LONDON From a small, white-washed basement close to London’s Liverpool Street station, Sakthi Ariaratnam is beating banks at what you would have thought was their own game - and it is relatively easy.
On a recent Tuesday morning in the heart of London's City financial district, Sakthi's firm Best FX would sell you 124 euros for 100 British pounds. Less than 20 metres along the street, the world's third biggest trader of foreign currencies, Barclays, would only give you 118.
The difference is a familiar one: surveys show consumers tend to seek travel money from bureau de change booths in preference to banks because the rates are better and Best (www.bestforeignexchange.com) are rated by a number of consumer surveys as offering the UK's best deal.
But at a time when banks are seeking to defend themselves from charges they manipulated the $5 trillion a day currency market, the gap stands as a refutation of the lenders' claims that their foreign exchange market has become extremely efficient for everyone.
The exchange rates on the board are not even the best ones Sakthi and his colleagues give bigger or regular clients.
"If people from any one of the big firms we serve want a better rate, we give it to them," he says. "There is enough leeway there."
It is not an accident that four of Best's six London locations are in the financial district. Ask around in some of the City's major currency dealing rooms and traders say they use the company for money for business trips and holidays simply because they get more bang for their pound.
Sakthi lists clients from some of the world's biggest banks, U.S. giants JP Morgan (JPM.N) and Citibank (C.N), or their UK competitors Barclays (BARC.L) and HSBC (HSBA.L). He also has regular custom from workers at the brokers, IT and information providers whose businesses feed off the banks.
"This is predominantly a City area. It is not tourists," Sakthi says. "You have to be extremely competitive on price because they know the market. But if you give the best rates they will stay with you - and we have a lot of repeat custom."
Senior management at banks are nervous about how the allegations of currency market manipulation, now being investigated in half a dozen jurisdictions worldwide, will play out.
First, there is the potential for fines from regulators that top the 6 billion euros ($8.18 billion) they have already paid out in the Libor interest rate fixing row.
But another reason is the possibility that the investigations will lead to a more detailed look at the structure of a market from which banks rake in billions annually. While most of those institutions have moaned loudly this year about falling profits from foreign exchange, Barclays for example made 5.54 billion pounds from all trading last year.
HSBC, one of the few banks to break out its FX trading profits, made $3.2 billion in 2013, almost half its overall Markets income of $6.9 billion.
At an institutional level, the currency market is highly competitive. The spreads at which banks buy and sell euros for their biggest clients - other banks or multi-billion dollar investment, hedge and pension funds - are just a "pips" or hundredths of a cent. Senior bank traders and managers regularly complain that increasingly it is business run at a loss, or at very thin margins, in aid of keeping key customers.
But by the time they get down to delivering that service to ordinary individuals, the cost rises. Barclays, for example, is charging spreads of more than 7 cents - or more than 700 pips.
Parcelled up and back on the interbank market that amounts to 700,000 euros of profit for the bank on a standard 10 million pound lot.
Banks say the difference reflects the broader costs they have to bear as crucial parts of the world's financial structure and the risks they have to bear and manage in such huge transactions.
"Our analysis shows we are competitive against a range of different FX service providers," said a spokesman for another UK high street bank, Lloyds (LLOY.L).
"Our FX international payments service has an extensive cost base and the margins charged on payments relate back to the cost to providing the service, staff, premises, infrastructure and processing."
But speaking on condition of anonymity, officials at two of Britain's biggest high street lenders said there are concerns of a steady loss of market share in the retail segment.
"The truth is that the rates banks give to their customers have never been very fully examined," one senior retail banking manager told Reuters.
"They are benchmarked against what our immediate competitors are charging, how much you want to earn or position yourself in a given segment and so on. But they are not necessarily set against all of the places you can now exchange currency online. We do seem to be losing share pretty consistently as a result."
After the surge of the Swiss franc drove rises in mortgage repayments for millions of eastern Europeans up two or three times in 2009, Polish and Hungarian policymakers began to ask why banks were allowed to stipulate that their own rates should be used for the currency exchanges involved.
Poland's parliament passed a law specifying that mortgage holders could buy their own francs from wherever they liked and make the payment themselves. Mortgage payments fell.
But most Europeans exchange only minimal sums annually, their need for currencies limited to a handful of weekends away or an annual summer holiday - and only then if they leave the euro zone. Those who do notice they are getting a worse deal tend to just swallow it.
"The public really didn't get any of these big international scandals, they haven't understood the impact on them," says Andy Love, an MP charged with overseeing Britain's financial sector on the UK parliament's Treasury select committee.
"Whether the commissions and costs to the consumer are proportionate, I don't think we have really looked at that. I would say we should. But no-one is beating down my door to indicate that they got a lousy deal on foreign exchange at Heathrow airport."
Still, interest in how best to exchange currency is growing. Before a lull in the past year which most cast as temporary, the global currency market had tripled in size in just over a decade to be worth more than $5 trillion daily.
Much of that is the result of the globalization and the ease of communication and global trade. But it also reflects growing interest among ordinary consumers.
"People are more aware of currencies and what their value is," says Brendan Callan, European chief of internet-based retail foreign exchange platform FXCM. "Sooner or later people start to say: you know what, I have a view on that."
Back at Best in London, Sakthi says he is increasingly looking at another bigger and complementary market in bank transfers, where he says banks are charging current account holders such large spreads he can beat them even when he swallows the fees the banks charge himself.
His business is beholden to banks for a number of basic services and he is very reluctant to criticise lenders outright. But when pushed on the issue of competitiveness he says with a sigh that he thinks the banks "could do better".($1 = 0.7331 Euros)
(Additional reporting by Clare Hutchison in London Editing by Jeremy Gaunt)