Global fintech and funding innovation ecosystem

How Western Union is fighting back against fintech startups

Techcrunch | Mary Ann Azevedo | Jun 28, 2021

cloud innovation - How Western Union is fighting back against fintech startupsThe saying goes that, “You can’t teach an old dog new tricks.” That may or may not be true, but at least one “old dog” is working hard to disprove that saying.

Western Union has been operating in the cross-border payments space for nearly 150 years (yes, you read that right — 150 years) and today, globally, it serves almost 150 million customers — representing senders and receivers.

In recent years, a number of fintech startups have emerged to challenge Western Union in the massive space — from Wise (formerly TransferWise) to Remitly to WorldRemit. But the payments giant seems up for the challenge and has been investing heavily in its digital operations in an attempt to beat fintechs at their own game.

This year, the company recently projected that its digital money transfer revenues are on track to exceed $1 billion in 2021 after first-quarter revenue growth of 45% to a new quarterly high of $242 million.  Digital channels in 2020 made up 29% of transactions and 20% of revenue for the company’s consumer-to-consumer (C2C) business, up from 16% and 14%, respectively, in 2019.  Western Union also opened its platform to third-party financial institutions in a move it says is a “step toward creating an end-to-end payments processing hub.”

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TechCrunch talked with Shelly Swanback, Western Union’s president of product and platform, about the company’s digital strategy and what’s next beyond payments for the company (hint: it involves banking products).

I know Western Union has touted the fact that it having such a strong physical presence in so many locations actually benefits the growth of its digital operations as well as an expansion into other offerings beyond payments. Can you elaborate on that?

We have the fortune of having a trusted brand that’s known globally and trusted for something that’s very near and dear to our customers. What we’re hearing from our customers is they would trust us to provide additional services. So one of the things that we’re beginning to put plans in place for, and beginning to do some market tests on, is building an ecosystem or building a marketplace if you will. It will all be catered around the 270 million migrants across the world and really connecting them to each other, connecting them to their families and connecting them to merchants who want to sell them goods or provide them services that are very culturally relevant to them, either where they happen to be living and working or providing them services back home to their families.

You recently announced a tie-up with Google Pay and some others. What is the significance of those partnerships?

We want to be able to offer our cross-border capabilities and platform in more of a co-branded or white-label fashion, so that we can reach those customers that might still prefer to just be a customer of a bank. As an example, we recently announced that Google Pay users can log in to their app and can do cross-border transfers.

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I think that’s an important part of our strategy — going after the direct relationship with customers and at the same time being able to offer our platform to others who already have a direct relationship with our customer. This is also part of our whole technology modernization right now of course. We’re very, very strong in the C2C segment, but the way we’re going about our technology modernization is one that provides us optionality to continue to expand in other segments — whether it be consumer to business or business to consumer, or even business to business.

Like many financial organizations and many existing global organizations, part of our massive technology modernization program is moving to the cloud. So we were well on our way from migrating many of our applications to an AWS Cloud Platform. We’re pretty excited about the progress that we’re making there.

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NCFA Jan 2018 resize - How Western Union is fighting back against fintech startups The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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