Opportunity Cost: Online v. In-Branch Currency Exchange

by Evan Shelan, CEO, eZforex.com

I’m often asked by those new to exchanging currency where to begin the sales process: online or in-branch. Many financial institutions are currently attempting to control costs by relying more heavily on the Internet for the processing of financial services. Yet, I have found that lowering expenses in such a way will increase your opportunity cost by as much as 84%. Therefore, I advise financial institutions to take a close look at metrics prior to making a decision.

This month, I’d like to give you an idea of the opportunity cost that your credit union may lose while only exchanging currency online. In order to do just that, I’ve averaged the sales of a few heavy volume credit unions and banks that sold foreign currency in 2012 through eZforex. Those that only sold online averaged just $54,000 in sales for the year. However, the financial institutions that sold currency online and in-branch averaged $377,000 in sales during the same timespan. That’s a loss of $323,000 in sales, the vast majority of which were in- branch.

So, why then do these consumers prefer to buy in-branch over the convenience of the Internet? Perhaps, there is a certain degree of trust that they feel when approaching a familiar face or space. Or, possibly, it’s a consumer’s first trip overseas in many years and she has questions for the teller. Also conceivable is a simple discomfort with math—why compute exchange rates and tally the best amount of currency for a particular trip yourself if a trusted credit union employee can help? No matter the reason, I always recommend thinking like a consumer. Ask yourself: If I were new to exchanging currency, where would I rather make a purchase?

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