If you’ve read the other posts in this series, you may already know a lot about Western Union’s transformation; how we’re transforming both our operating model and our overall approach to how works gets done.
You’ll have learned a little about our digital and physical network; about the strengths of our core Consumer Money Transfer business, and how the stability it offers us has powered our exciting move into new product and service offerings. You’ll have read about our collaboration with Amazon, and the white-label services we are now offering to money movers in a variety of different sectors. Taking all of that together, and against the backdrop of a fast-growing market for cross-border money movement, you know why we think we are a company poised for growth in the coming years.
Now I want to tell you about a part of our business that you may not see—deliberately so to a large extent. . It is our industry-leading cross-border regulatory compliance effort, and our 24/7 human and technology-led work to keep bad actors out of our network. It underpins every system we build and every transaction we process, and it is as important to our company—and our company’s values—as anything we can show you in a balance sheet or an Annual Report.
In the early 2010s, there was a change in the regulatory landscape, with compliance moving up the agenda of global regulators. Expectations and enforcement were increasing across the entire financial services industry, with record-setting fines and reputational damage at stake.
I feel very proud of how we responded to this step change. Western Union embarked on a journey to take a long-term view, completely revamping our compliance program. We did this not only to satisfy regulatory expectations, but to really turn our capabilities into a competitive advantage.
It was a mammoth undertaking: We invested approximately $1 billion over five years, making significant investments in people, processes and technology, including state of the art systems, predictive analytics, machine learning and artificial intelligence. We hired mathematicians, data scientists and other experts from fintechs and banks all over the world. Our patented Real Time Risk Assessment tool can make decisions and then take action in milliseconds. We knew it was a critical effort for us, and we treated it like one.
I’m happy to share that all that planning, all that effort, is ready to show off. We believe we have a best of its kind compliance program in place, ready to power transactions across borders for the overseas worker sending money back to his or her family to the world’s biggest companies. You’ve read about the 20,000 country pairs we can serve with transactions; using machine learning and artificial intelligence, for compliance purposes we can go even further. We can examine those transactions at the city-pair level—not just Spain to Morocco, but Madrid to Marrakech—looking for suspicious patterns or transaction attributes. That is real-time compliance at scale, and if anyone else in the world can do it, I haven’t heard about it.
Similar predictive analytics technologies are now helping power our anti-fraud efforts. We can’t reveal exactly what we look for, for obvious reasons, but I can tell you that as the number of fraud reports across the overall industry has risen in recent years, the percentage of principal reported as fraud on our platform has remained flat—and has been steadily decreasing in the past 12-18 months.
We also work hard to make sure our agents are trained effectively to ensure the integrity of our network. We used to go location-to-location with pen and paper to make sure our agents were meeting our compliance guidelines. We still do. But by itself, that’s not good enough anymore. We literally invented a new system, on which we have a patent pending, which is a series of questions an agent’s compliance officer is asked to help determine whether that agent meets our standards. If not, we can immediately push some training to that agent, or, worst-case, turn off that point of sale.
All this human and machine intelligence working together helps to protect our customers, but it also protects our agents and our company; now it’s helping protect our partners in our newest business lines. They know that’s what we’re offering, and that’s why they’re coming to us.
So, as you can see, there are lots of reasons this work leaves me excited and proud. We haven’t just built a better, more reliable system for our customers, agents, and partners: we’ve actually advanced the state of the art of cross-border compliance. We haven’t just built a platform that the world’s premier companies can use with confidence and cost-effectiveness: we’ve built a system that makes that confidence and thrift scalable to any business.
And we haven’t just helped set Western Union up for new opportunities and future growth: we’ve helped preserve and extend our heritage of breaking technological barriers to connect businesses and people, no matter where they are.