Do you like to think you’re running your business or that someone else is?
Maybe that sounds ludicrous. Well, it’s not as crazy as it sounds because when you’re converting money from one currency into another, it might sometimes feel as if your bank’s in charge rather than you.
It’s something of an historical fact that in Australia, exchange rate levels were traditionally associated with the banks. You simply phoned them up, whether as a retail or commercial customer, then were grateful when they told you what rate you were getting that day. Job done and if you weren’t happy, well, tough because there wasn’t a lot you could do about it.
Of course, those days are long gone now or at least they should be.
That’s because today there are specialist forex organisations, like Forex Group, who are operating in foreign exchange and they’re typically able to offer better exchange rates than the major banks. The reason for that is related to specialisation and expert knowledge – two things that allow the market to be exploited far more effectively than might be possible by a much more generalist bank.
Yet above we did say that the old no-choice days “should be” gone. So, why is it that in Australia, exchange rate levels and foreign currency conversions are still so closely associated with the banks?
To some extent, this is attributable to companies not quite understanding just how the modern markets have changed and how technical they’ve become. There’s sometimes an in-built cultural assumption that the banks must be able to deliver the best rates because of their size.
Paradoxically, the opposite is the case – as is outlined above.
So, there are still significant numbers of companies who believe they have little choice when it comes to forex transactions whereas in fact there is now intensive competition in the market place and has been for many years.
So, if you believe that competition is good and that you’d like to have a greater degree of control over your forex operations, it might be an idea to start questioning whether or not using your bank out of habit is really the best approach.