Western Union 2008 Annual Report Download - page 5

3
Pan African money transfer opportunity, and I am very excited about the potential in South Africa.
We also had several competitive takeaways during the year, including Bank Pekao with 900 locations
in Poland, The Vietnam Post which has nearly 3,000 locations, and Bank Danamon a leading
Indonesian Bank. The decisions by these new agents to work with Western Union are a clear
dem onstration of the value and service proposition we offer. Importantly, we also re-signed
a notable number of existing agents including the Banco do Brazil, the State Bank of India, Ahold,
two of our largest U.S. check cashers PLS Check Cashers and Multi-State Financial Services,
and A&P, among others.
We understand the importance of continuing to deliver strong operating margins. We took
significant steps in 2008 to ensure that we have a cost structure that will allow for operating
leverage as revenue reaccelerates. We completed a global organizational realignment of our
C2C business that streamlines our operations into two regional structures down from three.
By streamlining our management structure, consolidating sales forces and reducing operating costs,
we are closer to the market and able to operate in a more profitable and more nimble manner.
Additionally, we improved our cost structure by relocating, outsourcing and/or consol-
idating certain operations. The expansion of our Global Service Centers in Costa Rica and the
Philippines has helped create efficiencies in the business by consolidating the back office services.
These important steps, together with our focus on lowering the cost of distribution,
are designed to make our model even more scalable.
m a r ke t p lace d y na mi c s : r esi l ie n c e o f r e mi t ta nc e s
Global migration patterns and remittance flows are drivers of our long-term growth. According to
the Migration and Development Brief published by the World Bank in November 2008, remittances
have historically been resilient to downturns, as they are sent by the cumulated flows of migrants
from previous years, not only by new migrants. Though remittance flows are projected to decline
in 2009, the World Bank expects remittances to developing countries to grow up to 6% in 2010.
These dynamics are important to our consumer-to-consumer business. There are an
estimated 200 million cross-border migrants and we estimate that there are even more people who
have migrated within a country(2)
. We believe this mobile workforce will continue seeking employment
opportunities throughout the world. This population will not only need to transfer cash home,
but they will ultimately need other services. Western Union is very well positioned to service the
existing and expanding needs of our consumers.
Our mobile money transfer initiative, an emerging and longer-term market opportunity
that enables customers to send cross-border remittances directly from their mobile phones or to
other mobile phones, continues to make progress. Western Union most recently formed an alliance
with Vodafone, the world’s leading international mobile communications group. This partnership
adds to the relationships we already have with Orascom Telecom, Globe Telecom, Smart
Communications and the GSM Association. We believe we are well positioned to succeed over
the next three to five years as consumer acceptance of mobile money transfers emerges and the
technology standardizes.
Western Union
Estimated Share
of Cross-Border
Remittance Market(1)
06 07 08
14.0%
15.5%
16.7%