The UK’s financial services sector is renowned for its innovation and dynamism. A key contributor to economic growth, it would not be an understatement to say that banks, building societies and insurers act as the engine of the UK’s economy. Through their provision of loans, mortgages and lines of credit, the finance sector acts as the lifeblood of the economy, supplying the cash needs of households and SMEs up and down the country.

In addition to these services, most high-street banks provide a currency transfer service; foreign exchange specialists, however, almost always provide more competitive exchange rates, in addition to specialist tools and products. By partnering with foreign exchange providers such as Moneycorp, banks and building societies in the UK can benefit by being able to offer vastly improved international payments solutions to their customers.

What contribution does the finance industry make?

The financial services sector is a vital part of the UK economy, contributing £173.6 billion, or 8.3% of the country’s total economic output, in 2021. Research from PwC for the City of London Corporation reported that the financial sector contributed 10% of total government receipts (£75.6bn in taxes in the year to March 2020) in 2019/20.

The sector is an important source of jobs and employment: there were just over 1m financial services jobs in the UK in the first quarter of 2022 (3.0% of all jobs). Despite the threats posed by Britain’s withdrawal from the European Union and the Coronavirus outbreak, the UK’s financial sector is thriving – and it will continue to act as a significant contributor to the UK’s income, employment, investment and trade for the foreseeable future.

How exchange rates can affect the finance industry

Whilst we specialise in helping financial services providers offer their customers foreign exchange services, it is also true that which fluctuations in currency exchange rates can have adverse impact on the finance sector.

As a rule, banks that trade internationally are more likely to be negatively impacted by fluctuations in exchange rates than banks that do not transact at a global level. Foreign exchange volatility exposes banks to a variety of risks: these include transaction risk (the risk of an exchange rate changing between the date that a transaction is made and the date that a transaction is settled) and conversion risk (the risk that a borrower will not be able to convert local currency into foreign exchange). This makes banks less profitable by negatively impacting upon the return on their assets.

In the most extreme scenarios, abrupt changes in exchange rate can transform a bank’s balance sheet from positive to negative and destabilise its share price. Following Russia’s invasion of Ukraine, the rouble cratered to a record low against the dollar, losing 30% of its value. This fall in the value of the rouble was at least in part to blame for shares Sberbank, a Russian state-owned bank, falling as much as 74pc.

Insurance companies transact in foreign exchange too, given that they are often required to pay out claims in different currencies. Fluctuations in currency exchange rates can lead to insurance pay-outs denominated in foreign currencies costing far more than had been anticipated.

How international payments can integrate with financial services

If your organisation does not currently provide foreign exchange services, you may be losing an opportunity to provide a better customer experience and improve your bottom line.

International payments cost time and money, but our partnerships with financial services providers have allowed them to deliver a free, value-added service to their clients. We offer global payments solutions that allows you to manage all of your foreign exchange transactions for your clients, in addition to expert guidance and access to a range of currency tools that can be used to manage international payments and mitigate currency risk.

How we can help your business save money

As well as our partnership services, we offer financial service providers access to a suite of APIs that allow them to automate and integrate FX payments platforms into their existing service. We also offer APIs that allow you to use your own branding on our FX platform, allowing you to create a consumer solution that is user-friendly and makes use of our extensive currency expertise and facilities.

With 24/7 access to your online currency account, you can manage and process all of the payments that you need to make. Management controls and live reporting help you manage all transactions. Every business is assigned an account manager who understands the requirements of financial services providers; they will guide you through the facilities that are available and provide you with information on currency volatility to ensure that you are offered a solution that is tailored to your business needs.

Our global payment solutions allow you to make bulk payments for any business costs or staff salaries in over 120 different currencies to over 190 countries. You can also use a range of FX tools, including a forward contract, spot contract and FX orders.