Banks are better at currency conversion than fintech cowboys like Currencyfair

I recently had a conversation with someone who thought that changing currency with your bank was always a bad idea, and it was always better to use a separate service to do the foreign exchange, such as Spammers Wise, Cowboys currencyfair, or Revolut.

I just had a look on the online banking at changing 1M USD to GBP, and 1M EUR to GBP, between my different currency accounts within this same private banking relationship, to line up a chunk of GBP.  The indicative rate was 1.5% off the xe.com rate.  This is bad.  It indicates a spread of 3% if it's symmeterical.  I am going to call the 1.5% thing the half-spread.  It is loss for the customer, and mostly profit for the bank.  One would not want to do it for a large amount.

Then I wrote to them and they called me, and we ended up changing them at half-spreads of 0.13% and 0.17%, respectively.  These are not just good, they are very good.

The fintech brigade starts at around 0.5%, so it is better for smaller amounts.  I don't know how well their take reduces for higher bands.  But as the amount increases, the probability of a compliance hold-up approaches one.  Keep it within one bank between different currency accounts, and you know you are not going to get complianced on this transaction.  

In 2022, Currencyfair spuriously held funds of mine for months until I performed some administrative slavery and proved something or other to them.  During this time, the funds were not shown on any balance or other statement on their online banking.  They had effectively disappeared.  They were incorrectly, perhaps fraudulently, shown as having been withdrawn.  Eventually I did get the funds back, and in the meantime I had filed a complaint, which I have still not got round to escalating to the Irish financial regulator.

So no, it's nothing like as simple as always use a separate service to exchange the currencies.