Western Union Discovers New Ways for an Old Business

Aside from the theoretical mention of blockchain technology, there haven’t been many major changes in cross-border money movement technology. And when you’re a company that’s more than 165 years old, trying to be innovative and fresh can be tricky, which is why cross-border money transfer company Western Union teamed up with the Denver, Colo.-based fintech accelerator Techstars.

“We’ve never had a focus on innovation in the company,” Jeff Hochstadt, chief strategy and development officer at Western Union, told Bank Innovation. “But I would give a lot of credit to our current CEO for creating a strategy and development plan where we are turning to technology, innovation and addressing pain points through modern ways.”

“We’ve seen a lot of innovation on how people move money domestically,” Hochstadt said. “That hasn’t completely happened in cross-border cross-currency movement. Whether it’s making the process easier, faster, cheaper, there is a lot of room for growth in this space.”

This is Western Union’s goal in working with Techstars. The partnership, which was announced last week, will start accepting applications in early December. Western Union is looking for payment focused startups focused on areas such as money movement, compliance, KYC, customer service and security, Hochstadt explained.

“It’s all about moving money across borders, that’s our bread and butter,” he said. “We want to find players that have nimble technology whether AI or blockchain or other things that will enable a faster, cheaper and more secure way of sending and receiving money.”

Other topics like digital wallets, point-of-sale solutions, mobile payments, digital identity are also areas that Western Union plans on exploring new possibilities vis-a-vie the startups, he explained.

Over the next three years, Western Union will work with Techstars to run a mentorship-driven accelerator program that will consist of a 13-week boot camp in which the startups are invited to program’s Denver headquarters. Western Union will provide a “small” seed investment in each startup, according to Hochstadt. He declined to disclose a specific amount.

“Over a span of three years we hope to have 30 companies,” he said. “We will benefit from this, not just from the obvious innovation standpoint but also from a cultural standpoint. By working with these startups, we will learn how to infuse the entrepreneur spirit in our work culture.”

For Western Union, this is another major step to digitalize its operations. Already, the company has launched its online service in 40 countries and is in the process of rolling out a mobile app in all its locations across the globe. Regarding its partnership with Techstars, Western Union will work each year with ten startups each year from now until 2020/2021.

Western Union currently has 500,000 locations, across all countries except North Korea and Iran.

Bank Innovation is the sister company INV Fintech, which runs a fintech accelerator program in partnership with payments company Fiserv.

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