Western Union (WU), the world’s dominant money transfer and
remittance player, has made its first foray into mainstream retail
banking. The company is running a pilot consumer loan scheme for
Filipinos working in Hong Kong in conjunction with PrimeCredit, a
subsidiary of Standard Chartered, offering them the option to take
out a 12- to 18-month instalment loan and then remit the borrowed
money via Western Union Money Transfer. The pilot starts on 18
February.
Standard Chartered’s PrimeCredit has ten years of experience
serving migrant workers in Hong Kong, and 17 of its 31 branches
focused specifically on overseas workers, according to the
group.
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Extend the service across Asia
A spokesperson for WU told RBI that if the pilot in Hong
Kong is successful, WU will “definitely” look to extend the
programme to other consumer segments and other markets in the
Asia-Pacific region.
“One of Western Union’s strategic objectives is continually to
explore new service offerings that meet our consumers’ needs. We
are very excited about this pilot programme because this is yet
another new value-added service that complements Western Union’s
existing core money transfer business,” the spokesperson said. “Our
target customers continue to be consumers who are underserved by
banks or even do not have access to banking and financial services.
With Western Union’s extensive experience in serving this segment,
we are well placed to identify and provide access to quality
services that meet their needs.”
Research conducted by WU concluded that 79 percent of consumers
sending money transfers were receptive to other financial services
offerings from the company, and that one in four would consider
applying for a loan product associated with WU.
The deal with Standard Chartered comes at a time of strong growth
for WU in its core consumer-to-consumer remittance business (which
accounts for 65 percent of revenues) despite increasing competition
in the global remittance market, not just from other money transfer
players but also banks and telecommunications companies such as
Vodafone, and the surge in peer-to-peer (P2P) payment
systems.
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By GlobalDataCiti, for instance, the US banking giant, has been one of the more
aggressive entrants not just in the remittance market itself but
also in the P2P sector. It signed a deal last year with leading US
P2P technology company Obopay for the development of P2P payments
in the US and abroad.
And in February this year, Citi took its interest in the
global remittance one step further and rolled out QuikRemit, a
white-label remittance platform that can be used for both online
and in-branch remittances. Citi plans to sell it to banks,
corporations and money transfer companies looking to offer
customers and employees a secure and compliant transfer.
Launching the QuikRemit platform, Citi cited research from the US
consultancy Aite Group, published in March last year, that forecast
global remittance volumes will reach $5 trillion by 2010.
Western Union’s 335,000 agents
In its 2007 figures, WU said that total consumer-to-consumer
revenue for the year grew 9 percent to $4.1 billion on transaction
growth of 14 percent. Its global agent network increased to more
than 335,000 locations, ahead of group expectations. In the fourth
quarter, transactions that originate outside the US outgrew all
other business streams, posting 25 percent revenue growth and 28
percent transaction growth. This international-to-international
subset contributed 54 percent of WU’s fourth-quarter total
revenue.
The big area under development is mobile phone-based money
transfers. In October last year, the GSM Association (GSMA), the
global trade association that represents more than 700 GSM mobile
phone operators, and WU joined forces to develop a system for
consumers to transfer money from country to country via their
mobile phones.
Some concrete developments have already taken place.
Indian telecommunications major Bharti Airtel and WU are currently
jointly developing and piloting a mobile money transfer service in
India, a country with a rapidly developing mobile economy
(see “Thinking Cardless”).
During the second quarter of 2008, WU says, it expects
to launch two separate mobile money transfer offerings in the
Philippines, one with Smart Communications and the other with Globe
Teleco, the two largest mobile operators in the Philippines.
And in Canada, WU recently launched a service with Scotiabank
connecting customers to its global agents.
