SCOTT
There used to be a time when dollars sent home by Filipinos working overseas were viewed with mixed feelings.
On one hand, they provided a boost to local consumption, at one point accounting for an estimated 10 percent of the consumption expenditures in the local economy.
On the other hand, remittances of overseas Filipino workers were a glaring sign that all was not well in the country. As the remittances ballooned due to the growing number of Filipinos seeking greener pastures abroad, so to did the country’s collective embarrassment grow—more dollars from abroad because of our inability to provide back home.
Times are very different nowadays and things are definitely a lot better for the Philippines on the economic front.
Whether we like it or not, however, dollar remittances by the estimated 10 million Filipinos (about a tenth of the total population) either working or residing overseas are here to stay.
And for companies in the financial services industry, this situation provides an opportunity-rich environment for business.
One such firm is international financial services firm Western Union which, until very recently, has made the business of sending money back and forth between countries its bread and butter activity.
And it has never been as positive on the country’s prospects as it is now.
“We are very bullish about the Philippines,” says its chief product and marketing officer Diane Scott. “India and the Philippines are two of our biggest markets and we believe it will only continue to grow.”
And her confidence in the local market’s potential is backed by empirical evidence. According to the Bangko Sentral ng Pilipinas, dollar remittances from overseas Filipinos hit a record of $21.4 billion in 2012, representing a growth of over 6 percent from the previous year’s level.
This figure counts only those dollars sent home through formal banking and financial services channels, and excludes a large group of remittance agents in the so-called “door-to-door” courier business.
More importantly, Scott points to new data showing that Philippines is now the third-ranked country in the world in terms of the value remittances sent home by expatriates each year.
“In the past, it has always been [ranked as] China, India, then Philippines and Mexico tied for third place,” the Western Union official says. “But the Philippines is now officially in third place by itself, according to the latest World Bank study.”
Given these statistics, the challenge now for the US-based firm is to capture a bigger slice of the growing pie that is the Philippine remittance business. And it is not a walk in the park because of the stiff competition on the ground provided by courier firms and pawnshops which offer remittance services both locally and internationally.
But Scott is unfazed, citing Western Union’s broad international network of remittance centers and the firm’s growing array of financial services that would cater to the needs of expatriate Filipinos and their remittance beneficiaries locally.
“There used to be a time when a Philippine-based relative in the province would have to get on a bus, commute to town to pick up their remittances, and head back home—a process that could take the entire day,” she says. “With Western Union’s network, that is no longer necessary.”
According to Scott, Western Union is present in 200 countries and territories through 510,000 retail locations, many of these in under-served villages and rural areas.
In 2012, the company served 77 million money transfer senders for an average of 28 transactions per second.
In the Philippines, Western Union has over 8,500 retail locations across 143 cities and 78 provinces.
“We are one of the most recognizable and most respected brands in the world,” she says, noting that this recognition and respect bodes well for the company in the Philippine remittance market where the client’s trust is a key element of the business.
Despite being one of the largest remittance businesses in the country, Western Union is not resting on its laurels.
For one, its officials are aware of perception—an inaccurate one, Scott stresses—that its services are more expensive than those of its competition because it is a foreign brand.
“We’ve actually done a number of strategic price moves, especially from the US market to put ourselves at a strong price point,” she says, noting the very competitive nature of the remittance business from the US mainland to the Philippines.
The company is also gearing up for the time when technology takes on a greater role in the Philippines, given the growing sophistication of the local market. In particular, Western Union is rolling out new financial services that include stored value cash cards, an Internet-based cash transfer facility, as well as a new system that would allow local beneficiaries to receive remittances on their mobile phones through either the GCash or Smart Padala system of the country’s largest telecommunications networks.
“Of course in the Philippines the cash remittance business is still king, but we are expanding our portfolio of services,” Scott says.
Finally, Western Union is also adjusting its image to better reflect the global nature of the cash transfer business. From its old Western Union brand name and logo, it is now rolling out a new branding strategy where it will be known simply as “WU” (pronounced “woo”).
“Our new brand identity is a key milestone in the continuing transformation of our company and reflects our vision and strategy,” she says. “It reflects the truly international nature of our business.”
Indeed, if she is correct about her bullish prognosis for the Philippine market, it is a business that will continue to grow in the years ahead.