HSBC Holdings PLC (LSE:HSBA) has thrown its hat in the foreign exchange ring with the announcement of Zing, a forex app aimed squarely at a market dominated by disruptive tech platforms Wise PLC (LSE:WISE) and Revolut.
Disclosed in a recent interview with Bloomberg, Zing will be available via Apple’s App Store and Google Play this Wednesday.
“Zing has a global ambition,” HSBC’s chief executive Nuno Matos said in an interview, adding: “We want to establish ourselves as a global platform for international payments, which ties perfectly with our international payments strategy for HSBC and you should see us very soon in Asia, in the Middle East and in EU markets.”
Wise’s fintech star steadily rose after the UK-based company began offering super cheap foreign exchange payments in the early 2010s.
Wise charges as little as 43 basis points per international forex transaction due to its innovative use of domestic currency pools that make cross-border payments cheap and easy.
Big Banks have been unable to compete with Wise’s revenue model. In 2017, Santander warned that a large chunk of its profits generated by expensive forex margins was a risk from Wise’s disruptive model.
Though HSBC already offers forex services to existing customers, the bank hopes that Zing will bring in new customers to the bank.
However, it is not yet known how HSBC intends to compete with Wise’s super-low transaction fees.
Responding to a request for information, HSBC passed on a statement from Zing, which operates as a subsidiary of HSBC and as an e-money institution under FCA rules.
“At launch, Zing members can hold 10 different currencies in the app, providing the ability to lock in conversion rates and spend like a local without point-of-sale conversion fees in those currencies,” read the statement.
It added: “Zing also enables members to send money internationally across more than 30 currencies, and spend across the globe.”
James Allan, founder and chief executive of Zing, commented: “Many people are increasingly living an international lifestyle with more than half (57%) of UK adults have either spent time living abroad or have aspirations to do so.
“Our research found that these people often have frustrations when sending, spending and converting money. That’s why now is the time for a new kind of international payments solution; one that combines cutting-edge innovation with the support of an experienced global bank.
“Zing delivers this unique proposition to our members, helping them live their best international lives.”
The first 10,000 people to join Zing will become founding members and receive exclusive rewards in their first year, including their choice of Zing fee-free currency conversions (up to £1,000 transactions) or 20 Zing fee-free international ATM withdrawals.
Following the Zing announcement, Wise shares dipped 3.4% to 844.4p, though it is not clear if this was attributable to the announcement.
Proactive has reached out to Wise for a comment.