With remittances surging across the MENA region, Alexandru Badulescu, General Manager and Senior Vice President, Middle East and Africa for Western Union, discusses trends, growth plans and why technological disruption is good.
What kind of trends are you seeing in the Middle East? Are you seeing an increase in business?
Alexandru Badulescu: According to the recently published World Bank report, in 2017 global remittances grew 7 percent to US$613 billion. Remittances to the Middle East and North Africa (MENA) region are estimated to have grown by about 9 percent in 2017, after two years of decline. The high growth rate is driven by a rapid increase in remittances to Egypt as well as increased flows from Europe into the Magreb area. Saudi Arabia and UAE are in the top 10 remittance sending countries globally.
Western Union’s recent Q1 2018 earnings show that globally growth continues, with a 9% increase in cross-border principal on a reported basis and 5% on a constant currency basis. Money transfer initiated on digital channels is a strong driver of growth.
The growth of remittances to the region is expected to continue. Countries in the region have ambitious plans for economic advancement with a focus on development and upgrade of infrastructure, real estate, hospitality and health care sectors, all labour-intensive initiatives that often require government to bring in manpower from outside the country. This expatriate workforce seeks ways to send money to their families back home.
Alexandru Badulescu, GM and Senior VP, Middle East and Africa for Western Union.
What have been the most significant developments from Western Union in the region?
In the Middle East, in addition to our over 5,100 retail agent network locations, we are actively driving partnerships to add more touch points to our network such as via banks, ATMs and kiosks. Additionally, we are also launching digital services across the region. Starting with Kuwait, Bahrain and Qatar, customers have the convenience of sending money 24/7, from their desktop or mobile phone. They can fund their transactions via cash or from their bank accounts and receive it in cash, into bank accounts or mobile wallets.
Recently we signed an agreement with a government utility provider in the UAE for their customers to receive their security deposit refunds from Western Union agent locations anywhere in the world.
How is the technology behind money transfers changing and how is Western Union keeping pace with this?
At the heart of what we do at Western Union is connect people at send and receive, allowing them to move money around the world, often within minutes. Our ability to payout across our global network of over 525,000 agent locations and billions of bank accounts means consumers have the convenience of receiving the money at a location close to them. In 2017, we moved over $300 billion in principal in nearly 130 currencies and processed 32 transactions every second across all our services.
Technology is driving changes in ways to move money. Western Union is a leader in digital money transfers with well over $400 million in revenues in 2017 and we continue to see transactions growing at over 20%. We have the unique ability to connect the digital with the physical, combining our online presence in over 40 countries with our cash distribution network that pays out in over 200 countries and territories, and payout capability into billions of bank accounts in over 70 countries.
The conventional wisdom is that technology is disrupting financial services, our experience shows that it enables innovation from interesting partnerships and integrations. In the region we work with new and existing agents, banks, and telcos to expand their service offering and consumer touch points offering Western Union service. Globally we are working with digital social platforms such as Facebook, Viber, and WeChat to make money transfer as intuitive as sending a text message.
Additionally, this year, we opened a new WU Technology Engineering Centre in Pune, India. The 125,000 square feet facility will employ more than 1,000 people and serves as an innovation and engineering hub. WU has other technology centers in Denver, Montvale, and San Francisco. Included in the center’s activities will be investments in a range of new technologies including robotics, machine learning, predictive modeling and biometrics, covering areas such as fraud modeling and big data management.
What are your expectations for the year ahead in terms of growth for the money transfers business?
In an increasingly borderless world where people, goods and services move, remittances and the cross-border movement of money continues to be a robust sector. Our customer centric strategy is focused on building omni-channel capabilities for money transfers – giving customers the choice and the convenience of sending or receiving money – in cash, through accounts, in person, online or via mobile. We believe digital initiated money transfer remains a high growth area and expect it to be the major driver of overall market growth over the coming years. We continue to work with key partners to drive growth and new capabilities, especially in mobile and in sends to accounts, and further develop and expand our sites in international markets.
Competitively, we believe we are well positioned with our brand, payout network, cross border compliance and operational capabilities and continued development of our digital services.
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