non-financial non-remittance flows in order to help our customers transfer money more cheaply and efficiently. We also seek to understand more about the behaviour of these groups; for example what drives an individual to choose a money transfer provider over their bank and to choose between competing money transfer providers.

FXcompared allows our customers to compare providers and find the most efficient, low-cost solution for international transfers. Beyond this, FXcompared Intelligence also studies how governments set monetary and forex policy, in order to help our customers better understand the risks related to shifting foreign exchange rates, money transfer restrictions and foreign investment regulation.

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