x Abu Dhabi, UAESunday 23 July 2017

Banks profit from slow transfers

International transfers can take days, and for the banks, that is a good thing.

One currency trend that is unlikely to change soon is the time it takes for funds transferred from the Gulf to appear in an overseas account. According to Brian Dolan of Forex.com, Gulf-based expatriates often have to wait a week or more before the money they send home is accessible from their domestic bank.

"That comes down to banking operations," Mr Dolan says. "An intra-bank currency trade settles in two business days based on time zones and the fact that the trade might be done, for example, in the New York afternoon after the German bank that initiated the transaction closed up.

"Then it takes a couple of days for the communications to be sent back and forth between the banks and the funds to be credited. It comes down to time delays and the banks involved. But how do banks make money? They earn the float, meaning the longer the money is in transit you're not earning the interest on it, they are.

"It's one of the reasons customers are more demanding, saying, 'Hey, it shouldn't take a week and a half to transfer my money. If you don't do it in two days, then I am taking my business elsewhere'."