There's an old saying that says "You can't teach an old dog new tricks". To a certain extent it is true, though not entirely, but at least one old dog is making an effort to refute those claims.
150 years of building and developing the field of cross-border payments. Yes, Western Union has been around for 150 years and right now it has served 150 million customers, supporting both sender and receiver side.
There is no piece of land where only one person can live forever, not to mention cross-border payments are fertile land. So it is understandable that a number of fintech startups appear, claiming to challenge Western Union, from the giant Wise to Remitly to WorldRemit. These payment giants have put a lot of effort into technology and digital activities to look for opportunities to defeat other fintechs in this land.
It was also at the pivotal moment, when the Covid-19 pandemic appeared, that the trend of digital transformation became a sprint for most business sectors. And cross-border money transfers are no exception. And in 2020, Western Union has benefited from this trend. The numbers skyrocketed, with total digital remittance revenue up nearly 40% to $850 million, a $250 million increase over 2019.
Speaking of WU.com, the company's online trading site, it has seen a nearly 30% increase in year-to-date active customers to 8.6 million.
This year, the second electronics company recently predicted that its digital remittance revenue is on track to surpass $1 billion by 2021 after first-quarter revenue grew 45% to a new high. for the quarter was $242 million.
Today, Western Union claims to hold the largest peer-to-peer, digital, cross-border payments network in terms of size, revenue, and channel.
The emphasis on enhancing its digital operations dates back a decade as the company worked to expand its bank account, wallet and digital card payments operations to more countries. This digital expansion, combined with the impact of the COVID-19 pandemic, has contributed to a change in Western Union's overall business profile over the past 15 months.
Digital channels in 2020 account for 29% of transactions and 20% of revenue for the company's consumer-to-consumer (C2C) business, up from 16% and 14% in 2019 respectively. .
Western Union, cross-border payment company also opened its platform to third-party financial institutions in what it calls "a step towards creating an end-to-end payment processing hub".
TechCrunch spoke with Shelly Swanback, Western Union's president of products and platforms, about the company's digital strategy and what's next beyond payments for the company (hint: it involves products. Bank). This interview has been edited for clarity and brevity:
TC: Let's start by hearing how the COVID-19 pandemic has affected your business and what steps have you taken as a company to adapt?
Swanback: When COVID kicked in, just like any other company, I thought, "What do we need to do to rally our customers because our customers rely on retail locations that can failed to reach their retail location when the COVID lockdown started happening ?”
One of the things we learned from that experience was the concept of daily innovation. Innovation is not always blockchain or some emerging technology. Sometimes the best innovation is just innovating every day with the products and services you have.
For example, we've got some parts of the world where we really need to figure out how we can deliver cash at home. Other cash delivery to delivery pizza as you can imagine, because there are so many items under the regulations and security items. We very quickly figured out how we could transfer cash in Sri Lanka and Nepal, Jordan and some other parts of the world.
Another example lies in addressing how some people are only slightly intimidated by digital technology. I thought, "What if we set up a digital video venue where people can call and make video calls with us and we can help them transfer money?" It turns out that there's actually not as much customer demand for that as we might think.
But the great news - and this is a good lesson, I think, for many organizations - is what we actually did there in terms of KYC (know your customer), an important thing in the service industry. finance. So all the technology that we set up for this digital location for customers to upload their documents electronically and without having to go to the dealership, we are using today, just in another way.
I know Western Union advertised the fact that it had such a strong physical presence in so many locations that really benefited the growth of its digital operations as well as its expansion into digital services. services other than payment. can you explain about that?
The success and acceleration we are having in our digital business and of course the quarterly results have been fantastic and we want to continue doing that. But for me, what's most exciting is just a solid foundation and basis for us to build on the idea of a more meaningful account-based relationship with our customers and the ability to offer them more. money transfer only.
Western Uninon are fortunate to have a trusted brand that is globally known and trusted for something very close and dear to our customers. What we hear from our customers is that they will trust us to provide additional services. So one of the things that we're starting to plan and start doing some market testing is building an ecosystem or building a marketplace if you want. It's all going to be catering to about 270 million migrants around the world and really connecting them with each other, connecting them with their families and connecting them with merchants who want to sell them goods or give them food. services that fit their culture. where they live and work or provide services to their families back home.
Later in the fall , we will launch the first market test in Europe. We will, of course, offer bank accounts, debit cards, and multi-currency accounts tied to our remittance service, as well as a few other things as we get closer to launch. market. But this is really our first test of providing a more comprehensive set of services.
You recently announced a partnership with Google Pay and several other services. What is the meaning of those partnerships?
We want to be able to deliver our cross-border capabilities and platforms in a co-branded or white-label style, so that we can reach customers who might still prefer to be just a bank customer. . For example, we recently announced that Google Pay users can sign in to their app and make cross-border money transfers.
I think that's an important part of our strategy - to pursue direct customer relationships and at the same time be able to make our platform available to others who already have direct customer relationships. our goods. Of course, this is also part of our overall technological modernization. We're very, very strong in the C2C segment, but the way we're going about modernizing our technology is giving us the option to continue to expand in other segments - whether it is consumer to business or business to consumer business to business.
Tell me more about this "modernization".
Like many financial institutions and many global institutions out there, part of our massive technology modernization program is moving to the cloud. So we are on our way to migrate many of our applications to the AWS Cloud Platform. We are very excited about the progress we are making there.
Additionally, over the past 12 to 18 months, we've migrated a good portion of our client agency transactions, as the core of our data, to Snowflake. We've mined 33 datastores and we have 20 petabytes of data in the cloud. And so that in itself is just the starting point. We're modernizing our apps on top of this data and really starting to use artificial intelligence and machine learning. But we don't use it in back-end processes like many other organizations are using it for their operational interactions with our customers. We are using it at the office. For example, we launched a phone money transfer product where the customer talks to a virtual assistant and it is 100% digitized. It is truly one of the best customer experiences we have ever seen.