The recent jump in digital commerce has made international payment processing a hot target for fintechs, but Western Union contends its established network provides a way for banks to boost their own cross-border reach.
"For a long time we were kind of alone in the world. Now everyone wants a piece of our business. The startups and the banks," Jacqueline Molnar, chief transformation officer at Western Union, said during American Banker's Card Forum event, which took place Sept. 28-30.
Molnar pitched banks on the idea that partnering with Western Union would help them meet the demand for low-volume international payments. She argued that working with Western Union's online and agent network is easier than building an ecosystem from scratch.
"This is a space for banks, but in a partnership fashion as opposed to getting into the business of moving international payments $500 at a time," said Molnar, who was a
TD Bank offers branded Western Union transfers as part of a
"Banks would be foolish to try to replicate that network," said Jonathan Prendergast, head of U.S. payments strategy for the $1.7 trillion-asset TD Bank Financial Group, who also spoke at Card Forum.
The partnership with Western Union is a way to broaden access to digital payments as much as possible, and to ensure the bank is adapting to any change in consumer preferences for new or different payment options, according to Prendergast.
"Change is going to happen. Real-time payments are coming, digital wallets are here. Peer-to-peer with Zelle is here," Prendergast said. "If you are a bank, bring in people who will embrace this change."
Western Union works with
The transfer company faces a lot of competition from fintechs, both for bank partnerships and its consumer business.
Blockchain-powered companies like
More challenger banks and technology companies are joining the cross-border payments fray. Google has partnered with
And
All of these companies have opportunities for growth. Nearly half of millennials and Generation Z consumers began making digital money transfers more frequently during the pandemic, with nearly 40% of all consumers using the services more often, according to research from
"The shift to digital is here to stay," Molnar said, adding the pandemic's impact has caused transfers to increase for use cases such as gifting because people can't deliver "cash gifts" in person as readily as in the past. The company has enhanced its processing capability to manage the resulting spikes in volume.
"People who have adopted a more digital way of moving money are going to continue to do that," Molnar said.
As digital payment apps made correspondent banking less necessary for international transfers,
During Card Forum, Molnar noted Western Union operates a bank in