Is Brexit going to make changing money impossible?

It has been over two years since the UK’s referendum to leave the European Union. Plans for the country’s exit are slightly clearer, but the Sterling has failed to stabilise. How is this affecting those wanting to change money? Patrick Brusnahan writes

Brexit is coming ever closer and the Sterling may yet continue to fall. For those changing money or making cross-border payments, this is a major hurdle.

The pound dropped to a 31 year low following the referendum. Since then, it has seen rises and falls. At tiem of writing, one pound sterling is equal to $1.27. On the day before the vote, it was equal to $1.47

A threat?

James Hickman, CCO of currency and banking business FairFX, believes that the level of threat depends on what type of business you are.

Speaking to Verdict Payments, he says: “From our perspective, we are mostly marketing to the UK at the moment. In terms of Brexit and regulation, at the moment, there is little threat. 

“What is a big threat for us and anyone in currency is the value of Sterling. If it continues to drop, people are less likely to buy goods and services overseas because it's more expensive. That’s the big threat. It’s all vague at the moment and who knows what's going to happen. As a business, a priority is making sure we have our Brexit plans in place.”
With countless new forms of regulations set to hit the UK in the coming months, that will also be something to overcome. Hickman says that looking outward at friendly regulation may be the solution.

He explains: “In terms of regulatory opportunities, there are a number out there that are friendly and we’re investigating them at the moment.

“I do see many regulatory shifts ahead, particularly in the e-money world. We’re already seeing it. Some of the new players are looking at various regulatory things. For example, you see Estonia, Lithuania, all of these countries opening themselves up. It depends where you operate. If you’re UK focused, then it’s not a huge issue. If you’re pan-European, there’s a risk.”

A good time to be in business?

FairFX was an early fintech company in the UK. Founded in 2007, it went public in 2014. Its turnover for the first half of 2018 was £1.1bn, a 146.2% rise year-on-year. 

In terms of numbers, FairFX deals with 30,000 SMEs and just over 700,000 consumers. SMEs working with FairFX grew over 100% in the past year.

However, there are many players in the currency exchange market. Traditionally, consumers would go to their bank or the Post Office. Some retailers such as M&S offer the solution as well. In addition, challengers such as TransferWise, Revolut and ipagoo have entered the field, offering the services digitally. 
Is this a good time to be a challenger with all of this competition?

Hickman says: “It depends for which market segment you’re in. There are a massive amount of challengers and start-ups coming into the market at the moment. On the consumer side, it’s quite busy and competitive. On the SME side, slightly less so and that’s where we’re mainly focusing. That’s the fastest growing part of the business.”

SMEs are an “underserved market,” according to Hickman. While high street banks ignored have of the market, FairFX were able to add value to the service element, as well as in the technology side. The breadth of service allowed Fair FX to stand out.

“A lot of start-ups focus on just one thing,” Hickman purports. “We have platforms across all mediums. If the company want to deal with us over the phone, that's fine. If they want to deal only via by app, also fine. We're across all mediums. We've tried to create a business that will service a particular client's needs.

It’s all about what the client wants rather than what companies envisage a client wants.”