Western Union Digital Ventures Khalid Fellahi, Senior Vice President, Western Union Digital Barclays Emerging Payments Forum March 29, 2012
Western Union Today 2011 revenue: $5.5B C2B: 12% Other: 2% B2B: 2% C2C: 84% C2C overwhelmingly cash to cash 2
Our Strengths Global brand and customers Agent network and partners Technology Financial strength Compliance and regulatory capabilities 3
Our Customers Approximately 70 million money-transfer senders + receivers, bill payers, small businesses 4
Agent Partner Network Agent Location Growth 485,000 86,000 120,000 200,000 1996 2001 2006 2011 Over 200 countries and 16,000 corridors 5
Financial Strength + Strong balance sheet and cash flow + A- credit rating + Access to trading lines and ability to source multiple currencies + Compliance and regulatory capabilities = Ample access to capital = Commitment to business growth and product investment = Strong foundation for business partnership 6
Targeting the Needs of 2 Billion Underserved Meeting the Needs of 2 Billion Underserved Higher Net Worth 800M-1B Underserved 700-900M Unbanked Extreme Unbanked 650-850M 1.5-2.5B.and providing financial services to those without access to traditional banking services SOURCE: McKinsey & Co., Half the World is Unbanked, October 2009; CGAP, Financial Access 2009; C.K. Prahalad, Fortune at the Bottom of the Pyramid 2004; Hammond et all, Purchasing Power at the Bottom of the Pyramid, 2007; World Bank 2009 Bottom of the Pyramid population, Company analysis 7
Key Strategic Growth Areas Global Consumer Financial Services Ventures Money transfer, bill pay Business Solutions New products, services and electronic channels Cross-border business payments 8
WU Ventures 1 Send/Receive (beyond retail) Digital Ventures (Digital, Mobile Channel) 2 Spend (beyond cash) Stored Value Ventures (Card, Mobile, Digital Product Access) 3 Monetize (Attachment rev) Data Ventures (Value Add Services Adjacencies) 9
Stored Value Ventures Product and geographic expansion A leading global reload/cash access network Offer new ways for customers to access stored value Enable bill pay, gift giving, P2P transfers, savings and more 10
Data Ventures Develop robust consumer database Retention Loyalty Targeted offerings Western Union customer base underserved beyond money movement As database evolves, expand beyond money movement to meet customers financial needs 11
Western Union Digital Online Money Transfer Mobile Transaction Services 12
Online Money Transfer Originating business in 23 countries $100M+ revenue 2011 Strong margins Growth accelerating from single digit to 35% in 2011 Investment focus 13
Leveraging Our Assets Virtually all cash payout 485,000 locations Brand recognition 82% globally;* strong trust in the brand Risk mitigation, compliance * SOURCE: Western Union brand tracker 14
Growing Market Opportunity Low single-digit online market-share Channel adoption growth New customer segments Smartphone adoption Remittance growth & beyond remittance use cases 15
Key Developments Smartphone access New service: bank payout San Francisco WU Labs Platform migration Rethink customer experience Transaction funding Revenue Growth Trend WU Pay 16
Key Developments Smartphone access Launched in May 2011 in U.S. iphone, Android, BlackBerry Good ramp-up 10% of online C2C transactions in U.S. Higher share of wallet Expanding to new geographies 17
Key Developments New service for bank account payout Launched in December 2011 in U.S. Recently expanded to U.K., Australia Payout to banks in 38 countries Ramping up 90% new customers/use case Expanding to new payout geographies ACCOUNT 18
Key Developments San Francisco WU Labs Established base in September 2011 Digital product and business development Relocating key competencies Hiring new breed of talent Expanding operation and technology capabilities 19
Key Developments Platform migration Moving to e-wallet based platform Rebuilding all layers Agile, faster development for new products New Pay In / Pay Out architecture Innovation Foundational capabilities, then roll out globally 20
Key Developments Rethink customer experience New voice and tone New design, fast/easy transaction Universal account Mobile at the center of innovation Foundational capabilities, then roll out globally 21
Key Developments Transaction funding Account funding (low cost) Most popular pay-in options Special debit card features Expanding options based on geographical adoption 22
Key Developments Launched proprietary alternative payment method Acquired startup ebillme Bank push / cash Portfolio of gift card & merchant for e-commerce Activating in the U.S., selected geographical expansion 23
Investing for Growth Stepping up investment ($35M) Technology, products Talent Marketing Geographical expansion Accelerated site traffic, customer conversion Growing customer base (1 M+ active today) Rolling 12 months, 80% of new online customers new to WU franchise Transaction per customer (+8% YoY in 2011) Cross-selling opportunities 24
Western Union Digital Online Money Transfer Mobile Transaction Services 25
Strategy Partnering with banks, Mobile Network Operators (MNOs) or independents to enable mobile-based transactions Western Union on Mobile Banking Service banked consumers using mobile channel Expansion in line with ABMT/ multi-channel strategies Example: ABSA Bank South Africa Western Union on Mobile Wallet Partner with MNOs Primary focus unbanked consumers Reach underserved receivers Example: Safaricom/M-PESA Kenya mobile users 26
Competitive Advantages send Global and strong brand recognition Global network, multichannel Global AML/compliance engine & expertise Global settlement & FX system Standard gateway & vendor programs GSMA endorsement receive 27
Competitive Advantages 1. Mobile Send Sender uses mobile wallet as source of funds. Receiver payout in cash, mobile, or bank channels. 2. Mobile Receive Funds directed by Sender (push or alternatively by the Receiver (pull) to the wallet or account A leading international branded cash in/cash out network for Mobile 28
Western Union, a Branded Hub 29
Continue to expand MNO* Relationships & maintain leadership Mobile Money Transfer 120 + initiatives globally (GSMA) Approximately 30 partners for WU (multiple geographies) 10+ operations live Established brand and presence Early stages, 3-5 year opportunity 30
Western Union Digital Summary Leveraging Western Union strengths Growing market Enhancing capabilities Strong partnerships Goal of $500M+ digital revenue by 2015 31
Thank you Questions? Khalid Fellahi Senior Vice President, Western Union Digital