Western Union, is known as a global leader in cross-currency, cross-border money movement. Through its “omnichannel” platform, it enables customers and businesses to send, receive money, and make payments easily and efficiently.
As of June 30, 2019, its network included 550,000 retail agent locations. There they offered Western Union, Vigo, or Orlandi Valuta services in 200 countries and territories with the ability to send money to billions of accounts.
Their website, westernunion.com, was their fastest-growing channel in 2018, available in more than 70 countries to facilitate moving money around the world. It reported a revenue increase by 18%.
Despite its size, Western Union suffered a decline in its second-quarter revenue. A reported 1.3 billion of reported revenue was actually a drop of 5%. The main issues faced by this money transfer behemoth include up and coming digital rivals named Xoom (part of Paypal) and Remitly. Both of these companies launched with their unique selling point of transferring funds online and using mobile devices.
Other formidable challengers include the growing popularity of blockchain and cryptocurrencies.
Quick to address these challenges, Western Union announced that it would slash its workforce by 10%. At the end of 2018, the company employed around 12,000, with 2,400 inside the United States. This is in large part of a “global strategy” created to improve profitability, efficiency, and long term revenue growth. It will also focus on expanding its cross-border money movement solutions.
President and CEO Hikmet Ersek expressed great hopes for this new strategy:
“We are extremely excited to begin implementing our new strategy. The changes we announced today are being made from a position of strength and this is the first step in a larger plan that will not only reduce our structural cost base but allow us to expand the WU Platform to new customers, clients and global brands.”
Western Union’s Executive VP and CFO, Raj Agrawal added that the new structure will reduce the company’s cost structure. They hope the savings will contribute to operating profit and create margin expansion for the business.
Another big move by Western Union was selling its US domestic bill payments business, Speedpay, for $750 million in cash. It also completed the sale of its mortgage payments services company, Paymap. The sale of both of these “non-core” businesses have put Western Union on track with its strategic focus on cross-border, cross-currency, money movement.
In Conclusion
Although Western Union was facing some real challenges in this rapidly changing market, the company acted swiftly to shed itself of extra expenses that will be more of a hindrance to its competitiveness.
With the rise of digital transfers and the like, the company’s focus has shifted its focus to this important sector and is seeing significant growth as a result, especially in cross-border digital transactions.
They are also seeing more leading global brands turning to Western Union for their unique cross-border capabilities.
In all, Western Union seems well-positioned to whatever may come its way.