The digital ecosystem

25 February 2014

The digital and mobile banking, payment and remittance ecosystem that has developed over the past decade has had profound implications for the global money transfer business. In this blog from Nathalie Ferrant, business development director for Europe, Middle East and Africa (EMEA) at Western Union Digital Ventures, she examines the technology and business changes of the past decade and the one to come. 

The way the global money transfer business operates is affected by different factors at many different levels: it involves banks and other financial institutions (FIs), and in recent decades the internet and now the mobile phone. Technology has had a huge impact on the marketplace.

The latter two online and mobile developments offer money transfer operators around the world unprecedented opportunities to reach customers at all times, and also provide access to a different demographic than was previously reachable via a traditional ‘brick-and-mortar’ shop network.  The challenge for money transfer operators such as Western Union, whose business is global by nature, is that the potential of these new technologies is unlocked very differently across the world. 

The key question is how to ensure consistent quality and closeness to consumer needs, when consumers on both sides of the transaction not only have different needs for the money but manage their money with different digital methods? How to serve the end-to-end process effectively is crucial. 

At Western Union, we believe the evolving digital and mobile ecosystem gives us the ability to take advantage of developments in mobile technology, online banking and apps to deliver specific solutions to consumers no matter where in the world they are based. The ecosystems built up around our offerings enable us to achieve a dynamic that is both global and local – consumers access our global money transfer network through the various digital channels that have been designed to best meet their local needs. Of course, new technologies bring disruption and rival offerings but combining new mobile remittance and payment services, allied to an existing infrastructure, is I believe the best way to gain reach and offer good customer service. 

Benefits of a Global Ecosystem Delivering Local Solutions
It makes little sense to offer the same financial services to two populations with completely different cultures - this would only serve to alienate consumers in either or both locations. This is the case for Western Union’s digital and mobile offerings, as well as our physical agent locations, we mix local expertise and ‘on the ground’ knowledge with global technology and infrastructure support.

Below is a list of some of the recent collaborations Western Union has undertaken to try to get this mix of local and global capabilities to better serve people’s country-by-country remittance needs.

1. Development of a mobile app: In the US, Western Union (WU) consumers are used to having a mobile application for everything. They tend to be frequent users of the internet both on PCs and on mobile. Taking this into account, WU joined with US Bank in America in last quarter to expand its money transfer services via both online and, for the first time, mobile banking. US Bank, which has offered WU in-branch transfer services since 2009, has become the first to integrate these services into all of its platforms: offering them via its branches, its mobile app and, over time, its online banking portal. Separately, Western Union has launched its own mobile app which is also live in Australia, a country which has similar consumer behaviour patterns among consumers to the US. 

2. Development of mobile wallets: In Kenya meanwhile, a country often cited in this arena because of the M-Pesa developments, the vast majority of the population there use mobile phones, but few of them have frequent access to a PC. Many people in Kenya are ‘unbanked’, but the enthusiastic adoption of the mobile wallet for money transfers and payments so far shows there is demand for these services.

Recent figures show that almost half of Kenya’s population subscribe to a mobile wallet (19 million out of 44m), and a significant proportion of its economy is based on mobile money. Western Union Digital joined with SafariCom in Kenya in 2008, the operators of M-Pesa, to offer a mobile money transfer service between its customers and people in 45 other countries and territories via the M-Pesa mobile wallet platform, thereby making remittances available to all Kenyan consumers from the big cities to remote villages and rural areas. The programme has been a tremendous success. 

3. Development of a local transactional website: Compare this to Russia, where business is carried out in a very different way to Kenya, with consumers focusing on the internet, which they access via PCs as well as mobile phones. There is a growing wallet ecosystem in Russia but its natural home is the internet (e-wallet), not the phone (mobile wallet). Western Union consequently announced the launch of its transactional website in Russia in November 2013, taking the number of countries with local transactional Western Union websites up to 24.

Working in co-operation with MoscomPrivatBank, WU was able to extend the scope of online capabilities to its consumers. The commercial relationship brought an in-depth understanding of the local consumer, and this knowledge was used throughout all stages of website development: from building the site to carrying out consumer testing and eventually the launch.  

Conclusions: Mixing Digital and Retail Offerings
The introduction of mobile and online platforms fitted to suit local markets on a country-by-country basis as outlined above has complemented the existing retail business of Western Union and given us an enhanced ability to reach out to new consumers. This is necessary as new disruptive technology brings forth new rivals and methods of operation.

Leveraging the size of the existing physical network, connected to the new digital offerings, is a key differentiator for Western Union, its consumers and its digital associates. We do not consider them an unnecessary legacy cost, but rather as an opportunity to reach the customer. The mixture of physical and digital processes is part of Western Union’s on-going evolution into an omni-channel business that is capable of adapting to address changing technology and consumer needs.

Western Union has a growing list of mobile network operator (MNO) partners and mobile wallet companies to add to its existing list of commercial relationships with banks and FIs, in order to broaden its reach. It is a challenging process to implement new platforms for money transfer and to drive their adoption, but through partnerships and a history of 160 years involving innovation and adaption we have demonstrated these qualities to seize new market opportunities, and will do so again.  


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