Western Union Company (the) · NYSE:WU
Western Union Company (the) — Investor Day (May 2012)
174 slides from Western Union Company (the)'s investor day presentation, May 9, 2012
Slide 1: Safe Harbor
SAFE HARBOR This presentation contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to pred
Slide 2: Strategies and Overview
HIKMET ERSEK President & Chief Executive Officer STRATEGIES AND OVERVIEW Welcome Hosgeldiniz Willkommen
Slide 3: Today's Presentations
TODAY’S PRESENTATIONS Vision to complement existing strengths with new capabilities moving money for better Strategies and plans to accelerate growth
Slide 4: Our Vision
140M underserved businesses 28M cross-border 2B underserved consumers Sources: McKinsey & Co., “Half the World is Unbanked”, October 2009; CGAP, “Financial Access ” 2009; C.K. Prahalad, “Fortune at the Bottom of the Pyramid” 2004; Hammond et all, “Purchasing Power at the Bottom of the Pyramid”, 2007
Slide 5: Our Focus
OUR FOCUS Building from a strong foundation Great assets in place Leverage strengths to accelerate growth Grow the core (more choice, more convenience) Add new customers and services (Business Solutions, Ventures) Drive margin expansion with accelerated growth Opportunities and strategies in place F
Slide 6: Competitive Advantages
unmatched global network unique customer relationship with the underserved strong global brand global AML/regulatory capabilities global organization with significant resources COMPETITIVE ADVANTAGES
Slide 7: Competitive Advantages: Unmatched Global Network
COMPETITIVE ADVANTAGES 200 countries, territories Over 16,000 corridors Strong Agent relationships 500,000 locations Digital, ATMs … unmatched global network strong global brand global organization with significant resources global AML/regulatory capabilities unique customer relationship with the un
Slide 8: Competitive Advantages: Strong Global Brand
COMPETITIVE ADVANTAGES *Source: Western Union 2011 global consumer tracking study of consumers in money movement category strong global brand global organization with significant resources unmatched global network global AML/regulatory capabilities unique customer relationship with the underserved B
Slide 9: Competitive Advantages: Global Organization
COMPETITIVE ADVANTAGES global organization with significant resources Strong balance sheet, cash flow A- credit rating Ability to source multiple currencies Can leverage infrastructure to offer new services Offices and employees around the world strong global brand unmatched global network global AM
Slide 10: Competitive Advantages: AML/Regulatory Capabilities
COMPETITIVE ADVANTAGES global AML/regulatory capabilities strong global brand global organization with significant resources unmatched global network unique customer relationship with the underserved Complex AML/regulatory environment Regulatory scrutiny in all markets Bank Secrecy Act, Patriot Act,
Slide 11: Strategic Growth Areas
moving money for better STRATEGIC GROWTH AREAS GCFS Business Solutions Ventures Consumer money transfer Consumer bill pay Digital money transfer Stored value Data Ventures International B2B payments
Slide 12: Global Consumer Financial Services
GLOBAL CONSUMER FINANCIAL SERVICES Favorable long-term market demographics Aging population/need for workers in developed countries Surplus of workers in developing countries Income differentials WU strategies to accelerate growth Increase penetration: 1M points of presence Increase retention, loyal
Slide 13: GCFS: Penetration
Population WU Location/ Person Location/ Sq. Mile U.S. 314M 51,000 1/6,100 RUSSIA 138M 16,000 1/8,600 CANADA 34M 2,900 1/11,700 1/1,300 BRAZIL 206M 11,000 1/18,700 CHINA 1.3B 33,000 1/39,400 GLOBAL CONSUMER FINANCIAL SERVICES – PENETRATION
Slide 14: Agent Locations
Agent Locations Strong growth opportunity from expanding Market share* n/a 7% 15% 17% * Source: Aite ** As of April 2012 GLOBAL CONSUMER FINANCIAL SERVICES
Slide 15: Business Solutions
BUSINESS SOLUTIONS Large market opportunity: $24B revenue* Underserved customer: SMEs, specialized verticals (law firms, universities, financial institutions) * Source: McKinsey and Western Union estimates.
Slide 16: Business Solutions: Assets
BUSINESS SOLUTIONS Western Union assets: Underserved focus Cross-border money transfer Global brand Regulatory Strong balance sheet Agent network Financial institution relationships Business Solutions assets: Strong platforms Expertise Sales force Back-end bank network connections
Slide 17: Significant opportunity to increase 2% share today
Significant opportunity to increase 2% share today BUSINESS SOLUTIONS The right growth strategies Deeper penetration More geographies Expanded services and channels
Slide 18: Ventures
VENTURES Leverage Western Union’s core strengths to offer additional services and obtain new customers Strengths Brand Network Access to 2B underserved AML and regulatory capabilities
Slide 19: Ventures: Platform with Four Core Functions
VENTURES Currency and Channel-Agnostic Platform with Four Core Functions Digital Ventures Access “money-movement services” when you want them, how you want them Stored-Value Ventures Provide viable, alternative methods of financial inclusion Data Ventures Deepen our customer relationships Opportunit
Slide 20: Building the Business Through Partnerships
BUILDING THE BUSINESS THROUGH PARTNERSHIPS MasterCard: A key partner for building the world’s largest global stored-value load network, enabling global bank-based sends and money transfers to cards. Ericsson : The world's leading provider of communications technology connecting Western Union to glob
Slide 21: Building the Business Through Partnerships
BUILDING THE BUSINESS THROUGH PARTNERSHIPS Ajay Banga, President and CEO, MasterCard Worldwide
Slide 22: Ventures
VENTURES Build and monetize global consumer database of the underserved Vision to become leading global load/cash access network for stored value Expanding digital business from strong foundation Insurance Pay .com
Slide 23: Western Union Retail Network
WESTERN UNION RETAIL NETWORK Western Union is the Hub: connects retail Agents Trusted brand for consumers (reliable, fast, convenient) Trusted partner for Agents Compliance and regulatory Currency exchange Data network
Slide 24: Western Union Network: Retail / Digital / Accounts
Connects all form factors WESTERN UNION NETWORK: RETAIL / DIGITAL / ACCOUNTS Western Union is the Hub Trusted brand for consumers Trusted partner for Agents Retail, online, mobile … Compliance and regulatory Currency exchange Data network
Slide 25: Growth Portfolio for Today and Tomorrow
GROWTH PORTFOLIO FOR TODAY AND TOMORROW Lifecycle stage Ventures Business Solutions C2C C2B Global Consumer Financial Services Data Ventures Stored value Digital Social Ventures *Notes: C2C Retail includes Account-Based Money Transfer (ABMT) and excludes wu.com. 2011 B2B growth excludes Travelex Glo
Slide 26: Growth Portfolio: Opportunities for Acceleration
4% 2011 Constant Currency Revenue Growth* 2% 13% 31% 30% Accelerate Single-Digit 20% plus 40%-50% Low Double Long-term revenue growth objectives Good Growth Low Growth High Growth Very High Growth Very High Growth *Notes: C2C Retail includes Account-Based Money Transfer (ABMT) and excludes wu.com. 2
Slide 27: Western Union: Moving Money for Better
WESTERN UNION: MOVING MONEY FOR BETTER Vision: Premier Financial Services Provider for the Underserved GCFS Business Solutions Ventures
Slide 28: Total Shareholder Return
SCOTT SCHEIRMAN Executive Vice President, CFO and Global Operations TOTAL SHAREHOLDER RETURN Welcome
Slide 29: Strategic Growth Areas
moving money for better GCFS STRATEGIC GROWTH AREAS Consumer money transfer Consumer bill pay Ventures Digital money transfer Stored value Data Ventures Business Solutions International B2B payments
Slide 30: Total Shareholder Return Opportunity
Strong opportunity to drive returns through business acceleration and cash flow utilization TOTAL SHAREHOLDER RETURN (TSR) Opportunity to accelerate Expansion opportunity as revenue growth accelerates 2012: Retire 4-5% of shares 2% current yield
Slide 31: TSR: Revenue Growth
TSR – REVENUE GROWTH *Note: see appendix for reconciliation of non-GAAP to GAAP financial measures. -4% 2% 6% 2009 2010 2011 Reported Revenue Growth -2% 1% 4% 2009 2010 2011 Organic Constant Currency Revenue Growth*
Slide 32: TSR: Revenue Growth Opportunities
TSR – REVENUE GROWTH Opportunities for revenue acceleration Network expansion Increased customer retention New types of customers New services Economic improvement
Slide 33: Growth Portfolio: Opportunities for Acceleration
Good Growth Low Growth High Growth Very High Growth Very High Growth 4% 2011 Constant Currency Revenue Growth* 2% 13% 31% 30% Accelerate Single-Digit 20% plus 40%-50% Low Double Long-term revenue growth objectives 79% C2C Retail 11% C2B 6% B2B 2% Digital 1% Stored Value GROWTH PORTFOLIO – OPPORTUNIT
Slide 34: TSR: Margin Expansion
C2C operating margin expansion offset by other businesses C2C Operating Margin Operating Margin TSR – MARGIN EXPANSION *Operating Margin excludes one-time items. See appendix for reconciliation of Non-GAAP to GAAP financial measures. 25.2% 25.0% 25.2% 26.6% 26.2% 26.2% 2009 2010 2011 GAAP Op. Margin
Slide 35: Targeting long-term margin expansion
Targeting long-term margin expansion; Revenue growth and productivity initiatives key drivers TSR – MARGIN EXPANSION Margin Drivers Revenue growth: operating leverage Commissions Fixed cost optimization Other Factors Investments Acquisition amortization Currency hedges Business Mix Compliance – Dodd
Slide 36: Margin Key Drivers, Variable Costs
$4.1B Total Expenses 2011 TSR – MARGIN EXPANSION Margin key drivers, variable costs 65% variable costs Commissions 85% of variable costs Expense optimization opportunities Location expansion Signing new agents and renewing existing agents at lower rates Non-exclusive receive locations in some market
Slide 37: C2C Commissions as a Percent of Revenue
C2C Commissions as a Percent of Revenue TSR – MARGIN EXPANSION 48.4% 46.1% 46.3% 45.8% 2008 2009 2010 2011
Slide 38: Margin Key Drivers: Fixed Costs
Accelerated revenue growth leads to operating leverage $4.1B Total Expenses 2011 TSR – MARGIN EXPANSION Margin key drivers: fixed costs 35% of total costs Revenue leverage Expense optimization ($ Billions) $1.5 $2.6 Fixed Variable
Slide 39: Total Shareholder Return
TOTAL SHAREHOLDER RETURN Net Income Growth Share Repurchases Dividends + Revenue Growth + Margin Expansion + Utilization of Operating Cash Flow
Slide 40: TSR: Utilization of Operating Cash Flow
Option Proceeds Low Capital Intensity Drives Strong Operating Cash Flow Generation TSR – UTILIZATION OF OPERATING CASH FLOW $4.4B $4.3B Operating Cash Flow Net Borrowing Proceeds Other Sources CAPEX Dividends M & A Share Repurchases
Slide 41: Capital Allocation
TSR – UTILIZATION OF OPERATING CASH FLOW Capital allocation Balance sheet framework: maintain A- credit rating for business relationships Gross debt/EBITDA of approximately 2x Year-end cash balance of approximately $1.5 billion Deployment priorities Reinvest in business “Normal” long-term capital sp
Slide 42: Return of Funds to Shareholders
TSR – UTILIZATION OF OPERATING CASH FLOW Return of funds to shareholders Domestic cash availability Q1 2012 domestic cash balance approximately $700 million Due to tax agreement and planning, majority of cash generated over next 12 months available domestically Approximately 35% of operating cash fl
Slide 43: Significant Return of Funds to Shareholders
Significant Return of Funds to Shareholders $0.0 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 4Q09 4Q10 2Q11 1Q12 Quarterly Dividend $0 $200 $400 $600 $800 $1,000 $1,200 2009 2010 2011 2012E Share Repurchase Dividend TSR – UTILIZATION OF OPERATING CASH FLOW Dividend Levels Repurchases and Dividends ($ Millio
Slide 44: Strong cash flow return to shareholders
Business supports strong cash flow return to shareholders TSR – UTILIZATION OF OPERATING CASH FLOW Return of funds to shareholders: balanced approach Dividends Currently $0.10 quarterly Target annual increases with business growth Reevaluate with Board periodically Share repurchase Strong buy-back,
Slide 45: Total Shareholder Return Opportunity
Strong opportunity to drive returns through business acceleration and cash flow utilization TOTAL SHAREHOLDER RETURN Double Digit EPS Growth 2012: Retire 4-5% of shares Opportunity to accelerate Expansion opportunity as revenue growth accelerates 2% current yield
Slide 46: Strategic Growth Areas
STRATEGIC GROWTH AREAS Consumer money transfer Consumer bill pay Digital money transfer Stored value Data Ventures International B2B payments GCFS Business Solutions Ventures moving money for better
Slide 47: Investor Day 2012
INVESTOR DAY 1 2012
Slide 48: Non-GAAP Measures
NON-GAAP MEASURES Western Union's management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in our
Slide 49: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES (in millions) FY2009 FY2010 FY2011 Consolidated Revenue Growth Revenues, as reported (GAAP) 5,083.6 $ 5,192.7 $ 5,491.4 $ Reversal of Custom House revenues, including foreign currency translation impact (a) (30.8) (110.3) N/A Reversal of TGBP revenues, including f
Slide 50: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES (in millions) FY2011 Consumer-to-Consumer (C2C) Retail Revenues Revenues, as reported (GAAP) 4,489.9 $ Foreign currency translation impact (c) (35.8) Revenues, constant currency adjusted 4,454.1 $ Prior year revenues, as reported (GAAP) 4,296.8 $ Revenue change, a
Slide 51: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES (in millions) Business Solutions (B2B) Revenues Revenues, as reported (GAAP) 161.1 $ Reversal of TGBP revenues, including foreign currency translation impact (b) (35.2) Foreign currency translation impact (c) (5.7) Revenues, excluding TGBP and constant currency ad
Slide 52: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES (a) Represents the incremental impact, including the impact from fluctuations in exchange rates, when applicable, of Custom House on Consolidated revenue. (b) Represents the incremental impact, including the impact from fluctuations in exchange rates, when applica
Slide 53: Global Consumer Financial Services: Overview & Strategies
STEWART A. STOCKDALE President & EVP, Global Consumer Financial Services GLOBAL CONSUMER FINANCIAL SERVICES: OVERVIEW & STRATEGIES Bienvenidos WELCOME
Slide 54: Key Highlights from 2011
KEY HIGHLIGHTS FROM 2011 Highest growth since 2008 All regions contributed to growth Payments returned to growth FY 2011
Slide 55: C2C Revenue Growth 2009-2011
C2C REVENUE GROWTH 2009 – 2011 Region (reported) 2011 North America 3% Europe & CIS 3% Middle East & Africa 4% Asia Pacific 10% LACA 7% All regions contributed to growth in 2011 Priorities in place to help accelerate growth
Slide 56: 2012 Priorities for Growth
2012 PRIORITIES FOR GROWTH Assert Our Leadership Know Customers and Delight Them Go Deep in Must Win Markets Fuel and Fund the Growth Vision RETAIL PRESENCE CUSTOMER EXPERIENCE ADJACENCIES OPERATING MODEL
Slide 57: Expanding Retail Presence
EXPANDING RETAIL PRESENCE Accelerate location growth Win strategic accounts Fill the “white space” Invest and drive a sales culture Hunter vs. Farmer model (150 new positions) North America – Europe – MEA – APAC – LACA –
Slide 58: Diversifying Classes of Trade
DIVERSIFYING CLASSES OF TRADE Leadership in postal networks Penetrating North America banks Accelerating new European retail* Expanding points of presences globally Flagship locations ATMs Kiosks Convenience stores *Expanded retail locations available through Payment Services Directive (PSD)
Slide 59: North America Banking Class of Trade
NORTH AMERICA BANKING CLASS OF TRADE Continued sales momentum ABMT almost 20% of bank volume Accessing new customer segments Principal per transaction double the non-bank class of trade average 16% YOY Bank Class of Trade Transaction Trends
Slide 60: New European Retail Class of Trade
NEW EUROPEAN RETAIL CLASS OF TRADE Rapid growth and acceleration Independent trends are strong Convenient and accessible Preferred class of trade by migrant consumers New European Retail Transactions* * Countries Opened by Payment Services Directive (PSD)
Slide 61: Prioritize Agents and Size the Opportunity
Prioritize Agents and Size the Opportunity Market Size High Low Low High AGENT VALUE PROPOSITION Actively Retain Develop Strategic Partnership Negotiate Aggressively Actively Optimize
Slide 62: Agent Partnership
Chetan Mehra, Director, Weizmann Forex Ltd. AGENT PARTNERSHIP
Slide 63: Weizmann Forex Ltd: Introduction
WEIZMANN FOREX LTD – INTRODUCTION Weizmann Forex Ltd (WFL): Multidimensional Weizmann Group Revenues US $700M Principal Agent of Western Union since 1998 1,700 experienced professionals servicing valued customers PAN India Payout made during 2011 US $1.8B
Slide 64: Western Union India
WESTERN UNION – INDIA 100,000 strategically placed locations Larger than entire bank branch network Most reputed brands in India working with WU Strong agent relationship Most trusted brand 98% brand awareness “ 1 Out of Every 5 Global WU Locations”
Slide 65: Weizmann Forex Ltd: Rise in Locations
WEIZMANN FOREX LTD – RISE IN LOCATIONS Western Union Financial Services, India – 21,000 th Location The United Western Bank Fort, Mumbai, India – March 2005
Slide 66: Western Union Partnership: A Promising Future
WEIZMANN FOREX LTD – WESTERN UNION PARTNERSHIP: A PROMISING FUTURE Financial Inclusion – Helping underserved Untapped Market – Penetration Villages and small towns Continued Expansion – Successful relationships More than 26 state owned banks and 12,700 sub agents Focus on Transforming Business Weste
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Slide 68: Improving the Customer Experience
IMPROVING THE CUSTOMER EXPERIENCE Customer insights Communicate and offer new services Drive share of wallet Revolutionize the retail experience
Slide 69: Pursuing Adjacencies
PURSUING ADJACENCIES “Go deep” in key markets Account based and intra “Fill the bucket” Premier partnerships More Services = More Profit per Customer More for Agents
Slide 70: Global Payments Returning to Growth
More than 600 Million Transactions GLOBAL PAYMENTS RETURNING TO GROWTH U.S. payments turnaround Innovation in U.S. cash and electronic More than 10,000 billers New biller verticals Small business portal Text to pay Strong growth from South America
Slide 71: Bringing It All Together
BRINGING IT ALL TOGETHER Assert Our Leadership Know Customers and Delight Them Go Deep in Must Win Markets Fuel and Fund the Growth Vision RETAIL PRESENCE CUSTOMER EXPERIENCE ADJACENCIES OPERATING MODEL Scalable Operating Model to Drive Margin Expansion as Revenue Accelerates
Slide 72: GCFS Leadership Team
GLOBAL CONSUMER FINANCIAL SERVICES LEADERSHIP TEAM Drina Yue Middle East & Africa Jean Claude Farah Latin America & Caribbean Odilon Almeida Asia Pacific North America Victoria Lopez-Negrete Europe & CIS Jan Hillered
Slide 73: Europe & CIS
JAN HILLERED Senior Vice President, Europe & CIS EUROPE & CIS WELCOME WILLKOMMEN BIENVENUE VÄLKOMMEN
Slide 74: Europe and CIS
EUROPE AND CIS 53 countries $1.3B 2011 revenues Top countries France United Kingdom Italy Germany Russia Spain 80M migrants
Slide 75: Europe and CIS Network
EUROPE AND CIS 140,000 locations Western Union International Bank 19 WU.com transaction sites 33 account based MT banks signed 23,000 ATMs active in 6 countries Launched prepaid card in Germany, United Kingdom and Austria
Slide 76: The
The Economist (DAILY. EXPRI DER SPIEGEL) DAS LETZTE GEFECHT > THE DECLINE AND FALL OF
Slide 77: Macro Economics
MACRO ECONOMICS 1. 4.7 1. 3. 0.7 4. 0.5 1.6 1.8 3. 0.7 .3 Eurozone CIS France Germany Spain Russia Italy UK Real GDP YoY Growth Rate, Yearly 2010 2014f (in %) 2010 2011 2012f 2013f 2014f Unemployment Rates, Yearly 2008- 2012f (in %) 0. 4. . 0. - - 2008 2009 2010 2011 2012f Eurozone France Germany Sp
Slide 78: New European Retail (PSD)
NEW EUROPEAN RETAIL (PSD) Sales force increased by 40% Growing our footprint Exceeded 2011 target of 1% of total company revenues Ensuring customer convenience Targeting double digit revenue growth for 2012 “Western Union pays me a provision on each transaction … since I’ve been offering Western Uni
Slide 79: Euro Money Transfer
EURO MONEY TRANSFER Replicating the success of U.S. Domestic repositioning Accelerating growth for low band offering in Eurozone Gaining new customers and higher frequency from existing FY 2010 FY 2011 Q1 2012 Domestic in Eurozone Trx growth Revenue growth
Slide 80: Super Agent Acquisitions (Costa and Finint)
SUPER AGENT ACQUISITIONS (COSTA AND FININT) Builds on 2009 Fexco acquisition Moving closer to the customer Direct control of 30% of distribution network in Europe Single sales organization Gaining scale and efficiencies in back office infrastructure
Slide 81: Russia Turnaround Strategies
RUSSIA TURNAROUND STRATEGIES Distribution Enter retail class of trade Self service Brand Awareness Launch of Sberbank Marketing programs Pricing Techniques Tiered pricing Attractive high band offer RUSSIA
Slide 82: Growth Drivers
GROWTH DRIVERS Corridor Promotions Retail Expansion Grassroots Activations Dedicated Locations New Products Customer Promotion Pan European Campaigns New Channels
Slide 83: Middle East & Africa
JEAN CLAUDE FARAH Senior Vice President, Middle East & Africa MIDDLE EAST & AFRICA Bienvenue WELCOME
Slide 84: Middle East & Africa
MIDDLE EAST & AFRICA 66 countries $860M 2011 revenues Top countries Saudi Arabia United Arab Emirates Morocco
Slide 85: Middle East & Africa Agent Locations
40,000 AGENT LOCATIONS 21 SIGNED CONTRACTS 14 SIGNED CONTRACTS MIDDLE EAST & AFRICA Brand awareness 88% Business mix Outbound 43% Inbound 54% Intra 3%
Slide 86: 2011: An Evolving Environment
2011 – AN EVOLVING ENVIRONMENT MEA conflicts Migration shifts $120 oil price Moderate economic growth Emerging opportunities
Slide 87: Continue to Drive Winning Strategies
Minimize The Socio-Economic Impact CONTINUE TO DRIVE WINNING STRATEGIES Customers Execution Growth
Slide 88: Meeting Our Customer & Market Needs
MEETING OUR CUSTOMER & MARKET NEEDS Service availability New agents Footprint expansion Nous avons le plaisir de vous informer de la reprise du service Western Union en Côte d’Ivoire, Réception et envoi de transferts d’argent SOMALILAND NAMIBIA
Slide 89: Driving Growth & Building Momentum
DRIVING GROWTH & BUILDING MOMENTUM New channel - ABMT
Slide 90: Driving Growth & Building Momentum
DRIVING GROWTH & BUILDING MOMENTUM Driving loyalty
Slide 91: Driving Growth & Building Momentum
DRIVING GROWTH & BUILDING MOMENTUM Enhancing visibility
Slide 92: Case Study: Driving MEA Growth to APAC
4% 6% CASE STUDY: DRIVING MEA GROWTH TO APAC Customer focused Harnessing opportunity Portfolio management Increased presence 4% 6% ECONOMIC DOWNTURN ARAB SPRING MEA to APAC (REVENUE)
Slide 93: Closing
IN CLOSING Gulf economies rebounding Crisis countries opened Emerging Africa Channel diversification
Slide 94: Asia Pacific
DRINA YUE Senior Vice President, Asia Pacific ASIA PACIFIC Welcome
Slide 95: Asia Pacific
ASIA PACIFIC 44 Countries and territories 2011 Revenues: $660 Million Top Inbound Countries India Philippines China Top Outbound Countries Australia Malaysia Singapore Hong Kong
Slide 96: Asia Pacific: A Snapshot
ASIA PACIFIC: A SNAPSHOT 210,000+ locations 25 ABMT banks signed 7 Mobile partners signed 254 Agents
Slide 97: Asia Pacific: Five Point Strategy
ASIA PACIFIC Customer-centric Enhance in-bound corridors Build on intra-APAC and outbound Grow retail network and enable new channels Deploy new products to address new market opportunities Five Point Strategy To Bolster Growth
Slide 98: Money Movement: Asia-Pacific In-Bound
*Source: World Bank MONEY MOVEMENT: ASIA-PACIFIC IN-BOUND The Stalwarts and Emerging Tigers INDIA CHINA PHILIPPINES BANGLADESH VIETNAM INDONESIA Top 10 Recipients of Migrant Remittances* 1. India 2. China 3. Mexico 4. Philippines 5. Egypt 6. Pakistan 7. Bangladesh 8. Nigeria 9. Vietnam 10. Lebanon
Slide 99: Money Movement: APAC Revenues Diversifying
MONEY MOVEMENT: APAC REVENUES DIVERSIFYING With APAC Outbound / APAC Intra / DMT APAC INBOUND 64% APAC OUTBOUND 8% APAC INTRA 25% DMT 3% APAC INBOUND 56% APAC OUTBOUND 10% APAC INTRA 31% DMT 3%
Slide 100: Money Movement: Outbound Key Players
Malaysia Hong Kong Korea Japan MONEY MOVEMENT: OUTBOUND KEY PLAYERS All Corridors In and Out of Asia Pacific + Increased GDP growth + Aggressive development agendas + Aging population = Resulting in more migration within APAC Australia Singapore Taiwan NZ/Isles
Slide 101: India Focus: New Channels to Seize New Share
INDIA FOCUS: NEW CHANNELS TO SEIZE NEW SHARE India Remittances: $64B * Leader in cash-to-cash with 100K+ retail network Opportunity to expand to new segments Account based and prepaid cards launches in 2012 Retail Captures Majority of C2C Transfers *Source: World Bank Migration Development Brief Apr
Slide 102: Japan Focus: Channels Activated
JAPAN FOCUS: CHANNELS ACTIVATED - MONTHS 1. Retail expansion 2. Online ABMT: Launched with Seven Bank Poised to Tap $5B * Market Potential *Source: Bank of Japan Reports & Research Paper (2011 March) 3. ATMs: 16,000 4. Retail kiosks: 9,000
Slide 103: Money Movement: Adjacencies/Going Deep
RETAIL TO BANK ACCOUNT SELF-SERVICE MOBILE DEALS: 7 MNOs BUYING WITH CASH ONLINE 25 BANKS: SEND/RECEIVE Malaysia Thailand Japan Korea Vietnam Philippines China Australia Alternative Channels Serving New Consumers Indonesia India Philippines China Malaysia Philippines Bangladesh Vietnam China Japan J
Slide 104: North America
VICTORIA LOPEZ-NEGRETE Senior Vice President, North America NORTH AMERICA Bienvenidos WELCOME
Slide 105: North America
NORTH AMERICA Three countries $1.7B 2011 revenues Top corridors: U.S. domestic money transfer U.S. to Mexico U.S. to Philippines
Slide 106: North America Network
NORTH AMERICA 70,000 locations Long standing relationships 7 ABMT banks signed
Slide 107: Strategies to Deliver Growth
STRATEGIES TO DELIVER GROWTH Enhance the customer and agent experience Expand and diversify distribution footprint Broaden the product portfolio Continue U.S. payments turnaround Evolve and improve Mexico business
Slide 108: It All Begins and Ends with Our Customer
IT ALL BEGINS AND ENDS WITH OUR CUSTOMER 20M money transfer senders Providing consumer choice 4.0 7.5 Annual Transaction per Consumer Single Product vs. Multi Product Single Multi
Slide 109: U.S. Domestic Money Transfer & Consumer Behavior
Losing share Repositioning Revenue growth -7% -8% -9% 5% 18% 28% 35% 29% 21% 19% 14% 11% 12% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Domestic Transactions Transactions Growth U.S. DOMESTIC MONEY TRANSFER & CONSUMER BEHAVIOR All time highs Higher frequency New co
Slide 110: Winning Distribution
WINNING DISTRIBUTION Continued momentum with banks Retail and account based solutions Strong distribution with large retailers Pursuing non-traditional networks Retail expansion via independents Small shops in ethnic neighborhoods
Slide 111: Growing Mexico for Better
GROWING MEXICO FOR BETTER Addressing market challenges Opening of in-country network Direct relationships with agents Expanded services / channels Drive WU brand equity
Slide 112: Closing Summary
CLOSING SUMMARY Successful execution on the strategy Improving portfolio of services for sustained growth Solid momentum with banks Expanding distribution & product diversification Investing in Mexico to accelerate growth
Slide 113: Latin America and the Caribbean
ODILON ALMEIDA Senior Vice President, LACA LATIN AMERICA AND THE CARIBBEAN Bem-vindos Welcome Bienvenidos
Slide 114: Latin America and the Caribbean
LATIN AMERICA AND THE CARRIBBEAN 48 countries and territories $620M 2011 revenues Top countries Argentina Colombia Dominican Republic Jamaica
Slide 115: Latin America and the Caribbean Network
LATIN AMERICA AND THE CARRIBBEAN 40,000 locations 3,500 billers 5 mobile contracts Bolivia El Salvador Guatemala Honduras Paraguay
Slide 116: LACA Strategies Driving Growth
LACA STRATEGIES DRIVING GROWTH Money transfer by phone to account Argentina, Brazil, Chile, Ecuador and Peru 350 Banks 150M account holders Payments expansion Peru, Panama, Venezuela and Brazil
Slide 117: Pago Facil Continues to Deliver Value
PAGO FACIL CONTINUES TO DELIVER VALUE Acquisition completed in 2006 Bill Payments in Argentina Expanding in select markets
Slide 118: LACA Money Transfer & Bill Payments Revenue Growth Rate
LACA MONEY TRANSFER & BILL PAYMENTS REVENUE GROWTH RATE 10% CAGR (2006 - 2011)
Slide 119: LACA Has Diversified Its Revenue Stream
Money Transfer & Bill Payments Revenues (Mix %) LACA HAS DIVERSIFIED ITS REVENUE STREAM Money Transfer & Bill Payments Revenues (Mix %) Outbound & Intra Inbound Payments 2006 2008 March 2012
Slide 120: LACA Is Set Up for Continued Growth
LACA IS SET UP FOR CONTINUED GROWTH Grow the retail network Continue driving revenue mix strategies Build presence in Brazil Expand Account Based Money Transfer Extend offerings across multiple channels
Slide 121: Business Solutions: Overview & Strategies
RAJ AGRAWAL President, Business Solutions BUSINESS SOLUTIONS: OVERVIEW & STRATEGIES WELCOME Namaste
Slide 122: Strategic Area of Growth for WU
STRATEGIC AREA OF GROWTH FOR WU Low double-digit revenue growth Long-term trade growth at ~2X GDP 13% revenue growth (constant currency) for legacy WUBS organization in 2011 Approximately $400MM revenue in 2012 $24B market opportunity ~1,900 employees 95,000+ customers
Slide 123: Complementary Assets and Capabilities
Leading propositions: Financial institutions Law firms Universities Strong product and functionality capabilities Extensive banking relationships Leading provider of international business payments 71 country ACH clearing Two Great Organizations Better as One COMPLEMENTARY ASSETS AND CAPABILITIES Re
Slide 124: Business Overview
Payment Retail to retail Account to account Typical PPT $300 - $500 $15,000 - $25,000 Revenue Mainly transaction fee Mainly FX spread Typical RPT $15 - $30 $75 - $150 Sales Channel FLA’s / Retail Direct Sales / Dealing BUSINESS OVERVIEW Money Transfer (C2C) Business Solutions (B2B) Payment Cross-bor
Slide 125: Their Pain, Our Solution
THEIR PAIN Tools and operational support to manage large payment files; wide range of currency options Pay “From Your Account” Cash payment options Marketplace solutions Branch solution Electronic solutions Spot, forward, options Payment accuracy, speed and administration Multiple countries Cost Esc
Slide 126: Their Pain, Our Customers, Our Solution
THEIR PAIN OUR CUSTOMERS OUR SOLUTION Financial Institutions Law Firms Education Charities Investment: systems/staff Time to market Collect and reconcile tuition and fees from international students Managing multiple inbound and outbound currencies Global movement of funds, often remote; donor manag
Slide 127: Our Products
Real-time communication PAYMENTS COMPLETED IN MULTIPLE METHODS Same day and next day high-value wires Low-value wires Domestic funds transfer (EFT) International drafts OUR PRODUCTS Simple Rate Certainty SPOT PAYMENTS Future FX transaction Risk management tool FORWARD CONTRACTS Flexibility EXCHANGE
Slide 128: Our Channels
OUR CHANNELS Branch Model Partners / Self-service direct application use Simplified, web-based platform
Slide 129: Our Channels
OUR CHANNELS Branch Model Partners / Self-service direct application use Simplified, web-based platform
Slide 130: Our Channels
OUR CHANNELS Branch Model Partners / Self-service direct application use Simplified, web-based platform
Slide 131: Combining Best of Both Businesses to Drive Growth
COMBINING “BEST OF BOTH” BUSINESSES TO DRIVE GROWTH Geographic Expansion Direct in top importing markets Scalable partner and online models elsewhere Product Choice Charity hub Account to retail Multiple Channels Direct Online, self-service Vertical channel partners Agents Target Customers: Wider Vi
Slide 132: Growth Strategy
GROWTH STRATEGY Europe: Country Asia: Significant Opportunity 25 send countries 135+ currencies 200+ countries 71 countries through direct clearing network WUBS Existing Country expansion
Slide 133: Execution Priorities
EXECUTION PRIORITIES Deliver on growth objectives Gain share Geographic, product and channel expansion Retention and expansion of wallet share with existing clients Acquire new clients through investment in direct sales resources Continued growth via partnership model Integration focus Scale Cost ef
Slide 134: Business Solutions: Customers & Sales
KERRY AGIASOTIS Regional Divisional Director, APAC BUSINESS SOLUTIONS: CUSTOMERS & SALES WELCOME
Slide 135: More than 95,000 Clients Globally
MORE THAN 95,000 CLIENTS GLOBALLY Presence in 25 countries Customers across all industries and market segments Strong customer centric business model Experts in foreign exchange and international payments 135+ payment currencies to 200+ countries, 71 directly through clearing network
Slide 136: Sales Organization Design
Branch Hubs – includes all roles supporting complete customer lifecycle Sales Offices – remote sales executives with geographic or vertical responsibility SALES ORGANIZATION DESIGN Localized design to achieve in market objectives Right mix of Hunter and Farmer resources Hub and spoke geographic stru
Slide 137: SME Is the Foundation of Our Business
Corporate ($500M+) High volume integrated payments Select Opportunities SME IS THE FOUNDATION OF OUR BUSINESS CLIENT GROWTH IN ALL SEGMENTS SME ($10M-$500M) FX and payment process management Micro (<$1M-$10M) Simple cost effective payments Direct Sales On-Line Service Channel
Slide 138: Embedded Payments Through Vertical Solutions
EMBEDDED PAYMENTS THROUGH VERTICAL SOLUTIONS The benchmark service for banks, universities and law firms Integrated with existing core processing or ERP systems More than 700 Financial Institution clients world wide Expanded services for clients of mid-tier financial institutions Financial Instituti
Slide 139: Western Union Ventures
DIANE SCOTT Executive Vice President & Chief Marketing Officer and President, Western Union Ventures WESTERN UNION VENTURES WELCOME
Slide 140: Ventures: Strategic Focus
Leverage Our Core Assets: Brand, Customer, Network, Compliance 57% 96% 84% 96% 99% 96% 61% *Source: McKinsey & Co., “Half the World is Unbanked”, October 2009; CGAP, “Financial Access” 2009; C.K. Prahalad, “Fortune at the Bottom of the Pyramid” 2004; Hammond et all, “Purchasing Power at the Bottom o
Slide 141: Building Deeper Customer Relationships
WU 3.0 Transaction Focused Gold Card Membership WU 2.0 Registered Customer Relationships Creating Loyalty 19M Members, 70 Markets BUILDING DEEPER CUSTOMER RELATIONSHIPS WU 1.0 Processing Transactions A Deeper Relationship, Part of Their Daily Lives
Slide 142: Market, Customer and Technology Enabled Innovation
1 2 3 MARKET, CUSTOMER AND TECHNOLOGY ENABLED INNOVATION Data Ventures (Value Add Services – Attachment Revenues) Digital Ventures (Web, Mobile – New Channels) Stored Value Ventures (Card, Mobile, Digital – New Products) Send / Receive Store Spend Monetize
Slide 143: Digital: A Growing Market Opportunity
DIGITAL: A GROWING MARKET OPPORTUNITY Fast growing digital market Market share opportunity Channel adoption growth New customer segments Smartphone adoption Growth in remittance and expansion to new use cases International P2P Money Transfer (IMT) USD Billions in principal Source: McKinsey Payment M
Slide 144: Digital Ventures
DIGITAL VENTURES Today – Gaining Momentum Growth accelerating from single digit to 35% in 2011 $35M investment in new products, technology and talent (2012) Enhanced pay in/pay out options WU Mobile as a stand alone financial service or with 3 rd party mobile partners Vision: The Largest Cross Borde
Slide 145: Stored Value: An Attractive Opportunity
STORED VALUE: AN ATTRACTIVE OPPORTUNITY Prepaid market forecasted to grow at a 20% CAGR globally through 2015 $628B market opportunity (GDV) Estimated global market revenue opportunity of $13 - $20B Complementary and large revenue potential Monetizing remittance flows Utilizing the WU agent base bey
Slide 146: Stored Value Ventures
STORED VALUE VENTURES Today – Gaining Momentum 2012-geographic expansion to 10 markets Broaden customer relationships to enable adjacent revenues Offer new ways for customers to access stored value Enable P2P money transfers, bill pay and more Leverage partnership model to drive scale Vision: The Wo
Slide 147: Data Ventures: Big Data, Global Scale
DATA VENTURES: BIG DATA… GLOBAL SCALE Truly global, 200+ markets Migrant diaspora knowledge depth SME/VSE unique insights Monetization opportunities Cross sell other financial services Co-branded partner offerings Data augmentation Vision: The World’s Largest Database Of Underserved Customers Wester
Slide 148: Connecting the Billion Underserved
Connecting the 2 Billion Underserved Western Union Ventures STORED VALUE DATA DIGITAL
Slide 149: Western Union Ventures: Digital
KHALID FELLAHI Senior Vice President & General Manager, Western Union Digital WESTERN UNION VENTURES: DIGITAL Bienvenue WELCOME
Slide 150: Western Union Digital Roadmap
Current state Future state WESTERN UNION DIGITAL ROADMAP Digital presence online and mobile $100M+ revenue, growth accelerating from single digit to 35% in 2011 Limited features, customer experience Strategic partnerships with mobile network operators Enabling digital channels globally $500M+ revenu
Slide 151: Focus on Key Features & Functionalities
FOCUS ON KEY FEATURES & FUNCTIONALITIES WU-Wallet foundation WU Pay International deployment Mobile channel expansion Expanded “Account Funding” Account to Account products Mobile Wallet partnerships
Slide 152: Key Recent Developments: Smartphone Access
KEY RECENT DEVELOPMENTS Smartphone access Launched in May 2011 in U.S. iPhone, Android, BlackBerry Unique advanced features for payments 10%+ of online C2C transactions in U.S. Higher share of wallet Expanding to new geographies
Slide 153: Key Recent Developments: Account Payout
ACCOUNT KEY RECENT DEVELOPMENTS New service for bank account payout Launched in December 2011 in U.S. Recently expanded to U.K., Australia Payout to banks in 38 countries 90% new customers/use case Expanding to new payout geographies
Slide 154: Key Recent Developments: WU Pay
KEY RECENT DEVELOPMENTS WU Pay - proprietary alternative payment method Acquired startup eBillme Bank transfer/cash Portfolio of gift card and merchant for e-commerce Activating in the U.S., selected geographical expansion
Slide 155: Mobile Transaction Services
MOBILE TRANSACTION SERVICES GSMA lists 120+ initiatives globally WU approximately 30 partners globally 11 countries live/12 partners Established brand and presence Early stages, 3-5 year opportunity Partnering with MNOs, Banks, and Independents to Enable Mobile Transactions
Slide 156: Western Union Ventures: Stored Value
MIKE HAFER Senior Vice President, Stored Value WESTERN UNION VENTURES: STORED VALUE WELCOME
Slide 157: Building Deeper Customer Relationships
WU 3.0 Transaction Focused Gold Card Membership WU 2.0 Registered Customer Relationships Created loyal WU relationships with 19M active members across 70 markets A deeper relationship that’s part of their daily lives BUILDING DEEPER CUSTOMER RELATIONSHIPS WU 1.0 Processing Transactions
Slide 158: Consumer-Focused Solutions Using WU Assets
CONSUMER-FOCUSED SOLUTIONS USING WU ASSETS Via mobile SMS Phone/IVR Online Prepaid Agent Locations Utilizing the Remittance “Fuel” to Drive Convenience and Preference PHILIPPINES Receive Options
Slide 159: Consumer-Focused Solutions Using WU Assets
CONSUMER-FOCUSED SOLUTIONS USING WU ASSETS Consumer Focused Model Using WU’s Unique Assets to Differentiate UNITED STATES Strong consumer value Strong satisfaction ratings vs. competitors Integrated MT/BP driving utility Source: Absolute Data proprietary Prepaid Card research, August 2011
Slide 160: Go-to-Market Strategy Leading to Accelerated Growth
A GO TO MARKET STRATEGY LEADING TO ACCELERATED GROWTH Utilizing a Dual Approach to Accelerate Growth Globally in Key Markets Expanding presence and success in U.S. India stored value account to improve convenience, monetize receivers, grow share of wallet and expand intra opportunity Western Union L
Slide 161: Vision: The World's Leading Global Load/Cash Access Network
VISION: THE WORLD’S LEADING GLOBAL LOAD/CASH ACCESS NETWORK Funds In/Out Services Funds in available in all markets Funds out in select markets based on ATM/POS environment Expanding service already in U.S. and Argentina Partnership with MasterCard rePower Funds in/funds out drives utility, usage, c
Slide 162: Stored Value: WU on an Upward Trajectory
STORED VALUE — WU ON AN UPWARD TRAJECTORY Global expansion New customers Maximize network distribution Grow partnerships countries countries countries 2010 2012 2015
Slide 163: Brand
DIANE SCOTT Executive Vice President & Chief Marketing Officer and President, Western Union Ventures BRAND WELCOME
Slide 164: Five Numbers to Remember
FIVE NUMBERS TO REMEMBER *Source: Western Union 2011 global consumer tracking study of consumers in money movement category Underserved consumers SMEs with cross-border payment needs Agent locations Trust in the brand Global brand awareness*
Slide 165: Our Brand Is Uniquely Positioned on the Global Stage
OUR BRAND IS UNIQUELY POSITIONED ON THE GLOBAL STAGE Western Union enables customers to move up from the bottom of the pyramid. This is one of the most compelling and consequential trends of our time. The business opportunity is massive.
Slide 166: Western Union Is the Most Genuine Global Mainstream Brand
WESTERN UNION IS THE MOST GENUINE GLOBAL MAINSTREAM BRAND
Slide 167: Where a Smartphone Can Hardly Be Found
WHERE A SMARTPHONE CAN HARDLY BE FOUND, THERE’S ALWAYS A WESTERN UNION AROUND THE CORNER
Slide 168: Where Retail Brands Might Be in Years
WHERE RETAIL BRANDS MIGHT BE IN 10 YEARS, WESTERN UNION IS ALREADY THE PLACE TO BE
Slide 169: Where Digital Brands Are Beginning to Go
WHERE DIGITAL BRANDS ARE BEGINNING TO GO, WESTERN UNION IS ALREADY A HIGHLY TRUSTED BRAND
Slide 170: Moving Money for Better
MOVING MONEY FOR BETTER Places Western Union at a pivotal point in a customer’s life and business A purpose-driven, do-brand inspired by the underserved consumers and businesses A modern brand platform, inspiring new behaviors, elevating engagement Lifting up the brand to succeed across new and exis
Slide 171: Engaging Global Brand Building Acts
ENGAGING GLOBAL BRAND BUILDING ACTS Rolling series of engaging brand acts over seven months 9.5 billion total media impressions 4,700 media placements globally 767 million digital impressions 95 million social media impressions Site visits from over 205 markets Raising company profile and establishi
Slide 172: Building the Brand at the Moment of Truth
BUILDING THE BRAND AT THE MOMENT OF TRUTH Enhancing our global brand image and experience through westernunion.com DIGITAL RETAIL New interactive merchandising unit to improve customer experience MOBILE Expanding access to payment services through mobile devices
Slide 173: Stretching the Brand Even Further
STRETCHING THE BRAND EVEN FURTHER Refined brand architecture clearly provides an ownable platform for our products, services and partnerships We are evolving visually our brand as we reach out to new segments with greater digital access, beginning with the WU branding in newer channels
Slide 174: Western Union Brand: On the Move
WESTERN UNION BRAND – ON THE MOVE A purpose - driven, do - brand inspired by underserved consumers and businesses globally 2 Billion Customers Are Waiting.