Pertinent Information Regarding Australian Banking for Expatriates:
Due to the evolution of the digital age, it has become more commonplace to trust online banking. Once the online banking revolution occurred, it became possible for customers to contemplate the possibility of reaching multiple markets with commerce. From this came a need for currency exchange to flow more freely than it had historically due to the vast amounts of capital that needed to be exchanged across borders internationally on a daily basis. Historically speaking, banks had a monopoly on the market. To this end, banks were able to get away with charging astronomical fees to move money between markets to consumers and businesses alike. Due to this injustice, FX companies decided to fill a hole in the market that consisted of consumers and businesses that wanted to move money at a fee that was less expensive. One of the markets that was greatly concerned with this was Australia. Previously, Australian banks had dominance on financial transfers between markets. Due to Australia’s growth in the global economy, the need arose to get capital to many different markets. FX companies have become a viable alternative to Australian banks. When assessing viable ways to move capital in a cost-effective way, it is important to analyse whether utilizing a bank in Australia or a FX company is the ideal solution. Consider the discussion below when deciding between Australian banks and FX companies.
Main Banking Institutions in Australia
When attempting to choose a bank to work with in Australia, it is wise to research various banks in order to ascertain which bank you may be interested in working with. Upon doing so, you will be able to see which bank is the ideal fit for your particular needs. Below find a list of the top banking institutions in Australia:
- National Australian Bank: One of the top banks in Australia to work with is National Australian Bank. Three benefits that their bank currently boasts are: no monthly service fee, no minimum opening or balance requirements, and no overdraft fees.
- Westpac: Westpac, otherwise known as Australia’s First Bank offers many competitive advantages to include having the ability to open a bank account up to twelve months prior to relocating to Australia. Their account opening process is advertised as three minutes in length and an Australian address is not required at the time of account opening from abroad.
- Suncorp: Suncorp seems to be the bank in Australia that is the best suited for students and young professionals. The policies are allowing for an individual that is just starting out to get established. Examples of this are: $0 monthly fees, free ATM withdrawals across their network, no minimum balance, and the possibility of benefiting from their BillSplitter application, which enables bills to be split amongst friends and colleagues.
- Commonwealth Bank of Australia: Commonwealth Bank of Australia is one of the leading banks in the country. One of their main benefits that they advertise is that one is able to open a bank account up to three months before arriving in Australia. Currently, they are offering no account fees for up to 12 months, which is another benefit of choosing their service along with their MasterCard debit card that is widely accepted across Australia.
- ANZ: ANZ bank is another leading bank in Australia. One of the benefits of this bank is that they allow your money to start gaining interest before you even arrive in Australia due to their potential to open an account up to twelve months in advance.
- George: St. George is another useful bank to work with in Australia. The benefits of working with St. George are for those that have more capital at the beginning. For example, the offer a $0 service fee for those that have a minimum balance of $2,000.
Surprises that One Will Encounter When Working with Australian Banks
There is a uniform process to qualify for a bank account within Australia. It is important that you are compliant with the requirements so that you are eligible to open a bank account and then be able to move capital both to and from that bank account. Here are three surprises to be aware of when dealing with Australian banks:
- There are two primary types of bank accounts: As is common in many jurisdictions around the globe, there are two primary type of bank accounts for consumers to consider in Australia. The checking account is your standard checking account for regularly activity that comes with a check book and online banking. The second kind of bank account that is standard for most consumers is the savings account where the consumer will be able to earn interest on the money that is kept there on a monthly or annual basis. For corporate entities, there are business account options as well that have requirements for opening such as established business history from abroad or a corporate registration within Australia. In the effort to avoid the establishment of shell companies, international banking regulations have become far stricter than previously, which is why corporations will have more hurdles to jump through before being able to establish a business bank account within Australia.
- There is a 100-point system that you must meet when opening a bank account in Australia: What is important to note is that one’s qualifications to open a bank account in Australia are measured by a 100-point system. For example, important documents, such as a passport, will be far more valuable than other requirements with a point value of 70 points. Each bank will differ on their requirements for opening an account in Australia. This is precisely why it is wise to research beforehand to ensure that you have the proper requirements to open an account in Australia with ease.
- Be Aware of Moving Capital from Overseas to Australia and Vice Vera: Australia has a very strict requirement on the amount of money that is coming into the country. It is vital that you understand that amounts being brought into Australia that are larger than AUD 10,000 must be reported to customs. Additionally, in the reverse, Australian citizens will be taxed on capital that they are keeping abroad. The tax rate can sometimes even be as high as 45%.
Drawbacks to Sending Money Internationally with Banks
- Large Fees: One of the quintessential issues with sending money through banks is the large fees that are involved. A pertinent example of this is that individuals are resorting to sending money through agencies such as PayPal and Western Union in order to save capital. For example, Chase Bank charges $40 per international wire, whereas PayPal or Western Union charge around $25 depending the amount of the transaction.
- High Currency Exchange Rates: Banks are notorious for having exchange rates that are far higher than FX companies. This is precisely why it wise to research the currency exchange rate of banks in comparison with FX companies. More often than not, there is a great deal of capital to be saved from utilizing one rather than the other. Doing a comprehensive comparison can save you a substantial amount of capital depending on the amount that you will be transferring.
- Lack of Convenience to the Customer: Banks are quite difficult to deal with in the sense that it takes advance planning to have your transfers arrive on time. That said, banks are starting to offer the possibility of an online transfer for international wires. Even so, banks still take the customer between three and five business days to effectively transfer their funds from one jurisdiction to another. This can make it quite difficult for the customer to be able to anticipate when their wire transfers will arrive to satisfy the demands of their finances.
Benefits of Sending Money with FX Companies
- Low Fees or Possibly Even Zero Fees: What is incredible about working with FX companies is that many times, they have the potential to have low fees that can range between $1 and $5. That said, it is possible to have this fee waived if the amount being transferred is above a certain threshold. It is usually best to research the various benefits of different companies in order to ascertain which one has the benefits that are the most appealing to your particular financial circumstances. This way, you will be able to capitalize on those benefits and save the most money possible on your transfer. Upon completing your research that you will realize that you will see that banks such as Lloyds Bank, HSBC, and Barclays had transfer rates that were substantially higher, ranging between 4-25 GBP per transfer respectively.
- Great Currency Exchange Rates: Something that is commonly missed when working with FX companies versus banks is the reality that FX companies do in fact get better ranks in the banks. There is a simple reason for this and it is the interbank exchange rate that they have access to. The interbank exchange rate gets FX companies a better exchange rate because they have a higher volume than most banks do and they are able to get closer to the interbank exchange rate since they take smaller margins overall. Particularly on higher amounts, this is what helps FX companies to truly get far better rates than traditional banks.
- Easy and Convenient: One aspect that make FX companies far easier to deal with is their versatility with the modern consumer and their increasing digital needs. For example, an individual is able to transfer money both to and from Australia from their home or on their mobile device. This type of versatility is quite convenient to consumers, which is why consumers are turning away from the overpriced banks and embracing FX companies with open arms. In terms of sending money to and from Australia, it is great to look at sites such as SendMoneyAustralia.com to commence one’s research about which FX company is ideal for their specifications.
Recommended FX Companies to Consider
- World First: World First is one of the FX companies that is the most cost effective. In fact, World First is known for a very high level of client satisfaction. They are particularly great when working with transfers that are both to and from Australia. Some of their notable benefits include: a fee waiver for transfers above AU $10,000, AU $10 for transfers under $10,000, regulation by ASIC, fast international payments, and award-winning customer service.
- Hifx: Hifx is a FX company that operates based on high level technology and high liquidity. It is one of the largest currency providers, own by Euronet. They offer services in 60 different currencies and accept customers from Europe and Australia. If you want to know the differences between the two companies please check world first versus Hifx.
- OFX: OFX is another FX company that is quite reputable in Australia. Some of the benefits of choosing to work with OFX is that they are regulated by the ASIC and their parent company is even listed on the Australian Securities Exchange (ASX). Their global support team is quite wide spread in that they have representatives in offices in the following cities: Hong Kong, Australia, USA, Canada, UK, and New Zealand. Since 1998, they have successfully transferred over $100 billion and due to this volume, are able to obtain better exchange rates than banks.
Concluding Remarks on the Subject
When contemplating how to move money effectively in the global community, it is important to assess any and all options available to you. The reason for this is that financial landscape has greatly changed in the digital age. For this reason, it is important to learn about the best ways to move your capital that are cost effective. When discussing options for transferring money both to and from Australia, it is absolutely vital to consider FX companies in order to save the most capital possible. Upon finding the right FX company for your particular financial situation, you will be elated at the capital that you will save on your money transfers in the long term. Additionally, you will begin to see the diminishing value of working with banks that are notorious for extreme delays, increases in wire fees, and inflated currency exchange rates that will cause you to spend far more capital than you need going forward.
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