In the midst of a fintech attack, Western Union is testing new POS, digital services
Western Union, the 172-year-old money transfer company, says it has built a new modular point-of-sale (POS) architecture and “a service layer that we can access across multiple front-end technologies, including our legacy points of sale around the world” 00 which aims to tackle a steady decline in revenue, widespread customer churn and continue an ongoing Western Union digital transformation program
Western Union is relying on a digital transformation program under its “Evolve 2025” strategy to help recapture market share from fintechs such as PayPal, Wise, WorldRemit and tackle customer attrition. The latter is a priority: 60% of customers are one-time users, revealed at an investor day in 2022, with 40% of all customers not returning “due to pricing, transaction time or poor customer interaction.”
Western Union, which reported May 2, 2023 quarterly revenue of $1.03 billion, down 1%, has faced what looks like thousands of deaths from new fintechs with leaner stacks and lower costs. It also remains heavily dependent on brick-and-mortar retail locations, but executives said it was “making progress stabilizing our retail business and accelerating growth in our digital business” on its first-quarter 2023 earnings call this month.
The company, which has 120 million customers transferring more than $100 billion annually, has seen customers abandon it for rivals – with its “send” customer base on the retail side falling from 57 million in 2019 to 45 million in 2021 and its digital footprint small impressive. : Only 20% (9 million) of “send” customers do so digitally, data from the investor day presentation in late 2022 (which spans 12 months to September 30, 2022) shows.
Western Union digital transformation: New partners, apps, POS
In an earnings call on May 2, Western Union executives said their strategy to improve software and technology capabilities was on track. During its investor day in 2022, the financial giant had announced that it would prioritize digital money transfer services for its customers. This has included partnering with digital wallets globally, including Paytm in India and bKash in Bangladesh. Western Union has also indicated that it will participate in Visa+, a new service from Visa Inc. that enables both transfers between participating P2P payment apps and real-time payments to participating apps. And at the end of 2022, Western Union launched digital payment services in Germany and Romania in cooperation with OutSystems.
Some of the ongoing modernizations are paying off: “New U.S. outbound digital brand customers increased 21% year-over-year,” CEO Devin McGranahan said on the call, adding that “we’re streamlining our reimbursement processes and reducing friction in our compliance processes. , increasing the transparency of money flow through our ‘track a transfer’ services. I’m pleased to tell you that this focus on agent and customer experience has led to a 30% year-over-year decrease in per-transaction agent support calls to our call centers,” he added to.
Speaking about the new POS system, he told analysts: “This type of modular development allows us to bring to market product enhancements that will enhance the customer experience ahead of the full-scale rollout of our new point-of-sale system. Two functions we have developed in recent months are fast resending, and an improved customer lookup tool, which we call “remember me”. The goal of fast forwarding is to allow customers to complete repeat transactions to known recipients faster and can reduce transaction time by up to 75%. We tested this product enhancement on our legacy technology at select agent locations in the US in the first quarter and have now begun to roll it out across our US footprint,” he added.
In terms of infrastructure, OutSystems has provided Western Union with a new cloud-based IT architecture based on microservices underpinning its new digital banking services in Germany, Poland and Romania that allow the financial services provider to integrate many disparate systems quickly. Other recent partnerships highlighted by the company’s digital leaders include one with Matillion to load, transform, synchronize and orchestrate the data to produce a single source of truth in the Snowflake repository.
In Europe, Western Union does business across two applications: A digital banking app, which it calls Western Union One, or in some markets, WU+. And the traditional westernunion.com “app”.
CEO Devin McGranahan told analysts: “…in the US and Brazil we will operate under what we call one app, which will include both the traditional transaction-based service that has a lower KYC burden, and a full digital wallet, we will also be able to offer transaction customers a one- or two-click upgrade to the digital wallet. So it’s all in process. And we’re obviously learning a lot about how to integrate the two experiences.”
Of the new modular POS system, he added: “It’s being piloted at actual Western Union-exclusive locations in the US, in part because we wanted agents who were willing to work with us when we launched the technology to refine the experience. We’re not going to put it into the independent agent channel until the latter half of this year, so by and large the pilot results are really measured around … customer transaction times for specific things like repeats and around the customer’s ability to, or the agent’s ability to not have to re-entering data and things like that. So the pilot agents are all friendly, hand-picked to work with us through the launch.”
