The Truth About Banks vs. Financial Institutions

Posted by Olympia CGP on 3/9/20 3:17 PM

When it comes to Foreign Exchange, which one should I go with?

Whether you are importing/exporting goods, making a large purchase or sale in another country, you will encounter the need for foreign exchange services.

People assume that banks are the only institutions that can handle these types of transfers and transactions. Although banks can provide FX services, they do not always maximize the money back in your pocket. Banks exchange your money at higher rates and may not provide a level of service to match. There are however other options that provide convenience, security and great rates!

 

Your Options

BANKS
International Wire Fee
$30- $75


✗ Competitive rates

✗ Personalized service

✔ 100% Security on funds

✔ Online trading platform

✗ Market monitoring

✗ Multi-currency account

✗ Free wires

OLYMPIA TRUST
International Wire Fee
$30- $75


✔ Competitive rates

✔ Personalized service

✔ 100% Security on funds

✔ Online trading platform

✔ Market monitoring

✔ Multi-currency account

✔ Free wires* 

BROKERS
International Wire Fee
$30- $75


✗ Competitive rates

✔ Personalized service

✗ 100% Security on funds

? Online trading platform

? Market monitoring

? Multi-currency account

✗ Free wires

*1 free wire with every transaction

Exchange Rates

Bank generally have a set daily exchange rate for sending your funds to another country. This rate may be set in the morning and not fluctuate with changing market conditions. Even if they are updated to reflect the ups and downs, the set margin can be as high as 5%.

Private foreign exchange providers work with their clients and counter parties to reduce this margin and they trade on ‘up-to-the-second’ quotes. You can expect to save 1-3% on each transaction in addition to the savings on wire fees. Providers can also offer flexibility if your deal has a flexible timeline.  If you wanted to exchange at a certain rate to stay on budget, they can set up market orders to automatically execute giving you the exchange level desired. Read more about Market Orders here  

 

Service

Private foreign exchange providers offer personalized service to their clients. Unlike big banks, they can let you know when markets are trending in your favour, be in contact when beneficial exchange rate moves happen, and ask questions to understand your unique needs better.

Having a dedicated trader working for you can be the difference between keeping more money in your pocket or being at the mercy of the markets.

Security

100% SecurityWhen choosing a foreign exchange provider, the security of your transaction should be scrutinized. Being able to save money and have personalized service should not come at the expense of risking the security of your funds.Be sure to select a currency provider who can offer security through the entire transaction. Some private providers may be small shops who are not adequately capitalized and may mix your money with their operating funds. In cases where markets move suddenly, some may not have the required currencies to pay their operating costs or maintain client’s hedged positions which compromises your funds.
Olympia’s solution is to put our clients’ funds into segregated trust accounts which ensures 100% security throughout the entire transaction process.
 
Conclusion
Private foreign exchange providers can save you money on your bottom line and create personalized programs to maximize your exchange needs. Just be sure to look for:

➩ Publicly traded institutions
➩ Providers who can offer lower margins
➩ Providers who can offer free wires
➩ Providers who hold your funds in your name
➩ Providers who can claim 100% security through the entirety of your transactions

 

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