[ MUSIC ] All right, welcome. Hi. Hi. Thank you for making the stage purple. [ LAUGH ] You're welcome. I wanna jump into it and talk about the news that's going on right now. Just this week we heard Facebook announced a cryptocurrency initiative. Investors got pretty spooked on the news for Western Union. The stock took a dive it dropped something like two and a half percent. What's your reaction to what's going on Hekmat? Well, it was only an announcement, right? I don't know how the business model looks like. We are I just sold a white paper this morning. Looking at it, it's definitely something interesting, something innovative. Many payments institutions are also part of it. But the question is are the people gonna use it? It talks about the inclusion, financial inclusion. I don't know you have to be in the streets of Cairo, streets of Nairobi, and acceptance of Libra there, or is it seen as a coin? I think and how is the wallet seen, that all these things is an open question. It's a long shot. I believe it took us, Not 168 years but it took us many, many years to build a global system which moves about $ 300 billion every year in 137 currencies with multi- settlement programs, 33 transactions every second. It's something and we have 150 million customers and our customers are financially included. They are not the Louis Vuitton users or they're not Ferrari drivers. They are real customers who are on the streets of Cairo, or on the streets of Delhi and Bangladesh and this support their loved ones, and they leave their countries go to Saudi Arabia hard earned money and send back real fear cash. So the kids can go to school have a better life than they have it. I think that that's financial inclusion. And we've been doing that for many, many years. So let's see how that works. But we are still studying the white paper. It's definitely some interesting idea. It's unclear about how exactly it's gonna be implemented, but the core idea of it, which is that they're going to basically reduce remittance fees to zero This must pose an existential threat to Western Union's business that's the core of the operation for your company. Well on our so if you move money around a billion dollars right every year it's only a part of our costs are moving money in two hundred thirty seven currencies. It's not the main costs we have. The main cost is really serving the customer in the last mile. I don't know many companies or many CEOs like me who took a plane went to touchy Kingston and, made a negotiation with the central bank, you have to do that. And then you have to really open the network you have to invest in the in the brand and the brand investment is all about trust. Somebody makes money in the streets of New York and sends money to Jamaica trusts that $ 500 that's sent to Jamaica is really built on trust. It's important that this money arrives in Jamaica in a trusted way with all the anti- money laundering checks and that money is delivered in minutes. And the right way. And that's the real cost. That's only one thing under cost. The regulatory costs to moving money in different currencies. I mean we are pretty much in master on that. We you know actually if you collect the money in dollars we give a 10 digit number called MTC and no. And do, you if you send the money to Philippines, we pay out the same number in MTC. No it's actually recreate the first digital currency because we turned the dollar to embassy number that's images of a senior coin stable coin and pay out in pesos. And we do that for 40 years. And that works and it's all done electronically by the way. We don't carry cash from one location to a location. And the settlement is done overnight where the banking fees are really not that high that we can replace with something new. The real cost of the remittances are really the distribution of that The regulation of debt and not the process behind that. For us, not. I mean, if you enter new to the market, there are some entry costs. : Luanne, I'm gonna pass it to you in just a minute, but I wanna just drill down just a little bit more on this. What do you think is the likelihood that Facebook's project succeeds at its stated goal? I gained 24 hours ago. David Marcus is a great guy. They you know, the people also supporting our little payments experts. I think when you talk again, when you talk about financial inclusion, you really have to understand the needs of the customer. This thing doesn't work in a corner office. FinTech is for me, FinTech 50 % Finn. 50 % tech. You have to combine that and two combination of that is really the needs of the customer. If you talk about one point seven billion underserved customers you have to really understand that. And we have customers from 200 countries. Hundred fifty million of them. And our biggest couple if you put us you know most of the revenues a person is out of the US. US biggest countries 5 % of our revenue. This number six countries already only 2 % of our revenue number seven is 1 % of our revenue that diverse we are that multi currencies we have. So that has to be understood by Libra and Libra is I believe more the payment system it's not the last mile How do you take that currency translate that translate to fiat currencies still, you need a system like Western Union and for that, alright, well, Lou and I've got some questions for you as well. You need no introduction Brian white hands on the stage earlier talking you up but Let's talk about mobile payments, there are a lot of different apps out there, a lot of different choices people have. Venmo came out in 2009, or it was founded in 2009, Square Cash came out in 2013. Zelle is two years old, you're a little bit late to the game, no? Well, I would say, look at our numbers. In first quarter, we had $ 39 billion transferred via Zelle, 147 million transactions We have about 94 million consumers who've registered tokens in our databases. So I think it just depends on your view of the world. Now, we have a long way to go, with only 400 financial institutions signed up to participate in [ UNKNOWN ], and only 160 of those Our live today. It's pretty nascent for us even after two years. So, you know, our goal is that we get all of those financial institutions participating in as l so their consumers can You've got a bunch of owners of early warning systems big banks, you're basically a servant of seven Masters. How does that go over when you're sort of taking orders from all these different big banks? Well in early warning wasn't a well know company until two years ago, we've always been in the background, past 30 years we've been a fraud and risk management company and our successes and the collaboration between financial institutions. We use you by the way. Sorry? We use you, we are a client of. ->> Absolutely and we're trying to increase our business as we discussed in the green room. But- Deals get made at Brainstorm Finance. But it is that, Hegmund uses that very traditional- I have a conflict here. [ LAUGH ] Hey, I thought it went the other way. Hegmund uses a very traditional payment fraud and risk management, so that's the basis that we were born on. And Zelle, too I think our financial institutions, much like you heard Bryan say, it's about taking checks and cash out of the system. And Bryan can't do that if others, banks, customers, are still writing checks that get deposited in his bank, so it's really about taking cost out of the banking system. So I mean, given the competitors that you have, that have been out longer, I'd like to know how you plan to evolve the product to kind of stay [ UNKNOWN ]. Stay agile, stay ahead of the others. Especially when you've got this weird situation where it's a very new product but you're coming from some very old institutions. Right, sure, and then that most of the customers Actually try Zelle for the very first time because it's offered by their financial institution. So over 70 % of customers- Has anybody used Zelle in the room? Yep, okay. About half. And about half of our new customers are Gen- Xers, older Gen- Xers and Baby Boomers. So a lot of the launch of [ UNKNOWN ] has been teaching individuals how they would use such a product, such as [ UNKNOWN ]. But we're not stopping there, right, I think [ UNKNOWN ] most recognized for our P2P service. But we also provide corporate disbursements, so home claims paid out immediately right into your checking account. Car claims paid out immediately right into your checking account. Financial aid, emergency funds for victims of storms paid through Zell. But where I believe some of the biggest growth is going to come is small business. 59 billion transactions a year to small businesses that are check and cash. And that's really our target, that's where we're going to grow. So let's shift that question to you, [ UNKNOWN ]. Your company, as mentioned, is 168 years young, as you like to say. What is your approach to innovation? Well, obviously we have a DNA, 168 years young DNA, which we Basic cannibalize our own business every time. We, you know, wait for 168 years. That's why we are such a resilient business. That's why we all still grow, right, you know? Unbelievable opportunity still. Our approach on innovation is very simple. We listen to the voice of the customers. They tell us. We don't develop on the corner office's innovation. We invite our customers to our, offices sexually and they attend management meetings. And they tell us because especially our color voice of our customers are not heard for many, many people. They're migrants. There are about 270 million migrants worldwide. They don't have any flag. They don't have any constitution. They don't have any voice. And I feel like kind of a voice for the migrant population. And we do listen to them and they tell us what the next need is. I tell you one thing they told us, that many customers they wanna use Amazon And so many customers can't use [ UNKNOWN ] worldwide because they don't have international cards, they have local currencies. So Amazon and we built this new product called Amazon pay by code, if you don't [ UNKNOWN ] name is a white label product. People buy from their phone in Philippines, globally via mobile phone shop online and pay locally with their local currency. We collect the money in our locations almost and sends them there and then the purchase is immediately sent to them. That's our innovation by listening to the Filipino customers. They told us, we wanna shop there, can you help us, so- You've dabbled with blockchains in your past, and cryptocurrencies as well. How did that work out for you? I think are still investigating, we have our own group invested only in the blockchain, and on the cryptocurrency. We did also a test with Ripple And we are still doing it and It's still ongoing Still ongoing. You know we are looking at it and we are really learning from people But a year or so ago when you were using Apple's product that it was quote, still too expensive you didn't see Yeah, I mean you know we we are in a different day just announced with monogram as you know yesterday or the day before. An announcement that they're investing there. They took an activist size investors' stake in Moneygram? Yes. Ten percent? Obviously, we are in a different position than Moneygram. You know, we have our own settlement system, because it's extremely cost- efficient. Today showed us, as we do in the test, it's five times more expensive doing it A cryptocurrency, a stable currency like Ripple, but it's others as well. For us it's different, but I just saw Brett before coming to this meaning, I said hey Brett, we are still in talking, I congratulate him to this deal with the Moneygram needed something and Ripple needed something, that sounds a good deal. But for us it's currently we are pretty much okay with our Settlement system, we can move money in a way that nobody can move it. So that so that works but, look, hey, I'm open. Any cost- savings, any innovation, I'm there. I have, you we can find a deal tomorrow. [ LAUGH ] In the annals of business history, if you look back in the 1800s It's been said that Alexander Graham Bell he wants to sell his patents at one point he was going to sell the telephone patents to Western Union Western Union didn't see the value they turned it down. Are we going to see something like that right now with cryptocurrency and blockchain? Is that what's happening? Well, I think we have to really deeper differentiate between cryptocurrency From consumer use cases and cryptocurrency as a payment stable currency. I think I really believe cryptocurrency and blockchain as a processing system doing the payments has future and we believe in that also, and I think our innovation guys really are excited about that. We're seeing definitely won't miss it [ LAUGH ] We believe that we are on the head of the innovation, otherwise we didn't grow, but I am not sure that any government, any central bank will wanna control their currencies. Look nations are here, they have their own constitution they have their borders, they have their own economies and they have their currencies. And I'm not sure if you want to issue a currency which is overruling the central bank currency will go forever. You have to work with the central banks. You have to understand that the European Union's central bank or you have to understand Indonesian central bank needs, Indonesian economy needs. Why do they wanna control their currency? I can talk all day about this, I wanna turn to the audience for questions. I'm gonna ask one quick question from our panelists before doing so get questions ready. Luanne make a prediction or us, next five years, how are payments gonna change? Wow I believe the combination of authentication and the payment writing together, which is an interesting thing when you think about blockchain technology. Always in the past, those two things have been very separate. If you wanna move money fast, they have to be at the same time and combined, and I think The way that we authenticate ourselves as consumers, as merchants in the process is going to change and enable even faster movement of money. Faster. All right. [ INAUDIBLE ], same question to you. Very quickly. Next five years, what happens in payments? I think the instant payment is something big. Which we do it. I think that you know not only dropping money globally on an account or on a cash. I think it's really also wallets, local wallets will be big. It's not about the international role, it's owned by big corporation. The local wallet issued by local people. I think you have to bring the connection. And have that instant payment and instant clearing an instant anti money laundering instant settlement is big thing. And companies who invest on that block chain could be one thing who invest in that and the technology will succeed. So the acceleration of everything. All right, I saw a question back here. [ INAUDIBLE ] Well let's keep it tight so maybe we can get into it. Yeah, understanding all the AML and compliance pieces but I was wondering why, if -. What's your name, by the way? Name and company? Hasley Stern. I was wondering why it's so much more expensive to send money via Western Union than via Bitcoin or some other cryptocurrencies. Did you try to send money to each of [ INAUDIBLE ] BitCoin or cryptocurrency, it's not possible. So you have paid, once again let me tell that. You're an end- to- end payment system [ INAUDIBLE ] you collect money in dollars from your mobile phone and I can drop money immediately in Egyptian pounds All the way it's done, collecting the funds, paying out and making the anti- money laundering descent site, understanding the customer needs, anti- fraud activities, paying out in pounds the less model in Egypt, and overnight settling with the bank. Is big thing so that costs money that's an operation behind that and doing that in 137 currencies and doing 33 transactions every second costs some money or prizes changes also to the customer needs, right, I mean, some you can send money to for instance here from your mobile phone to India in an economy zero fee will be only an FX It's because the competitive market but you can send money to some some somewhere else which is you know more rural areas you have to pay out in cash it's more it's more expensive. So it's really much cost related .>> You got a lot of regulations to comply with let's see if we've got one more question back here And give your name and company as well. Yeah Rene from Cello. Hey Matt a question for you, as you said one of your big assets are sort of having these storefronts in the streets of Cairo and Nairobi. And I wonder if think strategically about other use cases beyond sort of the Peer payments use case, I mean having that kinda network is powerful. Do you ever think about kinda other other industries? Renee has a cryptocurrency startup cielo. He's asking what else you can use your footprint your global footprint of retail stores for? I think that's, as you heard from Amazon. We collect funds for Amazon. I'm sure that there are other retail markets globally who want to collect funds. By the way, you don't have to collect in cash, you have to collect in local currency. We do also collect with cards, debit cards, let's say in Egypt, I don't know why today Egypt but, Egyptian pounds, issued Egyptian pounds, prepaid cards. We collect there. I think the collection of the funds is a big thing. So what we do is the C2C is our major business. We start to do C2B. Businesses want to collect international funds from consumers. It's a big business for us and we are investing there. Alright, well before we wrap [ UNKNOWN ] you've been all over the world and made it from different places, what is the most beautiful, most lovely location you've visited in all your [ UNKNOWN ] [ UNKNOWN ] in Greece, it's a small [ UNKNOWN ] just on the opposite side of [ UNKNOWN ] in Turkey. Where I was born and raised in Isamu, and it's a small island even there, there are about 10 locations there about I don't know, [ LAUGH ] 150 people but, I will say that I've been personally visiting about 89 countries my son and [ UNKNOWN ] On the map and I have to say that where our customers are, I love that, Africa is big for me [ UNKNOWN ]. Luanne, I know [ UNKNOWN ] is just US based, but what's your destination choice? I tell ya, there's nothing more beautful to me than the Carribean Islands, that's my dream destination anytime I get time off for [ UNKNOWN ] Excellent. Well, mine is Montauk. [ LAUGH ] Thank you all for coming. Thank you very much .>> Thanks .>> Thanks.

Brainstorm Finance 2019: Money Transfers, Mobile Payments, and Blockchain

Finance

A conversation with Zelle’s Lou Ann Alexander and Western Union CEO Hikmet Ersek.
