Western Union expands online across the Gulf

Western Union, the 165-year-old money transfer company, is expanding its online business in the Arabian Gulf to tap one of the most lucrative remittance markets in the world.

The Colorado company already has a cash-based money transfer presence in this part of the world, with its services offered at many exchange bureaus, but the firm is now gearing to push its digital business regionally to keep up with many of its competitors that have already made significant inroads on the digital front.

“We see the retail business as being a low growth area for us," Raj Agrawal, Western Union’s chief financial officer said, referring to the company’s cash-based business.

“Migration is going to continue to be there, but it’s a low- growth area. The fastest growth for us is really coming in the digital channels. We actually have a fast-growing digital business. I’m very confident that we that we will have a strong presence in the Middle East in the next couple of years."

Digital transactions at Western Union, which currently account for about 7 per cent of its total consumer business, are growing at four times the rate of physical cash transfers. To boost its growth, Mr Agrawal said Western Union is spending hundreds of millions of dollars annually on technology.

The chief financial officer, speaking at the company’s Dubai office last week, said that his company was likely to offer online services in the UAE in the next year-and-a-half, but could not say when it would do the same in neighbouring Gulf countries.

The transfer company is busy making arrangements with banks and other financial services firms in the UAE to allow customers to send money from one account to another or to a physical location using the internet.

“Half the market is account- to-account cross-border money transfers and it’s an area we don’t play much in today. It’s something we are driving towards," he said.

Western Union is likely to have its work cut out in the UAE. Online remittance services are not only being embraced by exchange houses but also by banks keen to keep their customers from going outside the bank for financial services.

In the UAE, about US$18 billion is sent home by workers each year, according to the World Bank. More than half of the remittances in the UAE go to Asian countries such as India, Pakistan and the Philippines. Beyond Asia, the UK, Australia and Canada are among the top destinations.

UAE Exchange, the country’s biggest exchange house, said last year that it is forging ahead with a plan to offer its services outside its branches through digital channels. Some of the country’s biggest banks, such as Emirates NBD, are also making inroads into the remittance business at a time when banks are fiercely competing with each other for clients as the economy slows.

Mr Agrawal said he welcomes the competition and is betting that he can drum up business in this part of the world using his company’s well-known brand, efficient delivery and competitive pricing.

SOURCE:THE NATIONAL