Interview with:Boaz Zaionce, Co-Founder & Chief Marketing Officer of Covercy
Boaz devotes his efforts to marketing, public relations and steering operations. He began his career working in consulting before shifting to online marketing, where he headed Online Advertisement at Wix.com, one of the leading global website building platforms. Mr Zaionce holds an Msc in International Economics & Business from the Utrecht University School of Economics located in The Netherlands.
- What direction is the payments and wire industry going in terms of growth?
The non-bank money transfer industry, being a relatively young industry, is seeing a steady growth of quite a few players, however, not all are competing in the same segment within this industry. You have the e-wallet players, non-bank bank wire companies and even digital money like Bitcoin for example, all with one aim, to offer an alternative to banks. As technology moves forward and people seek faster and easier ways to handle their finances, it is clear to see that this industry will keep on growing.
- What are the problems with the banking systems in terms of sending money abroad?
If you ever had to send money abroad from your bank, you probably had a puzzling experience. You executed your transaction, paid the fee that was stated and then a day or a few days later an extra sum of money was deducted either from your account or from the beneficiary’s account. You ask your bank how come? And they answer by saying that this is how the bank system works or to be exact, this is how the SWIFT system works. This network is where the majority of the bank transfers in the world are registered. The 40-year-old Swift monopoly is expressed in the commission that it takes out of each transfer, and also by diverting the transfers to mediator banks and middlemen, which also take fat commissions. Without going to deep into the system, it is clear that this of course entails a cost.
To make things simpler, the high costs of transferring money internationally is due to the system banks use. To make things even worse, as banks pretty much dominate the financial world, the exchange rates they offer individuals and even businesses can easily be lowered, but without competition, there is no real reason for this to happen.
- What are the best ways to send money abroad? (bank, PayPal, e-wallets etc.?)
To answer this, let’s focus only on the cross border cross currency transactions. If we use the example of an individual who wants to send money from the UK to Germany, we are talking about a GBP to EUR transaction. The bank option is expensive due to its SWIFT system as explained earlier and the exchange rates it offers, but people trust the bank. PayPal is a good solution for same currency transactions but not for cross currency transactions as they are not transparent with the exchange rate and simply take large spread, not to talk about fees when extracting the money, nonetheless it is pretty simple. A company like Western Union will most likely be cheaper than the bank, but a transaction cannot be done from the comfort of your house and it is cash to cash business which is a different industry all together.
I would say that the best to transfer money abroad, meaning a combination of price, comfort, transparency and price, would be non-bank companies. Already we see that people are putting their trust in e-wallets and all sort of online money services and I am confident that in a few years, people will trust these sort of companies as much as they trust their banks.
- Globalization – people immigrant across the world – has this phenomenon pushed up the wiring industry and the international payments?
Transferring money from one account to a foreign account was always considered to be expensive for both individuals and businesses. Private clients almost never used this kind of service, and it is usually used by companies, especially large ones. However, in a world in which small and medium-sized businesses are required to be global and relocating to a foreign country became easier, a demand for better ways to send money abroad was created.
- What are the reasons people all over the world use wire companies like Covercy?
People and businesses are always looking for better, faster and cheaper methods to send money abroad. However, it all boils down to trust and risk taking. Banks as stated earlier are looked upon by many as trusted institutions and as such people feel comfortable transferring money with them. The advance in technology and the trust people started to have in internet oriented products and purchasing online, actually paved the way for money transfer companies like Covercy. As long as the risk is not too high, people will keep trying new services and products with the promise of them being better, the only question is whether someone is an early adapter or waits a bit until others are already using the product.
- Developments – What are the latest developments on the technical side
The focus of the coming 6 months is to both improve our risk management mechanism, which will allow us to further minimize our currency exposure, and to further automate anti-money laundering processes in order to ease the onboarding process of new clients.
- How the grow of mobile effects payments and wire possibilities?
It is a well-known trend in the world that more and more people use mobile devices for their everyday various actions like buying merchandise, social media, work and also bank transfers. Being able to make an easy mobile funnel is indeed something companies in many segments are aiming for and the money transfer industry is no different.
- What is Covercy ‘s uniqueness?
Covercy’s main focus is to provide SMB’s with an easy solution to conduct their international commercial transactions. SMB’s like all businesses must pay their suppliers / employees etc. in full and therefore the amount received by the beneficiary must be exact.
We developed a system where the money displayed, when concluding a transaction online, will be the final amount the beneficiary will receive, no surprises. This can happen thanks to our risk management mechanism, which is hedging the exposure of foreign currency and allows it to offer a comparatively attractive rate by minimizing the risk. Furthermore, due to our network that supports local bank transfers, no extra charges will be inflicted after a transaction has been completed.