Western Union’s president of global payments, Jean Claude Farah, has indicated the 116-year-old money transfer giant isn’t at risk of being usurped by FinTechs but does realise the value of partnerships, admitting “today, no one can do it on their own”.
Farah told Dynamic Business that the global payments industry is undergoing change, citing disruptive technology as well as the ‘proliferation’ of FinTech startups. While admitting the latter is often responsible for the former, Farah suggested the threat of FinTechs had been overstated.
He explained, “As with any industry that is being disrupted, you might be able to name three to five [notable challengers] but there are probably 500 who are trying disrupt the industry… and around 490 won’t make it. In the case of FinTechs, it needs to be understood that those that are successful are very few. Every morning, someone wakes up and says, ‘I have an idea about how to make payments less painful’ but many know little of the challenges, including how difficult it is to KYC (know your customer) or to be fully compliant when you move money across borders. Also, their idea might take care of part of the payment process, which is today a pain point, but it’s not end-to-end.”
Farah said there is value in partnering with other organisations, such as FinTechs, where the partnership streamlines the end-to-end global payments process for SMEs and other entities, globally.
“Today, no one can do it on their own,” he said. “At the end of the day, we are all in the business of serving customers. As good as an innovation from a fintech or corporate may be, it doesn’t matter if it’s not answering a customer’s need. We need to admit the fintechs with new ideas are removing the pain points from some parts of the process. It’s a choice: you ignore them, you buy them, you partner with them, you let them enable part of the process… it’s a choice you’ll have to make. I would say cooperation is better than fighting each other. Competing should be to serve the customer better, it shouldn’t be for my platform to look better than yours if it’s not serving the customer.
“From Western Union’s perspective, the idea is to partner in order to serve the customer better. We can partner with a bank, banks can partner with FinTechs, FinTechs can partner with us. If you do a bit of the process better than us, let’s partner and let us take care of compliance for you – we invest something like $200m on a yearly basis just on our compliance capabilities, and 25% of our workforce is in compliance. People are looking for a provider for anything they do, where with one click they have peace of mind and can say, ‘done and dusted’.
Asked whether Western Union had recently partnered with a FinTech, Farah replied, “We keep an eye on everything that’s going on. Take blockchain for instance, it’s going to big in terms of payments – we’ve made an investment in a startup that works in the blockchain technology, and that investment allowed us to have a seat around the table”.