When people send money to friends or family across the country or around the world, chances are good that Western Union is involved. Last year, the global-payment services giant completed 268 million consumer-to-consumer transactions worldwide, for a total of $80 billion. Increasingly, digital technology and mobile devices play a key role in these transactions.
In the latest step in its digital journey, Western Union recently launched a bot that enables Facebook Messenger users in the United States to send money to more than 200 countries, across 130 currencies, from within the messaging app. Funds can be picked up in cash at half a million Western Union agent locations worldwide or transferred electronically to the recipient’s bank account or to a debit card linked to a digital wallet.
“We go where our customers go,” says Khalid Fellahi, senior vice president and general manager for Western Union Digital, based in San Francisco. “The new generation of customers, especially Millennials, want to find us in the ecosystem of messaging apps.”
The company, which has been in the money-transfer business since 1871, launched online transfers via WU.com in 2000 and got into mobile money transfers in 2007. In 2011, Western Union opened an office in San Francisco to ramp up its digital operation.
“Rapid growth in technology was making it easy for international money transfers to take place online,” Fellahi recalls. “We saw that our revenue and customer base didn’t reflect the opportunity and size of the market.”
Transforming the Infrastructure
Not satisfied with the idea of incremental change, the company took a start-from-scratch approach, assembling an experienced team and transforming its infrastructure.
“Our technology platform is founded on a Hadoop big data technology cluster that is used for conversion analysis, risk statistical modeling, payments and risk data processing,” Fellahi explains. “Big data has helped Western Union merge data across multiple channels for years, for marketing and promotion, customer lifecycle management, compliance and fraud modeling. This is a powerful tool for our business and one of the key capabilities of our new infrastructure.”
Marketing tactics evolved to attract digital customers, who have a different profile from traditional retail customers. “They tend to be younger, they live online and they prefer to do everything there, at the touch of a button,” Fellahi observes.
However, Western Union doesn’t view its established retail business as totally separate from the digital world. “We offer consumers the choices they want, both for sending and receiving money,” he stresses. “Some want to go to a retail store and pay cash. Others prefer to prepare a transaction online and then go to a retail location to pay cash. And still others want to do it all online.”
Transfers can be delivered in cash or into a digital wallet or a bank account via electronic funds transfer. The company considers local preferences, as well, accepting about 10 payment methods, such as Apple Pay in the U.S.
These strategies are paying off. Today, WU.com is available in 40 countries, with mobile apps in 18 of them. Western Union has had a compound annual growth rate above 25 percent over the past five years, since the launch of the digital division. And, Fellahi points out, “When you look at customer acquisition on our digital channel, 80 percent of the customers we acquired in the past 12 months are new to us—not migrated from our traditional customer base.”
He expects digital money transfer and mobile technology to be the major driver of overall growth in coming years, adding, “In the U.S., over 65 percent of WU.com transactions are initiated on a mobile device, and globally it is nearly 60 percent.”
Fellahi sees the Messenger bot as a promising tool. Though it’s too early for results, the response from consumers has been positive, he says.
“We will expand our Messenger bot to other countries and add other languages,” he adds. “It’s in our DNA to think about global operations because Western Union covers the world.”