Dear fellow stockholders,
Moving money across borders—at speed, at scale, and with reliability—requires the strategic harmonization of people, innovation and technology. If 2020 tested our capacity for this increasingly complex undertaking, I am proud to say we succeeded.
As COVID-19 upended lives and challenged governments, businesses, and communities, our customers provided critical support for loved ones across the globe, becoming the frontline workers of economic security. Our employees showed great resilience in facilitating the continued flow of financial support across borders, while working remotely. Our stakeholders can be proud that we upheld our responsibilities and emerged leaner, stronger, with an even sharper focus on our role as a global leader and market shaper.
Throughout 2020, Western Union tapped into our innovative spirit, our strong global network, and the power of our technology. By quickly adapting our business strategy to meet the moment and our customers’ needs, we were able to do what we do best: build bridges between people and businesses, by moving money to and from nearly every corner of the earth.
As we mark our 170th anniversary, I’m struck by the sustained legacy of our company’s purpose. At our core, we have always been bridge-builders. In our earliest days, this meant creating a cross-continental telegraph system. In 2020, it meant more cloud-based applications, the further opening of our cross-border platform, and high-impact services like doorstep delivery of money transfers in certain countries. These innovations made it possible for our almost 150 million customers in over 200 countries and territories to send and receive funds from almost anywhere, as a global pandemic raged.
When the year began, we had embarked on a new global strategy designed to advance our position as a leading cross-border, cross-currency money movement and payments platform. This strategy involved creating stronger relationships with consumers and opening our platform to forge new partnerships with businesses across industries, allowing them to expand into new markets and better serve customers. This plan, coupled with our WU Way agile mindset and enterprise-wide, smart workplaces, was foundational to our navigation of 2020’s challenges, including the abrupt transition to remote work. Our results affirmed that we are on the right track and well-positioned to navigate challenging times.
In 2020, we delivered exceptional growth in the digital consumer money transfer segment (C2C). Our C2C principal growth exceeded market forecasts and we expanded our addressable market through strong momentum in our third-party partnerships to produce solid financial results.
Western Union generated $4.8 billion in revenue and $878 million of operating cash flow. We returned more than $587 million to stockholders through dividends and share repurchases and announced in February 2021 a 4 percent increase in our quarterly dividend. The resilience of our business, coupled with prudent management of costs and capital, enabled us to deliver more than $50 million in annual costs savings in 2020, and we remain on track to achieve our stated goal of $150 million in annual efficiencies by 2022. Our continued focus on efficiency has allowed us to deliver solid profitability while simultaneously reinvesting in initiatives to drive long-term growth.
Winning in Digital
When we set out to build a robust, resilient platform capable of meeting our customers’ manifold needs, no one could have imagined that a highly communicable virus would so dramatically alter human habits. Our platform’s digital underpinnings and processes accommodated the remarkable increase in digital traffic, validating both our strategy and our execution.
Our customers’ adaptability drove our overarching success story of 2020: exceptional digital performance. Lockdowns and social distancing measures prompted many customers to use our digital channels for the first time. We supported them in several countries through measures including personalized phone or video “concierge services,” which walked them through the process.
Our digital channels also drew many first-time Western Union customers. New customers returned to westernunion.com again and again and sent more transactions per customer on average than in previous years. This loyalty bodes well for the future of our cross-border consumer ecosystem strategy, as we seek to leverage the direct relationships with our unique customer base to offer tailored services to these ‘dual belongers’ with connections to nearly every country in the world.
Overall, our digital money transfer revenues grew by 38 percent in 2020, surpassing $850 million and, as of February 10 when we provided our 2021 financial outlook, was tracking toward becoming a $1 billion digital business in 2021. We grew our cross-border principal in our consumer business by 12 percent in 2020, exceeding World Bank forecasts.
Leading Innovation in an Evolving Landscape
Our global financial network currently connects billions of bank accounts, millions of digital wallets and cards, and over half a million retail locations. We strive to continue growing until we become the world’s largest network of networks.
To this end, we accelerated our digital transformation by upgrading our platform, moving more applications to the cloud, and leveraging the power of data analytics to introduce more tailored offerings to customers, for example. We continued to evolve customer-facing applications like WU.com and extended our account, wallet, and card payout to 120 countries, of which 100 have real-time capabilities.
We also expanded our digital partnership business, which allows other organizations to use our platform to serve their customers. This is a key component of our strategy for becoming a more diversified payments company. Digital partnerships with existing companies including Sber, the Russian banking giant, and stc pay, a leading digital wallet service in Saudi Arabia, continued to deliver revenue growth. We also entered into a definitive agreement to acquire a minority stake in stc pay, which we anticipate will strengthen our presence in the Gulf region.
We recently entered a new partnership with Ant Group, the parent company of China’s leading digital payment platform Alipay, to help Chinese users receive global remittances directly in their bank accounts. Additionally, we teamed up with NH Investment & Securities, one of the largest investment and securities companies in South Korea, to integrate our cross-border capabilities into the portfolio of financial services offered to NH I&S’s account holders.
We expanded our retail partnerships with companies ranging from Walmart U.S., the world’s largest retailer, to Cebuana Lhuillier, a large microfinancial services company in the Philippines. In 2020 we added almost 100 new agents, with nearly 20,000 new locations worldwide.
Western Union Business Solutions also made great strides: growing our education business in key markets and enhancing the student experience, enabling companies to grow their business globally through our WU EDGE platform, and establishing key partnerships to diversify our revenue streams. New payments partners include Belgium’s Isabel Group, providing worldwide connectivity to its multi-banking platform, and the London Stock Exchange’s ELITE platform, to bring business support and capital raising for fast-growing private companies.
Serving with Purpose for 170 Years
For 170 years we have seen our role not just in terms of goals expressed on a balance sheet, but in the context of our larger contributions to society. Against the backdrop of COVID-19 and worldwide protests against racial and social injustice, our determination to be a global force to champion for greater inclusive economic prosperity felt especially urgent.
This purpose is embedded in our core business, which helps to build and sustain emerging economies worldwide. The Oxford Economics report The Remittance Effect: A Lifeline for Developing Economies Through the Pandemic and Into Recovery describes the particularly “crucial” role that remittances have played in alleviating poverty throughout the pandemic and recovery period.
We believe we can be more successful when we embrace high ethical standards, address unmet social needs in our communities, and promote the well-being of our customers, employees, partners, and the environment.
We strongly supported our employees in 2020 by transitioning to work-from-home to protect their safety and investing millions of dollars in initiatives to foster health and well-being. We were recognized with our inclusion in the Bloomberg Gender-Equality Index and the Human Rights Campaign’s Corporate Equality Index (which evaluates LGBTQ-inclusive policies and practices). We also have strengthened our efforts to ensure that employees of all ethnic backgrounds enjoy the same hiring, advancement, and leadership opportunities.
The Western Union Foundation remains another important forum for giving back. In 2020, the Foundation supported COVID-19 relief efforts worldwide and continued its work on Opportunity Beyond Borders, supporting education and training for underserved youth.
Finally, we issued our second Environmental, Social and Governance (ESG) Report, detailing our efforts to combine strong stockholder value with good corporate citizenship. I hope you will look for our third annual ESG Report, which will be issued this summer.
A Reflection and a Look Ahead
One of the key lessons of 2020 is that global problems require global solutions. As we move toward a post-COVID future, it bears remembering that the vaccines we are counting on were developed by scientists from diverse backgrounds across the globe sharing their work and their knowledge in pursuit of something none of them could achieve alone.
As Western Union strives to be the world’s premier solution for transferring funds and, by extension, advancing opportunity, we are encouraged by our Company’s response to 2020’s explosive digital growth. We are proud of our employees’ fortitude and resilience. As always, we are inspired by our customers—many of them frontline essential workers—who kept loved ones afloat while grappling with challenges of their own.
As we mark our 170th anniversary, we are hopeful that 2021 will be a pivotal year of growth and bridge-building. During this promising year, we will draw on our most innovative and most foundational strengths and capabilities to further connect economies, geographies, and cultures—and to become an even more vital link in the global economic chain.