Spending money abroad can often become a pain point for travellers. Confusing or hidden fees have long caused issues for Brits and new research by digital transformation company GFT reveals the extent to which these problems remain.
Only 26 per cent of UK consumers understand their banking providers’ foreign spending fees while 38 per cent do not even know what the fees are; GFT revealed. Despite the apparent confusion around fees and a lack of certainty surrounding fee specifics, card payments continue to be the most popular method of payment whilst overseas.
Almost half (47 per cent) of consumers used a bank card from either a traditional bank or neobank to make transactions. This high usage highlights exactly why transaction fees are so important. GFT also explained how this information could reveal why a growing number of people choose to put their trust in challenger banks when travelling abroad.
Thirty-four per cent of consumers also said that the ability to choose whether to pay in the local currency or in GBP is the main factor for using a neobank whilst overseas. Thirty-nine per cent of respondents who use new digital-only banks whilst abroad, explained they do so because they offer the lowest fees.
Looking to the future
The findings emerged from GFT’s latest Banking Disruption Index, a quarterly assessment of consumer attitudes towards their bank’s digital capabilities. The index also explored which additional services customers would like to see more of:
- 28 per cent said they would like their banking apps to offer real-time currency exchange rates
- 29 per cent of 25 to 34-year-olds want the ability to pay in GBP or local currency from different ‘pots’
Richard Kalas, client solutions director of retail banking at GFT UK, discussed how services provided by traditional banks are falling behind. Kalas said: “It’s clear there is a significant difference between the offerings provided by neobanks and traditional banks when customers are spending their money abroad. More digitally savvy customers are already taking advantage of neobank capabilities and it is inevitable adoption will only increase in future.”
As part of its index, GFT also assesses consumer sentiment towards their bank overall. In Q1 2023, the sentiment score dropped two points since Q4 2022, down to 77 points, signifying a downward change in consumer attitudes towards their banking provider. This may reveal that banks, specifically traditional banks, need to improve their range of products and services to close the gap to the digital-first banks offering greater personalisation.