We have seen a defining year for the payments landscape with innovative technologies, consumer demands and digitisation reshaping this constantly evolving industry. Some of the major technological changes I have noticed include the further roll out of omni-channel payment gateways, faster cross border capabilities facilitated by ripple technology and the increasing number of mobile wallet providers at home in the UK and abroad. The growing popularity of digital technology has welcomed many trends in the payments industry in particular. Mobile wallets are a growing phenomenon; the introduction of Apple, Samsung and Android pay into the UK market earlier this year highlighted the growing trend in this space with many retailers making the necessary technology changes in store. We are increasingly looking for a more secure, convenient, cheaper transfer methods to move our money around the world globally, therefore trends in digital innovation will play a key factor in providing the best solution for the payments industry.
The argument that we are now living in an increasingly cashless society continues, with many business leaders debating whether or not there will be need for cash-based outlets. While the debate continues, I think we need to ask the question: are we ready to become a cashless society just yet? With over 500,000 agent locations worldwide, the traditional bricks and mortar part of our business is still the preferred channel for consumers of Western Union and we believe we need to continue to have agent locations across the 200 countries and territories in which we operate.
It comes down to personal choice; every customer is different and with that brings different needs. We have found that our target market in particular, prefer cash in-hand transactions to digital transfer methods or mobile payment devices. There is a familiarity associated with cash in hand transfers. A recent survey into “Consumer Muscle Memory with Entrenched Payment Methods” conducted by Blackhawk Network found that 93% of consumers still use cash due to convenience, in comparison to the 14% who opted for digital payment methods. This statistic is perhaps not so surprising; there is still the tactile feel of holding money in our hand and having a conversation with a human, whether we’re ordering food in a restaurant or purchasing a new pair of shoes.
But that said, we know we need to ensure our omni-channel strategy continues and that we are competitive and offer options in-line with our current modern digital age. 2015 has been the year for all payment transfer businesses to review what services they offer, whether or not they are meeting the needs of customers and offering enough options for transactions. While mobile banking and account-to-account transactions have been around for a few years and are services we have ensured are available within the Western Union business, it is time for providers to think what else they need to do.
The future of the payment transfer landscape should be built on collaboration; businesses cannot work in silos. They need to look at what they can offer and how best to promote their brand. A big change for Western Union this year was the launch of a new retail strategy. We saw the need to be seen in known British retail brands, as another avenue to promote our services and to be able to offer more convenience for our consumers. To this end, we started to work with Sainsbury’s Bank and WHSmith, as a way for existing and new consumers to easily have the option to make payment transfers, while doing their usual convenience store shop.
A survey by Lightspeed Research reports that 59% of today’s customers are the omni-channel users of the future. These consumers were broken-down into three categories, including: value-focused followers, data-hungry tech enthusiasts and tech-savvy social shoppers. The majority of our clientele would fall into value-focused but as we roll out our digital kiosks in retail stores and our WU connect platform, we are looking to target both tech enthusiasts and the digitally-demanding millennial generation.
Regulatory issues are always a key theme in any financial or technology discussion and this year has been no different. Organisations should ensure they invest heavily in anti-money laundering processes and systems, which will in turn allows them to stay abreast of the evolving regulatory landscape. At Western Union we focus on enhanced risk assessment of consumers, agents, and types of transaction activity. This includes Know Your Customer (KYC): risk scoring of customer transactions; single and cumulative transaction limits in various corridors and high risk jurisdictions.
Additionally, our Western Union Connect platform allows third party digital platforms to access our money transfer capabilities through a suite of Application Program Interfaces (APIs) so the risks are further mitigated in their own ecosystem. Although retail is the backbone of our business, WU connect is the start of how our digital offering will evolve going forward with many opting to use a social or messaging platform of their choice to carry out money transfers.
Looking ahead to 2016, I think we will see the rise of eMoney and also biometric authentication so consumers are able to have more control, portability and security around money transfer methods.
I think there will be many more players and solutions in the market and an increasing digitised offering to align with the shifting consumer trend towards the use of mobile technology in the developing markets. Findings from the World Bank have projected that the developing world is estimated to receive $540 billion in migrant remittances by 2016. Inadequate access to financial services and unstable socio-economic policies means consumers in these markets are looking for a reliable money transfer method to overcome the poor infrastructure challenges. For example, mobile transfer company M-PESA currently has 9 million registered users in Kenya who transfer on average $320 million per month. Looking forward, I think that it is important for all those providers in the money transfer business to evolve with industry regulation, technological advancement and, most importantly, to keep human relationships at the heart of their businesses.
By Massimiliano Alvisini, Vice President Northern Europe, Western Union