Western Union: Building a Societal Brand Through Shared Value
Monday, April 11, 2011
By Robert Reiss
Founded in 1851, Western Union began in the telegram business, and in 1871, added its money transfer service. With a history rich in innovation spanning stock tickers to satellites, the company has evolved into the single largest player in the $440 billion remittance market. Based in Englewood, Colo., Western Union has more than 7,000 employees worldwide and completes approximately 214 million transactions a year, generating $5.2 billion in total revenue in 2010. Western Union’s global reach is at the core of its unique business model, driven by a network of 445,000 locations in 200 countries and territories. While the world’s financial industry is built for those with credit, plastic, income and the internet, Western Union’s model helps the overlooked and underserved. I recently met with Western Union’s CEO, Hikmet Ersek, to discuss.
Describe the history of the organization and the business model today?
This year we celebrate 160 years of innovation. We were originally in the telegraph business, and today our offer is the freedom to move money quickly, reliably and in cash to virtually any place in almost any country on the planet.
The foundation of our business is a network of 445,000 agent locations in 200 countries and territories; a compliance engine second to none and a platform that is rapidly expanding into dozens of new opportunities – from prepaid cards to mobile.
If you walk into a location in New Jersey, you send money and in minutes your family and friends can pick up the money in Tanzania or in South Africa or Argentina.
We serve the underserved. Some people call it the bottom of the pyramid; I call it the future of the world.
What is the next generation for Western Union?
It’s building on our existing fundamentals -our extensive global network and global brand. It’s about taking a multi-channel approach, enabling our customers to send money from bank accounts electronically via the Internet, from mobile phones, credit cards, or agent locations, to 200 countries in minutes.
The electronic money transfer industry is growing very fast and Western Union is best positioned to fulfill the cross-border electronic money transfer needs of a global society. We connect the dots.
I’ll give you an example. I’m a busy man. I’m a recent migrant from Europe to the US. I left Istanbul many years ago, but my 87-year-old father is still there. I don’t have time to go to a location between meetings to send money. I use my mobile phone or the internet and send money from my laptop immediately to my father, who goes to a Western Union location in Istanbul and picks it up minutes later.
We’re also looking closely at prepaid cards. Many underserved people do not have access to financial services – we plan to expand mobile money transfer in Africa, and prepaid cards outside the U.S.
I know you recently made a special announcement at Committee Encouraging Corporate Philanthropy (CECP). Tell us about that.
It starts with our mission to create shared value. Creating shared value is about products and services that drive both shareholder value and social value at the same time. Quite simply, corporate responsibility is about doing the things you do as a business, but doing them better and smarter. We cannot give back to the people and communities we serve or have 445,000 touch points around the world if we aren’t successful as a business.
An example of this was CECP’s International Corporate Philanthropy Day, where we announced a commitment of $1.1 million to foster the economic opportunity and expand basic education working with several UN agencies.
We work with the United Nations Development Programme. We created a program that leverages remittances to give more back in the communities where we are active. We also work with UNICEF, the UN High Commissioner for Refugees, and the Central Emergency Response Fund.
I’m very proud of this partnership and I think that we will have an impact.
Hikmet, could you define shared value and give me a definition of what that means to you?
We are creating shared value for our customers in nearly 40 countries where remittances make up 10 percent or more of the GDP. We serve the base of the pyramid. We create jobs with our 445,000 Agent locations. The money our customers send across borders is redistributed – a father uses his remittance to invest in seeds to grow new crops, fueling the local economy. That kind of shared value is, for me, very important to be aware of; so that we continue to create that and help people and communities prosper.
And we are just beginning to realize the potential of our mobile money transfer service. Low priced cell phones have prompted the explosion of mobile banking in Kenya, where banks have not successfully reached large segments of the population. We are also introducing new offerings for NGOs, so we can not only contribute philanthropically, but serve their needs as a business in ways that benefit them and that are sustainable for us.