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Disrupt yourself before you get disrupted.
By David Thompson, Executive Vice President, Global Operations and Technology, and CTO, Western Union
Western Union has always been on the forefront of technological innovation. The company launched in 1851 with the invention of the telegraph. Now, 165 years later, we are digitally transforming ourselves and devising new and easier ways for our customers to move money around the world.
I have two jobs. First and foremost, I am head of global operations, which delivers our entire customer experience. The other portion of my job is leading our technology organization, combining both the traditional CIO and CTO roles. And I joined the company four years ago at a time when those two aspects of the company began to converge, enabling the company to bring new capabilities to the market. This dual role allows me to see the end-to-end process and come up with ways to make it better and drive a lot of efficiency.
We have a long and strong history of our retail brick and mortar infrastructure and an agent network that provides services to customers in half a million locations in 200 countries around the globe. In the last few years, we’ve been investing heavily in the omni-channel experience as our consumer and business customers interact with us in new ways, from our mobile app to remote kiosks to online bill payment. We’re looking at artificial intelligence and machine learning to automate more of what we do. We’re investing in analytical tools that can identify risk and fraud. As the regulatory environment has gotten more complex, we’ve also introduced new technology-enabled capabilities around compliance. The financial technology sector is a white-hot area of interest and investment today, so we’re also making sure that we continue to lead with our innovative offerings—disrupting ourselves in an industry full of potential disrupters.
The Importance of Being Vigilant
Western Union is the largest global money transmittal company. Our advantage is our major footprint around the world and our experience in technology innovation. But we know that no company can rest easy in the digital age.
There are a lot of folks who are very interested in the business we do. For example, Western Union operates in 17,000 money transfer corridors around the world, where migrant workers send money home to their families such as the U.S.-Philippines corridor or Saudi Arabia to India. Our closest digital competitor operates in just 35 of those. But we do have rivals for our most profitable corridors. There are upstarts coming at us with a different experience or attempting to undercut us on price. We still have a competitive edge because of the value we offer and the brand promise that customers trust. But we have to be very vigilant and make sure that we remain focused on delivering a differentiating customer experience, staying competitive on price and value, and remaining ahead of the curve with the technology we use to interface with our customers
One area we’ve been investing in is “staging” technology that enables a customer to stage a transaction and get it ready to go digitally. They then have the choice to complete the transaction physically in a retail location or complete it online. We’re also enabling many different payment types in our platform. If a customer in Germany wants to use the local payment platform Sofort, we’re enabling it. And we’re offering that kind of choice on the receiving side as well; you can choose to receive the transfer through your mobile wallet or direct to your bank account or in cash. Continuing to introduce those feature and functionality is what’s allowed us to remain the number one player in our game.
If You Build the Platform, They Will Come
If you want to send $100 to someone within the U.S., that’s a relatively easy transfer to make. There’s very little regulation. It’s a low barrier to entry. And that’s where we see a lot of noise and activity in the marketplace.
But that’s not where the biggest challenges are—and the biggest challenges lead to the biggest business opportunities. Cross-border transactions are where we can provide the most value, and as head of operations and technology, that’s where I’m focusing many of our new solutions.
In April, we introduced WU EDGE, a digital platform that enables small and medium-sized enterprises to trade internationally with confidence and ease. Business customers who want to enable cross-border payments can plug WU EDGE right into their existing financial platforms to initiate and manage cross-border payments. Banks that are de-risking and getting out of the cross-border transaction space are coming to us to white label our cross-border payment service.
Last October, we launched WU Connect, a platform that integrates with leading consumer messaging and social media platforms. The API-based platform enables third-party digital applications to integrate with us to provide global money transfer experience to their users. We’ve signed contracts with Viber and WeChat and have a healthy pipeline of social media and messaging platforms who’d like to use WU Connect to offer financials services to their customers but don’t want to take on the risk.
These kinds of platform-based innovations are increasingly important to our business. We’ve been able to take these capabilities that we’ve built for ourselves and provide them to other organizations.
These are capabilities that we’ve developed internally and we’re at a stage where external companies are willing to pay us for them. It's bringing new clients and revenues into the company. It’s particularly exciting to see these innovations take on a life of their own outside Western Union.
Job Number One: Security
Innovation is a high level priority for the business, but security is always top of mind. Having joined the company from Symantec and a number of high tech companies before that, I brought with me a respect for the layered defense-in-depth approach.
From the moment a consumer starts interacting with Western Union, we’re capturing information like mobile device fingerprints, user information, and location data in order to build a profile that will help us to take note of any variations in that profile. That enables us to take a real-time approach to risk assessment on a transaction level.
Internally, we have been focused on operationalizing cyber security, training not only our employees but also all of our contractors on appropriate behaviors, data handling, and technology use. And we have tools that monitor the behavior of the employees and contractors servicing our infrastructure.
We also have a “single pane of glass” in our security operations center that enables us to monitor all infrastructure and customer interactions so that we can respond effectively when something happens. We live in an age where the question is not if, but when, a breach will occur. So when it does, we want to ensure that we can respond quickly and forcefully. We’ve built a great response team and process.
In our rapidly changing regulatory environment, we’ve also invested significantly in our compliance practices. We have more than 2,000 compliance professionals around the globe, but we’ve also created a compliance engine. That platform that allows us to do real time risk assessment on each transaction to make sure, for example, it’s not being initiated or received by a sanctioned individual. The engine can also the scour transaction for evidence of fraud or money laundering. We spent two years building that system and it will be a long-term competitive advantage for us, keeping the barrier to entry in our cross-border business high.
And, just as importantly, even as we are building all of these protections into our business we’ve also kept the focus on the customer. While we are committed to safe and secure transactions, we’re equally committed to delivering an excellent customer experience.
Keeping Up with Silicon Valley
In my previous CIO roles at Symantec, Oracle, and PeopleSoft, I typically had a team charged with staying abreast of innovation. I interacted directly with our engineers whose job was innovation. And working in Silicon Valley, we were surrounded by innovation.
When I joined the financial services sector, I had to make adjustments in order to keep my finger on the pulse of technology change. What I’ve done here is to leverage the strength of our strategic technology partnerships. We have some key partners with innovation engines that we can plug into. They provide us input into what they’re seeing in the marketplace. In addition, Western Union has made an investment in the Bitcoin-focused investment firm Digital Currency Group, which gives us another eye on innovation.
I also have two team members who are focused specifically on true innovation in our customer experience. However, because innovation is so critical for success, I personally spend a lot of time on that aspect. I spend a lot of time working with our CEO and our chief marketing officer (who is also our chief strategy and product officer) sharing insights into what I’m hearing about in the marketplace, what I’m hearing from our partners, and what they’re seeing in this venture capital firm in which we’ve placed some investments.
Here in the Denver area, we’ve also been the beneficiary of some great tech talent as many companies have moved here to escape the expense of the Bay area. The Denver and Boulder areas have become hotbeds for innovation. The governor has stated that 4,000 people move to Colorado every month and a good portion of those transplants are technologists. That’s allowed us to tap into a marketplace of relevant skills and new capabilities to drive innovation now and in the future.
The Business Value of the CIO
Having spent a good portion of my career in technology companies, I’ve worked with some of the brightest engineers in the world. They truly know their craft.
But the benefit that a CIO can bring to those companies—and any company—is figuring out how to apply technology and innovation to a business problem. I’ve always seen that as my role. And that’s enabled me to not only be a great technology consultant to the business, but a great business consultant to the engineering teams.
In order to provide that value as a CIO, you have to go very broad. You must spend a lot of time to understand the many different areas of the business. If I’m going to evaluate a marketing tool, I have to understand marketing in order to accurately convey the value of that tool to the CMO. If I’m looking at financial tools, I have to have a conversation with the CFO about financial reporting. Even in IT operations, I must understand the tools that can make my own engine run better. And so you have to spend a lot of time across the entire portfolio of technology.
Sure, the engineers will tell you no one understand technology better than they do. And that’s fine. That’s not an insult to the CIO. But the CIO can take that technology and figure out how to make that technology work to solve a business problem. If you’re not focused on that, you’ll very quickly be put in a box and you’ll never have a seat at the table. It’s critical for the CIO to be a business executive and also be able to run the technology function. The job keeps getting bigger and bigger. But it’s also getting more exciting a result. I’ve been in this role for 20 years, and I can see another 20 years ahead of me.