Amid a fintech onslaught, attrition, Western Union tests new POS, digital services
A huge 40% of all customers don't return “due to pricing, transaction time, or poor customer..."
Western Union, the 172-year-old remittances company, says it has built a new modular point-of-sales (POS) architecture and “a services layer that we can access across multiple front end technologies, including our legacy point of sale systems around the world” 00 as it aims to tackle a steady decline in revenues, rampant customer attrition and continue an ongoing Western Union digital transformation programme
Western Union is relying heavily on a digital transformation programme under its “Evolve 2025” strategy to help recapture market share from fintechs like PayPal, Wise, WorldRemit and tackle customer attrition. The latter is a priority: An eye-opening 60% of customers are one-time users only, a 2022 investor day revealed, with 40% of all customers not returning “due to pricing, transaction time, or poor customer interaction.”
Western Union, which reported quarterly revenues on May 2, 2023 of $1.03 billion, down 1%, has faced what looks like death-by-a-thousand-cuts from emerging fintechs with slicker stacks and lower costs. It is also still heavily reliant on bricks-and-mortar outlets, but executives said they are “making headway on stabilising our retail business and accelerating growth in our digital business” on its fiscal Q1, 2023 earnings call this month.
The company, which has 120 million customers who transfer over $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 unimpressive: Just 20% (9 million) of its “send” customers do so digitally, data from its late 2022 investor day presentation (spanning the 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 that their strategy to improve software and technology capabilities were on track however. During its 2022 investor day, the financial services giant had announced that it would be prioritising digital remittance 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 be participating in Visa+, a new service by Visa Inc. which enables both transfers between participating P2P payment apps and real-time payouts to participating apps. And at the end of 2022, Western Union launched digital payment services in Germany and Romania in partnership with OutSystems.
Some of the ongoing modernisations are paying off: “New US outbound branded digital customers were up 21% year-over-year” said CEO Devin McGranahan on the call, adding that “we are streamlining our refunds processes, reducing friction in our compliance processes, increasing transparency of the flow of funds through our ‘track a transfer’ services. I am pleased to let you know that this focus on agent and customer experience has led to a 30% year-over-year drop in per transaction agent support calls to our call centres” he added.
Speaking about the new POS system he told analysts: “This type of modular development allows us to bring to market product enhancements that will improve the customer experience in advance of the full scale rollout of our new point of sale system. Two functions we have developed in recent months are quick resend, and an improved customer lookup tool, which we call ‘remember me’. The goal of quick resend is to allow customers to complete repeat transactions to known receivers more quickly and can reduce transaction times by up to 75%. We've tested this product enhancement on our legacy technology in select agent locations in the United States in the first quarter, and have now begun to roll it out across our entire US footprint,” he added.
In terms of infrastructure, OutSystems has been providing Western Union with a new Cloud-based IT architecture based on microservices that underpins its new digital banking services in Germany, Poland, and Romania that allows the financial services provider to integrate many different systems quickly. Other recent partnerships highlighted by the company’s digital leaders include one with Matillion to load, transform, synchronize and orchestrate its data to produce a single source of truth in its Snowflake warehouse.
In Europe Western Union conducts 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 be operating under what we call one app, which will include both the traditional transactional based service which has a lower KYC burden, and a full on digital wallet, we will also be able to offer transactional customers a one or two click upgrade to the digital wallet. So that is all in process. And we're obviously learning a lot about how to integrate the two experiences.”
Of that new modular POS system meanwhile, he added: “It is in pilot in actual Western Union exclusive locations in the US, partially because we wanted agents who were willing to work with us as we launched the technology, refine the experience. We won't be putting it into the independent agent channel until the back half of this year. So largely, the pilot results are really measured around… transaction times for customers for specific things like repeats and around customer’s ability to, or the agent's ability not to have to re-enter data and things like that. So the pilot agents are all friendly, hand selected to work with us through the launch.”
