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Western Union reveals international mobile strategy

Money-transfer giant Western Union discussed its mobile strategy and the hottest trends in the mobile financial services ecosystem in an exclusive interview.

Earlier this year, Western Union extended the reach and accessibility of its money-transfer services with mobile finance initiatives in Latin America, Africa, the Middle East and Asia (see story). Last year, the company tapped Sybase 365 to launch initiatives to interact with and engage its consumers with SMS-based notifications and mobile marketing campaigns (see story).

Mobile Commerce Daily’s Dan Butcher interviewed Rebecca Loevenguth, director of mobile alliances at Western Union, Denver. Here is what she had to say:

What is the importance of the mobile channel in Western Union’s overall strategy?
Western Union is committed to servicing the diverse Money Transfer needs of all of our consumers and businesses in all channels.

As the world moves progressively into digital forms of payments and sending remittances, Western Union’s strategy will continue to evolve to support new ways of moving money.

While we view remittances in the mobile channel as an emerging opportunity that has not yet reached critical scale, it is certainly a key area of focus and priority.

We are building a solid foundation of technology and relationships with mobile network operators, banks and vendor platforms that we expect to expand significantly over time.

When did Western Union first “go mobile?” What growth curve has Western Union’s mobile initiatives experienced since then?
Western Union first piloted mobile money transfer in the United States in 2007 with an mobile virtual network operator.

That early service allowed consumers who were enrolled for the mobile “CashCard” to make purchases and conduct Western Union Money Transfers using their mobile phones.

Shortly after the pilot began, Western Union’s mobile initiatives really started to take off.

We announced an endorsement agreement with the GSMA for mobile money transfers in late 2007.

In 2008, we signed agreements with multiple MNOs to add Western Union Money Transfers to the services they already offered to their mobile subscribers.

Currently we have three carriers actively processing Western Union mobile transactions.

Most recently, on May 13, we announced a different kind of mobile money transfer for banks, allowing consumers with Absa “Cell Phone Banking” in South Africa to conduct Western Union international remittances.

How does Western Union balance the needs of developed and developing markets when formulating its mobile strategy?
The idea is to enable all kinds of “mobilized accounts” with capability to send and receive Western Union transactions.

Mobilized accounts can include mobile wallets (branchless banking), mobile banking with financial institutions or even mobile-activated prepaid cards. 

At a basic level, international remittances are usually transactions originating in a “developed” send market, and paid out in a “developing” receive market.

We must therefore view and address the needs and behaviors of senders and receivers very differently, particularly in the mobile channel.

In developing markets, there tends to be relatively low banked populations, limited access to financial services, and low Internet access, but explosive growth in mobile phone penetration.

This makes emerging markets ideal places for mobile wallets, or branchless banking, to thrive.

We serve consumers in these markets by partnering with MNOs and banks offering mobile wallets, so consumers who prefer to receive their remittances directly into their mobile wallets are able to.

In contrast, in developed markets there tends to be much higher bank penetration, as well as high mobile penetration.

In these countries Western Union is able to serve the mobile needs of money transfer senders by partnering with financial institutions and by introducing a Western Union “send money” option on consumers’ mobile banking menus.

What trends are you noticing in the mobile money/payments/commerce space?
To me one of the most fascinating outcomes of mobile money implementations, particularly in developing countries, is that while MNOs, banks and the like are realizing the benefits—increased profitability, reduced churn—of a mobile money service, there is also a significant philanthropic result of bringing financial services to the underserved.

Yesterday I saw a headline that read “Mobile Banking Gives Kenyans New Weapon Against Poverty.”

And it’s true—in just the few years since the mobile operator, Safaricom, introduced mobile money transfer services in Kenya, their “formally banked” population has gone from just 10 percent of the country to more than 40 percent.

It’s so incredible to be working in this unique field which seems to equally benefit companies, corporations, customers, mothers, fathers and families.  

What is the current state of the space, and what are the opportunities for growth going forward?
As far as mobile banking goes, we expect to see major growth in this segment as more and more financial institutions are listening to their customers and introducing the convenience of banking on a mobile phone.

We also expect the sophistication of these applications to continue to grow, as will major breakthroughs, for example, the new functionality for “mobile remote deposit capture” allowing mobile banking consumers to deposit a check by simply taking a mobile photo of the check.

In terms of mobile wallets, we expect to see strong continued growth in Africa, the Middle East and Asia, and new activity Latin America.

As more MNOs and banks work together in these regions, bringing their unique skills and capabilities to the table, we should see quite a few more successful mobile wallet deployments popping up.