German savings banks have teamed up with the Bank of New York Mellon (BNY) to assist customers with international money transfers.

Testing Phase at Two Banks

The financial institutions, known as Sparkassen-Finanzgruppen, are collaborating with BNY to facilitate customer transfers of up to EUR 3,000 to recipients outside the EU. This initiative is currently in a trial phase at two smaller German savings banks and aims for a wider rollout in coming months.

Challenging Fintech Competitors

The move seeks to counter low-cost fintech companies that have raised concerns about the sovereignty of Europe’s financial services. By reducing fees by up to 75%, these banks hope to reclaim business lost to competitors like Revolut and Wise, among others.

Furthermore, the partnership with BNY aims to capture a segment of German residents who frequently send low-value transfers abroad to their home countries. One example is the savings bank in Hanau, near Frankfurt, which has been testing this new system following observations that many people are transferring money overseas to support family members.

The BNY document mentions a project named Crossmo, under which German banks can now offer more competitive rates. For instance, the transfer fee for sending money abroad is now EUR 5.5 compared to the previous charge of EUR 22.

Addressing Sovereignty Concerns

While there are criticisms about Europe’s reliance on US financial infrastructure, such as Visa and PayPal, representatives from DSGV, the national umbrella association for savings banks, acknowledge that sovereignty is a factor. However, they also believe that partnering with global entities offering extensive country coverage and secure transaction processing is essential.