What once seemed an unlikely nightmare for British travellers is becoming an expert forecast. City giants Morgan Stanley and HSBC are both predicting that the euro will reach parity with the pound and even go beyond that point in the coming months¹.
But how will British currency buyers react if rates fall, and will it affect their travel plans? Morgan Stanley forecast suggests a 12% fall in the pound’s value against the euro by the end of March next year, while HSBC is sticking to a forecast of euro pound parity by the year end.
That’s a large cost for families travelling abroad to swallow. Some may react by shopping around for better rates, while others may change their holiday destinations entirely.
Consumer Intelligence research shows that foreign exchange customers are already price sensitive. Over half (52%) of customers choose the provider that they believe offers the best rates, and poor rates was rated the top concern about any provider in the most recent survey of customers. Nearly 60% of customers said that they would switch for a better rate.
The euro is still by far the most traded currency by both business and leisure travellers. Our most recent survey showed that 62% of all currency bought was euros, with the next most popular currency, the US dollar, making up just 15% of transactions.
What can banks do to ensure that they keep customers during this difficult time?
Here are a few pointers that could help you to keep market share, all gleaned from our knowledge of customer behaviour and opinion.
- Let them know about rate changes in advance
We know that many customers buy their currency a while before their holiday. Over half of leisure travellers (54% ) bought their currency either a few weeks or a few months before their trip. Even some business travellers like to be prepared, with 44% buying currency either a few weeks or months in advance. By alerting customers when rates are good, you can persuade them to buy currency at the best time for them, creating brand loyalty and ensuring they don’t go elsewhere.
- Consider other currencies and destinations
Recent figures from the Post Office, looking at good value long haul city breaks, highlighted some bargain areas that may become popular. Bangkok, Tokyo and Beijing came out as the best value long-haul city breaks. If the pound continues to fall against the euro, providing good rates on the baht, yen and yuan may become a more important strand in your strategy.
- Make your rates clear
Tiered rates or rate banding can be confusing and misleading to the customer. They won’t be aware that the more they buy the better the rate could be. Be clear and transparent on your rates and as long as they are competitive, the customer will buy and will return.
Travel Money: What Your Customer Is Really Thinking
Buying travel money is an important part of many people’s holidays abroad, and Consumer Intelligence’s survey shows that travellers are becoming more price sensitive, perhaps due to the slide against the dollar and the euro.
¹Buying travel money is an important part of many people’s holidays abroad, and Consumer Intelligence’s survey shows that travellers are becoming more price sensitive, find out why.