Tech Companies are Shaking Up the Foreign Exchange Trade

The disruption wrought by the likes of Spotify, Skype and Uber on the music, telecomms and transportation industries is about to hit banks and financial services as tech companies seek to shake up banking.

That's according to the executive chairman of TransferWise, whose peer-to-peer foreign exchange company has integrated with an accounting app in another sign that web startups are eyeing bigger chunks of the market in financial services.

Estonian Taavet Hinrikus, says the deal with online accountancy app Xero will open up the money-saving service to thousands more small and medium sized businesses (SMEs). Xero currently has around 400,000 users in 350 countries, and they will be able simply to select a TransferWise checkbox in the app when paying invoices overseas, saving them the 1-5% fees typically charged by banks for currency exchange transactions.

TransferWise is just one of a host of online forex platforms to cut out the middleman, and the company charges a flat commission of 0.5% on transactions, based on the interbank exchange rate.

"We estimate that between five to 10 trillion euros move across country borders every year. Ten years ago all of that money was handled by banks. Now we have PayPal, Western Union, and a number of other people working in this space, but it's a huge space," says Hinrikus.