In 2020, approximately 250 million migrant workers worldwide collectively sent $702 billion in remittances back to family and friends in their home countries every week or every month, according to the World Bank. These workers were a lifeline to loved ones who rely on those funds to buy groceries, pay for education and purchase medicine. That doesn’t only benefit receivers but also the countries into which those funds flow. In some nations, disbursements sent home by workers abroad make up more than half of the annual GDP.
Unfortunately, these workers often aren’t given the respect they deserve as important contributors to the global economy, Western Union President and CEO Hikmet Ersek told Karen Webster in a recent conversation.
“Without that money, there wouldn’t be homes, shops, hospitals or schools,” he noted.
Ersek said that the foreign worker sending $300 a week home is punching well above their weight class, given the importance of contributing to the growth of the connected economy in emerging markets. That’s something Western Union is committed to enabling, as moving the money to fuel that growth has been the core of its business for the last 170 years.
A Path To Economic Prosperity
The two most important things necessary to accelerate the growth of the connected economy for these global citizens are choice and flexibility, Ersek said, something that is necessary yet challenging to execute without global reach and scale.
Consumer needs can vary widely from nation to nation or even within a single economy. In India, for example, rural consumers still show a distinct preference for picking up their remittances in cash. In contrast, in urban regions, consumers will usually have their funds sent to a digital bank account or mobile wallet.
“It’s impossible to sit in a corner office and develop products that are going to be the future. Product adoption in the digital world has to center on customer needs,” said Ersek. “Putting down roots in the market and going to the market in a way that customers accept is critical.”
It is a credo put to the test 18 months ago as the global pandemic shuttered physical locations, many of which also served as outlets for receivers to pick up their cash. Ersek told Webster that Western Union’s major concern during the pandemic was ensuring that consumers who needed the funds in cash could get it — something made possible by having agent locations in grocery stores and other essential storefronts. He said that online WU.com average monthly users grew by roughly 50 percent throughout the second, third and fourth quarters of 2020 as the pandemic took hold.
For Ersek and the Western Union organization, the situation demonstrated two things very clearly. First, people never forget where they came from and always try to support their loved ones despite great economic and personal uncertainty. Second, receiving a disbursement is an essential service, not just for what the receiving side will spend the funds on, but for the economies they support.
“In developing countries, [this essential service] is about creating financial inclusion, and about how these funds can create jobs and boost economic prosperity in those receiver markets,” Ersek said.
Meeting The Wider Need
As Ersek noted, transmitting funds worldwide wherever customers want them — and in whatever form, digital or physical — is the starting point for advancing the connected economy in emerging economies. Western Union itself is building a connected ecosystem on top of its global network of funds in and funds out to provide more capabilities for its customers and enable its partners to reach the global citizens who may be less accessible to them, Ersek said.
Partnerships with Amazon and Google leverage the Western Union network to deliver more genuinely useful services, like eCommerce and global peer-to-peer (P2P) payments, to consumers worldwide. The P2P service with Google launched in May 2021 to benefit consumers in the U.S., India and Singapore.
One day, it could include the transfer of regulated cryptocurrencies and central bank digital currencies (CBDCs) across its network. Ersek said that he and Western Union are “open to the idea,” so long as the currencies they are moving comply with regulatory frameworks and they can easily track where the money is coming from.
For example, Ersek said that Western Union has the ability to take fiat currency and help consumers translate them into digital currency to load on wallets. “We have built a system that is agnostic to the digital currency that our customers want to send, receive, and then spend, in minutes,” he said.
Global Citizens And The Connected Economy
Ersek said that Western Union’s vision is to build an ecosystem of choice for global citizens that lets them shop in their own language, send funds to loved ones however and wherever they want and have flexible access to the same financial services that many people in the developed world take for granted.
Western Union is working to provide a wider range of financial services for users, he said, pointing to Western Union’s EU banking license and plans to expand into digital banking services in markets like Romania and Germany. The goal for that banking expansion is to provide access to a digital wallet, debit card and other banking service offerings — things Ersek said consumers living in developed markets take for granted but may lack in their home countries.
“Our customers trust the company that moves their money and helps them become part the formal banking and payment system,” Ersek said. “They know they can use [Western Union] and trust it with their funds — it is probably the most important thing.”
Ersek said that expansion would enable the firm to more effectively “deliver dignity” to global citizens with fuller, more robust financial access from a brand they already know and trust with their money — a new digital front door that global citizens need and want to gain access to the promise and potential of the connected economy.