Western Union Company (the) · NYSE:WU
Western Union Company (the) — Investor Day (September 2010)
159 slides from Western Union Company (the)'s investor day presentation, Sep 30, 2010
Slide 1: Forward-looking statements
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 predict. Actual
Slide 2: Strategy Overview
HIKMET ERSEK Chief Executive Officer Strategy Overview Welcome Hosgeldiniz Willkommen
Slide 3: Our Vision
OUR VISION Western Union: The Network and Brand for Moving Money Focus on the underserved
Slide 4: Competitive Advantages
COMPETITIVE ADVANTAGES Unmatched global network and strong relationships Strong global brand Unique consumer relationships Anti-Money Laundering (AML) and regulatory expertise Range of send and delivery options including cash and eChannels
Slide 5: Unmatched Global Network
UNMATCHED GLOBAL NETWORK 430,000 agent locations 200 countries and territories Over 16,000 corridors Strong agent relationships Agent network for cash-in/out critical core of money movement
Slide 6: Strong Global Brand
STRONG GLOBAL BRAND 430,000 global locations McDonald’s: 32,000 locations Starbucks: 16,000 locations $200MM annual marketing spend in 2010
Slide 7: Strong Global Brand: Unprompted Brand Awareness
STRONG GLOBAL BRAND: WESTERN UNION UNPROMPTED BRAND AWARENESS High and growing consumer awareness Germany India Saudi Arabia Pakistan Indonesia 2004 2007 2009 Global 81% US 82% Europe/CIS 81% Middle East 77% APAC 72% Source: Western Union Brand Tracker
Slide 8: Strong Global Brand: Key Brand Dimensions
STRONG GLOBAL BRAND: KEY BRAND DIMENSIONS Global Mean Score (Scale 1 to 10) Western Union consistently performs on key consumer attributes for money transfer Source: Western Union Brand Tracker TrustWorthy Innovative Fast Easy to Use Safe and Secure 8.6 8.3 8.6 8.3 8.7
Slide 9: Strong Global Brand: Money Transfer Senders in 2009
STRONG GLOBAL BRAND Approximately 65 Million Money Transfer Senders in 2009 Canada 1MM United States 16MM LACA/Mex 2MM South America 4MM Europe 14MM MEPA 13MM Africa 4MM Russia & CIS 4MM North Asia 1MM SSEA 1MM Pacific & Indochina 4MM Over 100MM additional consumers including money transfer receiver
Slide 10: Unique Consumer Relationships
UNIQUE CONSUMER RELATIONSHIPS Brand Trust Leads to Engagement with Consumers Large consumer database Consumers we know and recognize and can serve across channels 14MM Gold Cards Ability to engage with consumers cost effectively and in real time Mobile marketing, e-mailing, social media Personalized
Slide 11: AML & Regulatory Expertise
AML & REGULATORY EXPERTISE $40 million annual investment 400 colleagues / 50 cities / six continents Global anti-money laundering (AML) and regulatory experience Sophisticated technology Strong regulatory relationships Over 40 countries have unique reporting requirements Trend toward increased regul
Slide 12: Range of Send and Delivery Options
RANGE OF SEND AND DELIVERY OPTIONS Timing: Money-in-Minutes or Next Day Payout: >120 currencies Channels: Western Union provides consumers choice and convenience
Slide 13: Strategic Priorities
STRATEGIC PRIORITIES Grow Retail Channels Expand Electronic Channels Develop Product Portfolio Improve Process and Productivity
Slide 14: Strategic Priorities: Grow Retail Channels
STRATEGIC PRIORITIES Grow Retail Channels Long-term, demographic data suggest growth in new migrant flows Cash-to-cash share of market has been increasing WU network expansion can drive incremental growth New consumer opportunities exist
Slide 15: Demographics Support Long-Term New Migrant Growth
DEMOGRAPHICS SUPPORT LONG-TERM NEW MIGRANT GROWTH Median Age of Population (2010) G7 Countries 15 years Top 7 Inbound Countries Large income gaps remain between developed and developing world The developed world is aging while surplus workers are available in the developing world Global wealth distr
Slide 16: Cash-to-Cash Share of Market Increasing
STRATEGIC PRIORITIES Grow Retail Channels – Cash-to-Cash Share of Market Increasing Cash-to-cash share of cross border migrant remittances have increased since 2006 Share among top 10 money transfer organizations increased 7 percentage points from 2006 to 2009 New migrants strongly prefer cash trans
Slide 17: Preference for Cash Still Strong
STRATEGIC PRIORITIES Grow Retail Channels – Preference for Cash Still Strong C2B Payments and Consumer Purchases by Region Cash remains the predominant form of consumer payment in much of the world Source: McKinsey, “Perspectives on the Worldwide Payments Business,” Feb, 2010. Africa Asia Middle Eas
Slide 18: Network Expansion
STRATEGIC PRIORITIES, INCREMENTAL GROWTH Grow Retail Channels – Network Expansion Market share highly correlated with retail distribution Ratio of WU agents to post offices an effective barometer Globally, 0.6 Western Union agent locations per post office today
Slide 19: Network Expansion, Incremental Growth
STRATEGIC PRIORITIES Grow Retail Channels – Network Expansion, Incremental Growth Inbound Examples WU network size compared to the post office WU share of inbound remittance principal Low Density India China Pakistan Average Density Mexico Argentina Bangladesh High Density Philippines Dominican Repu
Slide 20: New Consumer Opportunities
STRATEGIC PRIORITIES Grow Retail Channels – New Consumer Opportunities European retail North American banking strategy, account-to-cash Extend to non-migrant cross border senders WU share nominal with non-migrant cross-border money transfer consumers (principal estimated at half the size of migrant
Slide 21: Strategic Priorities
STRATEGIC PRIORITIES Grow Retail Channels Expand Electronic Channels Develop Product Portfolio Improve Process and Productivity
Slide 22: Expand Electronic Channels
STRATEGIC PRIORITIES Expand Electronic Channels Leverage retail network, brand, compliance, infrastructure More choice for consumers: 70% of senders have bank accounts* New consumers: higher income, more immersed Estimated half of cross-border remittance market principal involves at least one accoun
Slide 23: Develop Product Portfolio: Prepaid
STRATEGIC PRIORITIES Develop Product Portfolio Prepaid Additional service for existing consumers 650,000 cards-in-force Scaling U.S. business; leverage brand, distribution, consumer relationships, and infrastructure to develop prepaid in international markets More on prepaid from Stewart Stockdale
Slide 24: Develop Product Portfolio: Business-to-Business Payments
STRATEGIC PRIORITIES Develop Product Portfolio Business-to-Business Payments B2B in 7 countries today, Canada largest Large market revenue opportunity Branding: Western Union Business Solutions More on Business Solutions from David Yates
Slide 25: Improve Processes and Productivity
STRATEGIC PRIORITIES Improve Processes and Productivity Faster decision making, closer to consumers and agents More efficient organization Lifecycle approach, synchronized planning Margin focus through constant improvement More on productivity from Scott Scheirman
Slide 26: Product and Services Portfolio: The 4i Process
PRODUCT AND SERVICES PORTFOLIO The 4i Process EXAMPLES Manage and Invest According to Lifecycle Stage Innovate Incubate Implement Improve
Slide 27: Western Union Today
WESTERN UNION TODAY Strong brand, solid base. Diversified geographic portfolio. Strong cash flow 2009: $5B Revenue 1H10 73% Retail Cross Border Money Transfer 9% Intra Money Transfer 2% Electronic Money Transfer 12% Consumer to Business 2% Business to Business 2% Other
Slide 28: Matrix View of the Business
“MATRIX” VIEW OF THE BUSINESS Objective is to expand product and channel offerings Product Categories / Primary Consumer Segment Consumer Money Transfer Cross Border + Intra Immigrants , Mass Market / Underserved Consumers Prepaid / Stored Value Cards + Mobile Mass Market / Underserved Consumers Bus
Slide 29: Western Union Tomorrow
WESTERN UNION TOMORROW Retail and electronic channels Long-term growth market Share opportunities through network expansion, 4 P’s, new consumer opportunities, more choice Infrastructure in place 4 P’s Large and growing U.S. market International opportunities Stabilize existing U.S. business Select
Slide 30: Market Opportunities
MARKET OPPORTUNITIES Source: Company estimates, Aite, Boston Consulting Group, and McKinsey Consulting. Note: The data used to compute market size may not include all services that compete with Western Union, such as mail or courier services, prepaid cards, travel cards, ATM transfers and other serv
Slide 31: Global Organization
GLOBAL ORGANIZATION World HQ Regional HQ Regional Operations Center Regional Office WU Labs Silicon Valley Denver New York Costa Rica Vilnius Vienna Dubai Hong Kong Manila Total of 129 corporate, regional, and local offices globally Close to customers, clients, regulators, and agents
Slide 32: Western Union Today's Speakers
WESTERN UNION – TODAY’S SPEAKERS STEWART STOCKDALE The Americas, Global Cards & Global Key Accounts (Denver) JAN HILLERED Europe/CIS (Vienna) JEAN CLAUDE FARAH Middle East & Africa (Dubai) DRINA YUE Asia Pacific (Hong Kong) KHALID FELLAHI Head of Africa & Mobile Transaction Services (Casablanca) SCO
Slide 33: Stewart A. Stockdale: The Americas Update
STEWART A. STOCKDALE President, The Americas EVP, Global Cards & Global Key Accounts Welcome Bienvenidos The Americas—Update
Slide 34: The Americas
THE AMERICAS Population: 920M Countries and territories: 46 Agent locations: 105,000+ (3 Brands) North America Locations 59,000+ Mexico & Central America Locations 25,000+ South America Locations 21,000+
Slide 35: Expanding the Category
EXPANDING THE CATEGORY… Deliver on the Core Reposition Domestic Money Transfer Win Bank Distribution Channel Penetrate Prepaid Category New Marketing Paradigms Low Band Entry Point Enter New Classes of Trade Americas Market Principal Traditional Money Transfer Expanded Money Movement Money Transfer
Slide 36: The Americas Go To Market Strategy
THE AMERICAS GO TO MARKET STRATEGY Money Transfer Money Order Payments Prepaid Integrated Sales & Marketing One Voice, One Message Customer Profitability Retention / Cross Sell “Fill the Bucket” Strategy Agent Yield by Service
Slide 37: Serving Consumers How They Want It Served
SERVING CONSUMERS HOW THEY WANT IT SERVED… Money Transfer Money Order Payments Prepaid
Slide 38: Fill the Bucket Strategy
FILL THE BUCKET STRATEGY… Money Transfer Money Order Payments Prepaid Grocery Stores Check Cashers Independents Banks C-Stores Dollar Stores Western Union® Services
Slide 39: Example of Fill the Bucket: Banks
EXAMPLE OF “FILL THE BUCKET” BANKS PROVIDE ACCESS TO MILLIONS OF CUSTOMERS Integrates Money Transfer & Payments Recent signing of KeyBank Increasing demand for Account Based Services Western Union has more than 100 bank agent relationships across the Americas Banks
Slide 40: One Voice, One Message
ONE VOICE, ONE MESSAGE Customer Retention, Trial and Acquisition Retain Existing & Attract New Users Money Transfer Money Order Payments Prepaid Integrated Marketing, Public Relations & Social Media Mainstream marketing Talent and testimonials Consumers preference Direct response Customer Relationsh
Slide 41: U.S. Repositioning: Domestic Money Transfer
Return to Growth Launch in Q4 2009 Growth Across All Principal Bands Money Transfer U.S. REPOSITIONING – DOMESTIC MONEY TRANSFER U.S. Domestic Money Transfer Remains a +30% Margin Business Q4 Estimate
Slide 42: U.S. Low Band Offering Opened Door for Prepaid
U.S. LOW BAND OFFERING OPENED DOOR FOR PREPAID Expanded Usage from Emergency to Casual / Gifting / Prepaid Generate incremental revenue Strengthen existing customer relationships Drive new customer acquisition Extend Western Union brand to broader audience
Slide 43: Repositioning Had a Halo Effect Across Outbound Corridors
U.S. REPOSITIONING HAD A HALO EFFECT ACROSS OUTBOUND CORRIDORS Transaction Growth National positioning and promotion Consumer cross over Improving trends Gaining share Money Transfer EUROPE & CIS
Slide 44: U.S. to Mexico
Improving trends vs. Banco de Mexico Optimization of in country network for cash out Brand strategy addressing premium vs. value consumer segments Addressing regulatory environment U.S. TO MEXICO Mexico Transaction Growth Rates
Slide 45: Integration of the Payments Business
INTEGRATION OF THE PAYMENTS BUSINESS Primarily Serving the Americas Market Opportunity to Leverage Cost Structure Synergy with Money Transfer Sales Force Marketing Agent Base Consumer Cross-Over Money Transfer Money Order Payments Prepaid
Slide 46: Expand the Reach in the U.S. Payments Market
EXPAND THE REACH IN THE U.S. PAYMENTS MARKET Leader in the “Urgent” Segment of C2B Bill Payments Grow Walk-in Payments under Western Union Brand Expand Electronic Services: New Industry Verticals New Consumers Strategic Distribution Partnerships Source: McKinsey U.S. Payments Map, 2009—2014, Release
Slide 47: A Leader in the Same-Day Payments Industry
A LEADER IN THE “SAME-DAY” PAYMENTS INDUSTRY Western Union® services approximately 4,000 U.S. Billers across multiple industries Auto Finance Insurance Mortgage Telecom Utility Western Union completed 415 million bill payment transactions in 2009 Payments
Slide 48: U.S. Payments Current Market Category
U.S. PAYMENTS CURRENT MARKET CATEGORY Grow the Walk-in Payments Business Under Western Union® Brand Expand Electronic and Online Banking
Slide 49: Expanding into Broader Payments Alternatives
EXPAND THE REACH IN THE U.S. PAYMENTS MARKET Credit Card Servicing Government Health Care Universities Small & Medium Billers Auto Finance Financial Services Insurance Mortgage Prisons Utility Expanding into Broader Payments Alternatives…
Slide 50: Other Key Markets for the Americas
OTHER KEY MARKETS FOR THE AMERICAS… Activate Mobile to Cash service access to 20 million subscribers Expand alternate channels and drive ubiquitous distribution Bank License granted September Go to Market as a “Local Player” Multi-product / Multi-channel Multi-product / Multi-channel Expand Payments
Slide 51: In Summary: The Integrated Americas
IN SUMMARY… The Integrated Americas …On a New Track To Growth
Slide 52: Americas Return to Growth Strategies
AMERICAS RETURN TO GROWTH STRATEGIES… Expand Core Retail & Increase Yield Continue Momentum in Banking Channel Drive Account Based Solutions Grow the Prepaid Business Launch Mobile Offering in Key Markets Explore Broader Payments Market for Consumers & Businesses © 2010 Western Union Holdings, Inc.
Slide 53: Jan Hillered: Europe & CIS
JAN HILLERED Senior Vice-President, Europe & Commonwealth Independent States (CIS) Welcome Välkomna Willkommen Bienvenue Europe & CIS Increasing Growth Momentum
Slide 54: Europe & CIS
EUROPE & CIS 880 million population 54 countries ~200 agents 146,000 agent locations Over 20,000 locations enabled for cash-to-mobile Remittance Market: Cross-border $160 billion
Slide 55: Million Migrants: Growth Potential
80 MILLION MIGRANTS: GROWTH POTENTIAL Americas 13% European Union 28% Eastern Europe & CIS 15% Middle East & Africa 33% Asia Pacific 11%
Slide 56: Europe & CIS: Growth Potential
EUROPE & CIS: GROWTH POTENTIAL Romania Domestic Transactions (and YoY growth)
Slide 57: Europe & CIS: Growth Potential
EUROPE & CIS: GROWTH POTENTIAL Western European Remittances Russia U.S. Remittances
Slide 58: Europe & CIS: Growth Potential
EUROPE & CIS: GROWTH POTENTIAL Remittances to former Soviet Union Russia
Slide 59: Unrivaled Distribution with Room to Grow
UNRIVALED DISTRIBUTION WITH ROOM TO GROW Expand retail money transfer Recent EU regulation allows new retail networks in previously restricted countries Key opportunities in major markets (e.g. France & Germany) Opportunity to target under-served segments with greater choice and convenience Estimate
Slide 60: Leveraging Alternative Channels
LEVERAGING ALTERNATIVE CHANNELS Expanded choice for current consumers, improved access for new consumers More banking partners Easier IT solutions More countries with Online transaction capability Improved customer experience 24/7 telephone access Expand to more countries Activate more cash-to-mobil
Slide 61: Account Based Money Transfer: Garanti Bank, Turkey
Account Based Money Transfer (ABMT) Garanti Bank, Turkey Amongst top 5 Turkish banks Over 1.5 million internet banking customers 7.7 million customers Since ABMT launch (May 2009) Already 3% of Western Union country share New consumer segments Growing outbound business Garanti Transaction Direction
Slide 62: Westernunion.com in Europe & CIS
WESTERNUNION.COM in EUROPE & CIS 2010 transactions growing at over 60% YTD Growth drivers Building channel awareness Improved consumer experience Expanding on-line payment methods Affiliate programs New country site launches New consumer segments
Slide 63: Enhancing Business Processes and Productivity
ENHANCING BUSINESS PROCESSES AND PRODUCTIVITY Lower Agent commissions Leverage efficiency benefits of FEXCO acquisition Create back-office efficiencies via new European Regional Operations Center (Lithuania)
Slide 64: Europe & CIS: Increasing Growth Momentum
EUROPE & CIS: INCREASING GROWTH MOMENTUM New customer segments More retail locations in key markets Leverage of westernunion.com Expansion of Account Based Money Transfer Continuous productivity improvements © 2010 Western Union Holdings, Inc. All Rights Reserved
Slide 65: Jean Claude Farah: Middle East & Africa Update
JEAN CLAUDE FARAH Senior Vice President Middle East & Africa Bienvenue WELCOME Middle East & Africa—Update
Slide 66: Middle East & Africa Regional Coverage
MIDDLE EAST & AFRICA REGIONAL COVERAGE 1.4B Population 63 Countries ~400 Agents
Slide 67: Characteristics of Middle East & Africa
CHARACTERISTICS OF MIDDLE EAST & AFRICA Over 68% of world oil reserves Remittance market size of $100B+*, including inbound and outbound Saudi Arabia – 3rd largest outbound remittance market Economies relying on remittances Gulf States are primarily Outbound *Source: World Bank
Slide 68: Western Union in Middle East & Africa
WESTERN UNION IN MIDDLE EAST & AFRICA Deep understanding of our remittance markets Ethnic marketing expertise Diversified presence banks - post offices - exchange houses - entrepreneurs Prominent Agent partners Strong regulatory ties High & growing brand awareness Regional presence – Staff and Offic
Slide 69: Driving Growth
DRIVING GROWTH PRODUCT Channels & Choice PLACE Network Ubiquity PROMOTION Delivering our brand PRICE The right value proposition
Slide 70: Positioning Case Study: Saudi Arabia to India
POSITIONING CASE STUDY: SAUDI ARABIA TO INDIA Rapidly growing economy Dependent on migrant labor Approximately 1.8M Indian migrants Family support – a key priority DAMMAM RIYADH JEDDAH
Slide 71: Positioning Case Study: Saudi Arabia to India
POSITIONING CASE STUDY: SAUDI ARABIA TO INDIA Harnessed the opportunity Created the right value proposition Engaged in direct ethnic communication 39% Transaction CAGR
Slide 72: Enhancing Profitability
ENHANCING PROFITABILITY Optimizing our Agent commission structures Develop flexible Agent performance and incentive models Inline with evolving market dynamics Improve profitability
Slide 73: Enhancing Profitability: Agent Commission Rates
ENHANCING PROFITABILITY Agent Commission Rates as a % of Revenue 38% Transaction CAGR 11% Transaction CAGR SAVING 2% SAVING 5% Middle East Africa 2006 2007 2008 2009
Slide 74: Middle East & Africa Growth Drivers
MIDDLE EAST & AFRICA – GROWTH DRIVERS Long-term economic growth Resurgence of emerging markets New investments in projects Pickup in new & intra regional migration © 2010 Western Union Holdings, Inc. All Rights Reserved Western union is well positioned to capitalize on regional economic rebound
Slide 75: Drina Yue: Asia Pacific Update
DRINA YUE Managing Director and SVP, Asia Pacific Welcome Asia Pacific—Update
Slide 76: APAC Snapshot
APAC SNAPSHOT ?World Population: 6.8 Billion ?APAC 3.6 billion ?Agent Locations: 150,000+ ?43 countries and territories ?>200 agent relationships ?Bank 55% Post 11% Financial services 10% Retail 6% Travel and Transport 4% WU Primary business 3%
Slide 77: World's Top Receive Markets
WORLD’S TOP 4 RECEIVE MARKETS—3 ARE IN ASIA *Remittance market share – World Bank Migration and Development Brief April, 2010
Slide 78: World's Top Receive Markets: China, India, Philippines
WORLD’S TOP 4 RECEIVE MARKETS—3 ARE IN ASIA CHINA ?$48b* remittance market ?Agent locations: ~25,000 ?Brand awareness (key receive provinces)—avg. 45% INDIA ?$49b* remittance market ?Agent locations: ~61,000 ?Brand awareness of 90%+ PHILIPPINES ?$20b* remittance market ?Agent locations: ~7,000 ?Bran
Slide 79: APAC Inbound: India
APAC INBOUND: INDIA ?Key corridors: ?Middle East (Saudi Arabia, UAE, Oman), USA, Australia, UK ?60,000th agent location activated this quarter
Slide 80: APAC Inbound: China
APAC INBOUND: CHINA ?Key corridors: ?USA, Angola, Russia, Canada, France ?Doubled agent relationships in one year -total 8 ?5 regional city bank agents – corridor specialists
Slide 81: APAC Inbound: Philippines
APAC INBOUND: PHILIPPINES ?Key corridors: ?USA, Canada, Middle East (UAE, Saudi Arabia, Qatar), Australia
Slide 82: APAC Growth
APAC – GROWTH ?Strong growth potential ?Steady revenue growth ?Serve the underserved ?Focused strategies ?Network: Expand ?New Channels: Electronic initiatives ?Cost: commission optimization ?Marketing: Expert ethnic corridor connections
Slide 83: APAC Intra-Region: Australia
APAC INTRA-REGION: AUSTRALIA ?Key corridors: ?India, Philippines, Thailand, China, Indonesia, Malaysia, New Zealand/Isles
Slide 84: APAC Intra-Region: Malaysia
APAC INTRA-REGION: MALAYSIA ?Key corridors: ?Indonesia, Philippines, India, Vietnam
Slide 85: APAC Intra-Region Dynamics
APAC – INTRA ?Emerging intra APAC dynamics ?1/3 of APAC revenue contributed by APAC intra-region (and DMT) ?DMT strong growth ?Philippines: 17% CAGR* Transactions ?Indonesia: April activation has seen tremendous growth; 154%+ Transactions ?Well-positioned to offer DMT *CAGR 09 VS 06 / + YTD 2010
Slide 86: Japan: The Opportunity
JAPAN: THE OPPORTUNITY ?Official remittances: Money Transfer License $4B* (Outbound + Inbound) ?Historically limited presence ?First non- bank entity to offer international cash-to-cash money transfers, under new laws ?Launched 20 Travelex agent locations ?More locations to be launched ?Seven Bank –
Slide 87: Japan: Seven Bank ATM Video Sample
JAPAN: SEVEN BANK ATM VIDEO SAMPLE PLS HOTLINK
Slide 88: APAC Poised for Growth
APAC POISED FOR GROWTH Core cash-to-cash – serve the underserved ?Network expansion ?Market share growth New channels – capability Account-based Money Transfer: Current: Malaysia New: Korea, India, Thailand MOBILE: ??Malaysia—Maxis ??Philippines—Globe and Smart WU.com ??Australia © 2010 Western Unio
Slide 89: David Yates: Electronic Money Transfer
DAVID YATES Executive Vice President, Alternative Channels Welcome Céad míle fáilte Willkommen Benvenuti Bienvenue Electronic Money Transfer
Slide 90: Western Union: The Network and Brand for Moving Money
WESTERN UNION: The network and brand for moving money
Slide 91: Electronic Money Transfer Opportunities
ELECTRONIC MONEY TRANSFER Opportunities ?Core cash-to-cash retail money transfer fueled by demographics, migration ?Electronic money transfer fueled by consumers moving up the lifecycle (in tenure, income, banked status) ?Account-based money transfer (cash-to-account, account-to-cash) complementary
Slide 92: Mainstream Population Has High Interest in A2C
MAINSTREAM POPULATION HAS HIGH INTEREST IN A2C Non-Migrant Cross-Border Senders 37% 37% 38% 39% 36% 30% 46% Source: Western Union Indigenous population surveys 2010
Slide 93: Electronic Money Transfer Key Initiatives
ELECTRONIC MONEY TRANSFER OPPORTUNITIES Key Initiatives 1. Increase consumer choice 2. Self-service 3. Extend reach to consumers with accounts 4. Extend reach through third parties: plug and play
Slide 94: Direct Sales: Westernunion.com Rollout
DIRECT SALES: WESTERNUNION.COM ROLLOUT
Slide 95: Drive Account-Based Money Transfer
DRIVE ACCOUNT-BASED MONEY TRANSFER A Global Presence
Slide 96: Account-Based Money Transfer: How it Works
ACCOUNT-BASED MONEY TRANSFER How it Works
Slide 97: Account-Based Money Transfer: How it Works
ACCOUNT-BASED MONEY TRANSFER: HOW IT WORKS
Slide 98: Account-Based Money Transfer: How it Works
ACCOUNT-BASED MONEY TRANSFER: HOW IT WORKS
Slide 99: Provide an Open Innovation Platform
PROVIDE AN OPEN INNOVATION PLATFORM ?Potential Examples: ?Western Union widget on a blog that facilitates payments across borders. Small companies can utilize it to tap into our payment platforms ?Integrate gift-card sites with Western Union’s open platform to offer cash or ‘WU prepaid cards’ as a g
Slide 100: Competitor Models
COMPETITOR MODELS ?Challenging for mobile, card networks to replicate cross-border money transfer on their own Technology is just one step in the system Trusted brand Cash in/out AML compliance Multi-currency payout Inter-operability
Slide 101: Range of Delivery Options
RANGE OF DELIVERY OPTIONS ?Timing: Money-in-Minutes or Next Day ?Payout: >120 currencies Channels © 2010 Western Union Holdings, Inc. All Rights Reserved
Slide 102: Khalid Fellahi: Mobile Transaction Services Update
KHALID FELLAHI SVP, Global Head Mobile Transaction Services Welcome Bienvenidos Marhaba Akwaaba Mobile Transaction Services Update
Slide 103: Mobile Money Industry Status
MOBILE MONEY INDUSTRY STATUS Acceleration of Mobile Money initiatives Primarily Mobile Network Operators (MNOs) 30 M to 50 M users for Mobile Money, primarily domestic Still early days, but proof of concept Smart, Globe, Safaricom, MTN, Airtel/Zain 160 140 120 100 80 60 40 Y2008 Y2009 Y2010 Emerging
Slide 104: Market Dynamics
MARKET DYNAMICS ?Depending on regulations, MNOs or Banks key partners ?Africa, Middle East, Asia expected to remain hotspots Source: WU – Business Intelligence Mobile research
Slide 105: Mobile Money Forecasts
MOBILE MONEY FORECASTS By 2014 ?Up to $40-50bn forecast for cross-border mobile money transfer ?Western Union well positioned ?Intra-country mobile money transfer and domestic payments potentially 4-5x larger than cross-border ?Market still dominated by emerging economies ?However, appeal developing
Slide 106: WU Strategy
WU STRATEGY Build relationships with Banks, Mobile Network Operators (MNOs) and independents to enable mobile-based transactions. Western Union on Mobile Banking Western Union on Mobile Wallet Banks ??Service banked consumers using the mobile channel ??Expansion in line with our account-based/ multi
Slide 107: Video Window
Video Window
Slide 108: Services
SERVICES Western Union is the largest international branded send/payout network for Mobile Mobile Send Sender uses mobile wallet as source of funds. Receiver payout in cash, mobile, or bank channels. Mobile Receive Funds directed by Sender (Push or alternatively by the Receiver (Pull) to the wallet
Slide 109: New Product Development
NEW PRODUCT DEVELOPMENT WU® Money Transfer Mobile apps Direct Consumer Core Money Transfer Primary target markets North America & Europe WU Yellow Phone Mobile Wallet / Prepaid Core Money Transfer Primary target markets, Emerging countries Transfer Funds P2P Customers Transfer Funds P2P Customers
Slide 110: Enablers
ENABLERS ?Gateway & certification Program allowing world-class m-Wallet platforms to connect to Western Union ?Quick scalability and easy integration as m-Wallets and Mobile Banking is deployed Mobile Network Operators/ Carriers Financial Institutions
Slide 111: Western Union Competitive Advantages
WESTERN UNION COMPETITIVE ADVANTAGES WU ® Mobile leverages the same trusted platform used at 430,000 agent locations Western Union Money Transfer® service endorsed by the GSM Association
Slide 112: Mobile Money Financials
MOBILE MONEY FINANCIALS Revenue per transaction comparable to cash-to-cash ?On average smaller transactions ?But, more frequent Expect lower cost of distribution $25 $20 $15 $10 $5 $0 UK to Kenya—Average Revenue per Transaction US $0-50 US $50-100 US $100-200 US $200-300 US $0-300 Cash to Cash Mobil
Slide 113: Achievements to Date
ACHIEVEMENTS TO DATE ?70K locations active for directed transfers in 25 countries, westernunion.com activated in 5 countries ?10 agreements in place ?5 deployments active in 4 countries: Philippines, Kenya, Malaysia, South Africa ?5 more countries in progress ?6 mobile operator-centric, 4 bank-centr
Slide 114: Conclusion
CONCLUSION ?Mobile Money is accelerating and shows great potential ?3-5 year opportunity ?Western Union has built ?The Mobile technology platform ?Partnerships with key players ?Western Union is positioned to play at the center of the Mobile channel WESTERN UNION IS LEADING THE WAY FOR MOBILE MONEY
Slide 115: Thank You
THANK YOU
Slide 116: Stewart A. Stockdale: The Prepaid Business
STEWART A. STOCKDALE President, The Americas EVP, Global Cards & Global Key Accounts Welcome Bienvenidos The Prepaid Business
Slide 117: Prepaid Is a Significant Global Opportunity
PREPAID IS A SIGNIFICANT GLOBAL OPPORTUNITY Delivering on the Brand Promise & Extending the Reach to the World’s Underserved Population Source: MasterCard, Boston Consulting Group 2010 Market Sizing Study $1 Trillion Global Principal
Slide 118: Prepaid Strategy at Western Union
PREPAID STRATEGY AT WESTERN UNION ?Gain Scale in the U.S. ?Aggressive distribution with direct, online, and retail channels ?Access New Classes of Trade ?In-lane solutions bypass need for traditional guest services ?Enter Select Global Markets ?Direct Program Management & Agent Partnerships ?Adapt p
Slide 119: Prepaid Comprised of Two Lines of Business
PREPAID IS COMPRISED OF TWO LINES OF BUSINESS Card Programs Manager of Card Programs in Market “Fee Friendly” offerings Leveraging 14M Gold Card base Co-branding programs Reload Network Provide reload capability for Cards & Wireless top up for prepaid providers Today, 53,000 locations for cash load
Slide 120: Prepaid Product Lines
PREPAID PRODUCT LINES Prepaid Products General Purpose Reloadable (GPR) Money Remittance Card Payroll / Government Cards Consumer Gift Card Incentive Prepaid Money Transfer “goCASH” Target Consumer Segments ?Underserved / Underbanked ?Not targeted by banks ?Budgeting Tool ?Loyalty Card members ?Invo
Slide 121: Prepaid Driving the Customer Relationship
PREPAID DRIVING THE CUSTOMER RELATIONSHIP Payments Transactions Mobile Transactions SME Intra Money Transfers Cross Border Transfers wu.com Transactions Customer Relationship Foundation Extending the Consumer Life-Cycle Frequent Brand Interaction Cross Sell Strategies
Slide 122: Prepaid Money Transfer goCASH Service
PREPAID MONEY TRANSFER goCASHSM SERVICE DRIVING NEW DISTRIBUTION Purchase Process Redemption Process
Slide 123: U.S. Prepaid Gaining Scale
U.S. PREPAID GAINING SCALE… Signing new and existing retail Accelerate retail expansion with strategic partnerships Direct Response TV Advertisement Direct Mail Online / westernunion.com
Slide 124: Global Priority Markets
GLOBAL PRIORITY MARKETS United States General Purpose Reloadable goCASHSM Gift 8M Gold Cards Europe ?General Purpose Reloadable ?goCASH ?Gift ?1.5M Gold Cards United Arab Emirates ?General Purpose Reloadable ?Payroll Cards ?500K Gold Cards Brazil ?General Purpose Reloadable ?Receiver Card ?goCASH Ca
Slide 125: Sources of Prepaid Revenue
SOURCES OF PREPAID REVENUE Card Programs ??Card Fee Revenue ??Money Transfer Load Fee Revenue ??Interchange Revenue ??Breakage ??Float ??Gift / Incentive Card Sales Revenue Reload Network ??Consumer Reload Fee Revenue ??Prepaid Card Issuer Fee Revenue ??Wireless Top Up Provider Fee Revenue Expect Pr
Slide 126: Prepaid Metrics
PREPAID METRICS Card Programs 650,000 Cards-in-Force 10,000 Locations Card Sales 1.1 Million Card Loads YTD 52,000 Locations Reload Reload Relationships Reload Network Countries $240 Million Principal Loaded YTD Build Program Scale Focus on Acquisition & Activation Gain Key Learnings Focus on Long T
Slide 127: Capturing Our Share of the Market
CAPTURING OUR SHARE OF THE MARKET… ?Large and Growing Market ?Logical Extension of Core Services: ?Money Movement ?Gifting ?Paying Bills ?Global Footprint, Brand & Capabilities ?Speed to Market ?Relationships to Enhance Distribution Western Union is Uniquely Positioned $24M to Win Share & Grow the C
Slide 128: David Yates: Western Union Business Solutions
DAVID YATES Executive Vice President, Alternative Channels Welcome Céad míle fáilte Willkommen Benvenuti Bienvenue Western Union Business Solutions
Slide 129: Extending Our Brand to Business Customers
EXTENDING OUR BRAND TO BUSINESS CUSTOMERS OPPORTUNITY Cross-border foreign-exchange business payments CUSTOMERS Small/Medium Enterprises (SMEs): 10-500 employees $2M to $50M revenue $2k to $50k typical payment NEEDS Better service than main alternatives today Treated as retail account despite SMEs’
Slide 130: Spontaneous Awareness
SPONTANEOUS AWARENESS Providers for International Payments (SME Market) Thinking about the ways you can send international payments, what is the FIRST payment provider that comes to your mind? And 2nd? And 3rd? United States Mentioned as: 1st 2nd 3rd Bank (no name) 28% 8% 9% Western Union 8% 13% 6%
Slide 131: Global SME Cross-Border Revenue Opportunity
GLOBAL SME CROSS-BORDER REVENUE OPPORTUNITY: US$24 BILLION Market revenue opportunity in millions 7000 6000 5000 4000 3000 2000 1000 0 United States Canada APAC Europe All Other Existng Markets Top ~15 countries account for 75% of revenue opportunity Significant opportunity to expand into small numb
Slide 132: Typical Transaction
TYPICAL TRANSACTION Buyer Buyer’s Bank Correspondent Bank Correspondent Bank Beneficiary Bank Flow of Funds Customer Contact/ Information Exchange Buyer’s Currency Custom House Seller’s Currency MAJOR PAIN POINTS Transaction ordering process through banks can be cumbersome and lengthy, with poor cus
Slide 133: Typical Transaction Revenue Structure
TYPICAL TRANSACTION REVENUE STRUCTURE Western Union® Business Solutions generates spread between FX supplier (global banks) pricing and the rate quoted to customer Also targeting fee-based opportunity for SME business payments Illustrative transaction: ?Customer purchasing US$30,000 ?Typical spread
Slide 134: Key Growth Strategies
KEY GROWTH STRATEGIES Leveraging our Core #1 – Selectively expand direct channel #4 – Add Cash and Stored Value Products #3 –Integrate online platform with wu.com #2 – Pursue indirect channels more aggressively (WU Agents/Partners) Agent Network Bank Foundation Accounts, Funding and Disbursement
Slide 135: Complementary Assets / Capabilities
COMPLEMENTARY ASSETS / CAPABILITIES WILL ACCELERATE GROWTH IN THE BUSINESS SEGMENT Brand Strong brand recognition of Western Union as an international payments provider Key brand attributes critical in this space; speed, accuracy, reliability Western Union Presence Western Union brings reputational
Slide 136: Scott Scheirman: Financial Overview
SCOTT SCHEIRMAN EVP and CFO Financial Overview Welcome
Slide 137: Estimated 3rd Quarter Revenue Results
ESTIMATED 3RD QUARTER REVENUE RESULTS Consolidated (YoY % Change) 3% 3% 3% 2% 1% 1% 1Q10 2Q10 3Q10(e) GAAP Constant Currency C2C (YoY % Change) 3% 3% 2% 1% 0% 0% 1Q10 2Q10 3Q10(e) GAAP Constant Currency Global Business Payments (YoY % Change) 9% 4% 4% -7% -8% -10% 1Q10 2Q10 3Q10(e) GAAP Excl Custom
Slide 138: Estimated 3rd Quarter Transaction Results
ESTIMATED 3RD QUARTER TRANSACTION RESULTS International (YoY % Change) 10% C2C segment transaction growth C2C regional transaction growth rates generally consistent with Q2 Affirm 2010 full year outlook Domestic (YoY % Change) Mexico (YoY % Change)
Slide 139: Financial Overview: CFO Priorities
FINANCIAL OVERVIEW CFO PRIORITIES ?Support growth strategies ?Improve processes and productivity ?Margins ?Cash flow generation and utilization
Slide 140: Support Growth Strategies
SUPPORT GROWTH STRATEGIES ?Investment in business and M&A ?Strategic ?Cash-on-cash returns ?Maximize profit generation ?Fund long-term growth (incubation, innovation) ?Improve returns ?Pricing strategies ?Elasticity testing; drive long-term profitability
Slide 141: Pricing Example
PRICING EXAMPLE Country X Corridor Repositioning Revenue (Indexed to 100) 120 118 110 113 100 100 Pricing investment = 90 9% of revenues country’s 80 Year 1 Year 2 Year 3 Year 4 Transactions (Indexed to 100) 160 167 120 100 80 100 Year 1 Year 2 Year 3 Year 4 Country X Corridor 50% Operating Margin 4
Slide 142: Improve Processes and Productivity
IMPROVE PROCESSES AND PRODUCTIVITY ?Productivity Objectives ?Reduce costs ?Increase efficiency and customer satisfaction ?Support strong margins and business investment to drive growth ?Productivity office established ?May 2010 restructuring ?$50 MM annual savings by 2012 Procurement Centers of Exce
Slide 143: Commissions
COMMISSIONS ?Five year contracts, in third year of commission optimization program ?Renewals and new agents signed at lower rates ?Generated strong savings ?Large international agent renewal example ?WU agent for more than 10 years ?Growing annuity stream – transactions up 2x since time of prior ren
Slide 144: Margin Drivers
MARGIN DRIVERS ?Revenue growth leverage on fixed costs ?Commissions: renewals and new signing initiatives ?Productivity and efficiency initiatives ?Investments ?Product, business model and corridor mix ?Foreign exchange
Slide 145: Business Model
BUSINESS MODEL 2009 2009 GAAP Adjusted* % Revenue* Revenue $5.1B $5.1B 100.0% Cost of Services $2.9B $2.9B 56.6% SG&A $0.9B $0.8B 16.8% Operating Income $1.3B $1.4B 26.6% % Costs Total Costs $3.8B Commissions $2.1B >65% Other Variable $0.4B Fixed Costs $1.3B 35% * 2009 adjusted CoS & SG&A exclude mu
Slide 146: Revenue Growth Leverage
REVENUE GROWTH LEVERAGE ?35% fixed cost base, some inflation ?Modest revenue growth offsets fixed cost inflation ?Revenue growth key to margin expansion on fixed costs regardless of pricing changes ?Commissions variable: margin benefits of increased transaction volume offsetting pricing declines
Slide 147: Cash Flow
CASH FLOW Three years ended December 31, 2009 ?High cash flow conversion $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 (in millions) $2.6B $3.6B Net Income Operating Cash Flow
Slide 148: Cash Flow Priorities
CASH FLOW PRIORITIES ?Invest in business Strategic, cash returns ?Acquisitions ?Return capital to shareholders ?Dividends ?Share repurchase
Slide 149: Cash Flow Utilization
CASH FLOW UTILIZATION Three years ended December 31, 2009 ?Strong cash flow generation, significant portion returned to shareholders s) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Other Sources Option Proceeds $4.2B Operating Cash Flow Net Income Cash Sources Cash Uses $4.2B Othe
Slide 150: Strong Balance Sheet and Liquidity
STRONG BALANCE SHEET AND LIQUIDITY $1.7B cash at June 30th, 2010 $3.3B debt outstanding as of June 30th, 2010 Nearest maturity: $0.7B due Nov-11 $1.5B undrawn revolver expires Sept-12 Capital structure and cash flow support A3/A- credit rating Debt Maturity Schedule © 2010 Western Union Holdings, In
Slide 151: Hikmet Ersek: Recap and Closing
HIKMET ERSEK Chief Executive Officer Recap and Closing Welcome Hosgeldiniz Willkommen
Slide 152: Our Vision
OUR VISION Western Union: The Network and Brand for Moving Money Focus on the underserved
Slide 153: Competitive Advantages
COMPETITIVE ADVANTAGES Unmatched global network Strong global brand Unique consumer relationships Anti-Money Laundering (AML) and regulatory expertise Range of send and delivery options including cash and eChannels
Slide 154: Strategic Priorities
STRATEGIC PRIORITIES Grow Retail Channels Expand Electronic Channels 3. Develop Product Portfolio Improve Process and Productivity
Slide 155: Model for the Future
MODEL FOR THE FUTURE Service Categories Business Model Channels “Funds In” “Consumers’ Choice” Global Global Global Selective Consumer Relationships Channels “Funds Out” “Consumers’ Choice” Retail Electronic Channel Consumer Database Brand: Marketing, loyalty, preferences Know-Your-Customer (KYC), A
Slide 156: Reconciliation of Non-GAAP to GAAP Measures
RECONCILIATION OF NON-GAAP TO GAAP MEASURES
Slide 157: Non-GAAP measures explanation
Western Union’s management believes the non-GAAP 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 underlying business, becaus
Slide 158: Year-over-year percentage change (unaudited)
year-over-year percentage change (unaudited) Estimated 3Q09 4Q09 FY2009 1Q10 2Q10 3Q10 Consolidated Metrics Revenue change, as reported (GAAP) (5)% 2 % (4)% 3 % 2 % 1 % Foreign currency translation impact (a) 3 % (3)% 3 % (2)% 1 % 2 % Revenue change, constant currency adjusted (2)% (1)% (1)% 1 % 3 %
Slide 159: Non-GAAP related notes
Non-GAAP related notes: (a) Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the Uni