July 30, 2009

As Western Union's (Englewood, Colo.) offerings widen to the mobile channel, it decided to launch an initiative that it says will help strengthen the brand and present a more consistent feel to its users worldwide.

The Digital Vendor Program is intended to extend the reach and accessibility of Western Union Money Transfer services to mobile finance initiatives in Latin America, Africa, the Middle East and Asia.

According to Matt Dill, SVP, head of digital ventures, the Digital Vendor Program is a vendor certification program. "We're attempting to define what it means to work with Western Union by simplifying it with a vendor certification," Dill tells BS&T. "We have a set of operational processes that are core to our business. We're working with technology vendors to look at their platforms and how they engage customers. We insert our products into their platforms and run a series of tests to ensure they are working properly with our infrastructure."

Western Union's services become a simple add-on to an existing mobile banking platform, he says, turning them from local services to global services.

Dill notes the project has been in the works in some for about a year and a half. As Western Union dealt more with companies in the mobile space, it came to realize just how non-standardized this area was.

"There are different technologies being used worldwide," he explains. "No one organization or bank is able to standardize mobile. The world is too big, it's too early and it's moving too quickly. At the same time, as Western Union made its services available, we had to do more work with regard to how our services should be presented."

As a result, the Digital Vendor Program was created to bring together both technology and business. "Western Union was never a technology company. I'm starting up a program where business and technology become complementary. It's an evolution if a company can recognize that their distribution can grow exponentially rather than by working with one partner at a time."

At press time, companies involved in the Digital Vendor Program include Fundamo, mChek, Sybase 365, Utiba—all global players in the mobile financial services space.

The key in m-finance is building partnerships similar to what Western Union is doing, according to Dill. He says while banks manage and hold accounts, Western Union transacts between accounts. Therefore, he says Western Union has a need for increasing its points of presence in the real and virtual worlds.

Dill does see the growing struggle over customer ownership in the mobile finance chain—banks versus mobile carriers. However, he also sees a major difference in the evolution of m-finance in the developed world as opposed to the developing world.

"I'm seeing two trends. Banks are moving more aggressively in the multichannel account access space in the developed world with mobile banking being added as a convenience," he explains. "In the developing world, mobile operators have the ability to touch millions of people. Financial institutions there are focused on the urban and wealthy segments of the population. But major changes are occurring where people are realizing the transaction services associated with banking are a great benefit to the larger population, even if they don't hold a bank account."

In general, however, this ownership question is less of a struggle for Western Union than for banks. "What Western Union has done successfully is taking a clear view of the value chain and identifying specifically what we do best and just focus on it. We move money between different entities and institutions seamlessly, whether it's from a bank or a mobile operator, to a grocery store somewhere."

Still, Western Union is by no means shutting out banks, Dill emphasizes. Financial institutions are one of the constituent parties the company is targeting with its Digital Vendor Program.

"The program is based on looking at technology and helping Western Union's network reach into new channels using specific technologies," he says. "In some markets, we're still seen as a rival to banks. But it comes down to what services you provide."

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