The Western Union global money transfer service will be offered to existing Fifth Third customers and walk-in customers over the next several months. Mark Erhardt, SVP of retail products, Fifth Third Bank, says the service will be phased-in starting in the fourth quarter of this year.
According to a statement, the signing of Fifth Third Bank is part of Western Union's strategy to enter into new classes of trade in the North American market. As Western Union continues to expand its service offerings in money transfers for consumers, it seeks to tap into banking channels including: Cash-to-Cash, Account to Cash, and Account-to-Account.
For Fifth Third, the partnership is also a way for it to expand beyond its traditional customer base. Erhardt tells BS&T that the bank is in this for the long haul. "This is a multi-year agreement. Our intention is to get into this business and stay in this business. It's part of a larger strategy at the bank to expand our products and services to existing customers, noncustomers and customers who don't traditionally use large banks that often."
Offering Western Union remittance services is by no means Fifth Third's first foray into the world of nontraditional banking. It has an existing product line directed at underbanked consumers, including a MasterCard prepaid card and a "starter" checking account for people who may not qualify for a regular checking account. "It was logical for us to offer remittances," Erhardt says. "Person-to-person payments is a growing area."
Under the agreement, Fifth Third becomes an agent of Western Union and joins its worldwide agent network. Erhardt says the bank will have Western Union signage in all its branches and will partner with the payments company on marketing the service as well.
"The marketing will be along the lines of 'You're familiar with Western Union, and you have a Fifth Third branch nearby. Now you can use Fifth Third for Western Union transactions,'" he explains.
All transactions will take place at the teller station. The bank is working on integrating Western Union's software into its proprietary teller platform.
"We're working through the details on that and are scoping the level of integration we want for the initial rollout," Erhardt comments.
The bank looked at a variety of solutions and providers before deciding to team up with Western Union. Erhardt says the fact that the payments company is such a recognizable brand with a large global network pretty much sealed the deal for Fifth Third.
"Western Union has an established technology infrastructure, along with the training and software support to allow us to get our people up to speed," he says.
For Aite Group's Gwenn Bezard, research director at the Boston-based firm, the partnership was quite logical and something other banks should examine.
"It's about time for U.S. banks to view Western Union as a partner, and not a competitor," Bezard said in a statement. "Much like a Visa or MasterCard, Western Union is a global network and a brand, both of which don't compete directly with banks but rather complement their offerings. Western Union, like MoneyGram, has an unparalleled network and brand, but thin end-user relationships. U.S. banks have deep relationships with senders, but limited physical global presence and their brands are irrelevant in the global money transfer space. Such relationships make sense, and more U.S. banks should embrace them."
However, Erhardt cautions that the decision to compete or partner with companies like Western Union is something to be done on a case-by-case basis. "Every bank has a different strategy," he says. "Ours is to partner where appropriate. In this case, we felt it was the way to go. But in prepaid, for example, we developed that in-house and plan to continue handling that ourselves. But [expanding into nontraditional consumer segments] is definitely part of a long-term strategy for us, not a short-term tactical play."