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Confidential and Proprietary of Western Union - 2008
Being Responsive and Accessible to Migrant Workers
A Western Union Perspective David Batubara
Country Director – Western Union Indonesia
Confidential and Proprietary of Western Union - 2008
130+ Years in Money Transfer…
…… Over 300,000 locations worldwide
Confidential and Proprietary of Western Union - 2008
Source: Aite Group
Cross Border Market
$300B
$213B
2003 2007
10%
20%
2003 2007
Cross-Border Remittance Principal
Market
Western Union share ofCross-Border
Remittance Principal
Confidential and Proprietary of Western Union - 2008
Banks
40%Post Offices
35%
Others (Retailers, Forex House, Pawn Shop…)
25%
World wide Partners
Class-of-trade diversity:- Closer access for customers….
- Allows customer to choose convenience location…. - Flexible opening hours….
Class-of-trade diversity:- Closer access for customers….
- Allows customer to choose convenience location…. - Flexible opening hours….
Confidential and Proprietary of Western Union - 2008
Partners in Asia Pacific
Confidential and Proprietary of Western Union - 2008
Migrants prefer easy access & convenience channels to send money
home….
Formal vs In-formal channels?
Bank vs Non- bank channels?
Cash vs Bank account?
Meeting Sender’s needs
Confidential and Proprietary of Western Union - 2008
Accessible to Receivers
Receivers also prefer easy access & convenience channels to receive money….
Formal vs In-formal channels?
Bank vs Non- bank channels?
Cash vs Bank account?
City vs Rural?
Confidential and Proprietary of Western Union - 2008
Accessible from Cities to Rural
Confidential and Proprietary of Western Union - 2008
Being Responsive to Migrants
Confidential and Proprietary of Western Union - 2008
Being Responsive to Receivers
Confidential and Proprietary of Western Union - 2008
Perspectives in Sending Country….
• Indonesia Migrant profile: low education, working in informal sectors, difficult to reach them, majority unbanked
• Geographic spread of Indonesian migrant across Malaysia, makes convenience of locations a key consideration
• Migrant working hours necessitate 7 day, an extended hours service is crucial, domestic helpers - no day off
• Informal channels offer easy access and convenience, but “lack an AML Compliance”, bringing in concomitant risks
• ‘Unregulated industry’ has arisen to facilitate remitting funds through formal channels to be difficult, this industry includes mediators, migrant agencies, and informal channels that are part of formal enterprises
• Value added free insurance (offered by WU), meets “continuity of income”need of migrants
Confidential and Proprietary of Western Union - 2008
Perspectives in Receiving Country….
• Indonesia Receivers profile: low education, poor, majority unbanked, low income, no saving affordability
• Geographic spread of migrants origin across Indonesia, makes convenience of locations a key consideration
• Large unbanked and rural base in Indonesia, ‘intimidated’ of using Banking service, makes cash payout an important option for receivers
• Ironically, informal channels utilizing Banking infrastructure to “run” their business, but unable to trace and bringing in concomitant risks
Confidential and Proprietary of Western Union - 2008
Compliance..!!
• Formal operators perform KYC, significant investment made by formal operators in name verification, tools to monitor transaction
• Informal operators do not do KYC, creating cost advantage but with concomitant risks, dominating channels for migrants
• Western Union & its partners worldwide:– Complies with all applicable AML laws and regulations everywhere Western
Union does business.– Provides AML support and guidance to Western Union’s Partners
worldwide.– Work in partnership with AML regulators and policy makers worldwide to
develop effective and workable regulations.
Confidential and Proprietary of Western Union - 2008
Summary
Meeting “consumers needs” – accessible, convenience, key to convert informal to formal..
‘Unregulated industry’ has arisen to facilitate remitting funds through formal channels to be difficult, this industry includes account mediators, migration agents or agencies, and informal channels that are part of formal enterprises
Historically access a key constraint, inhibiting widespread use of formal channels, recent policy permitting retail/MTOs towards addressing convenience & access needs, both in Malaysia and Indonesia
Informal operators/money changers offer easy access & convenience but lack an AML Compliance program bringing in concomitant risks
Compliance, a key pre-requisite to regularizing informal operators, Formal operators can play a role here in bringing in requisite skills
Safety of customer funds is paramount. Review and credit assessment key to ensure safety of transaction with smaller operators. Formal sector can play a role here
Confidential and Proprietary of Western Union - 2008
Win-Win-Win for Migrants – Institutions – Regulators….marry the convenience offered by informal players with the expertise in payments and
AML Compliance offered by formal players…..
Terima Kasih
Confidential and Proprietary of Western Union - 2008