The money transfer industry sometimes has been viewed as a outsider in the world of banking. If you needed to transfer money you had to make a stop at a grocery store or check-cashing spot. But now the top two firms in the business, Western Union and MoneyGram, are on a mission to bring their services directly to more bank branches.
Western Union, which has more than 475,000 agent locations around the world, recently added SunTrust banks to its list of partners. It’s not the first bank Western Union has teamed with (U.S. Bancorp, Regions, KeyCorp, and Fifth Third also offer Western Union services). The company is trying to persuade more and more US banks to join them as a partner instead of a rival. It’s a concept that has worked elsewhere.
Western Union often looks to banks outside the US to sell its products. But fewer US banks offer Western Union services. However, that is changing as banks look to draw more customers and bring in additional revenue from fees.
More US banks also are looking to cater to non-traditional customers. Regions’ recent partnership with Western Union to bring its bill payment and money transfer services to Regions branches is part of a larger strategy to attract unbanked and underbanked customers. According to the Federal Reserve, there are 30 million U.S. households that are unbanked or underbanked and they represent untapped potential for banks.
WesternUnion’s rival, MoneyGram (with more than 265,00 agent locations), also is looking to build partnerships with banks. However, the US isn’t the target. The company recently signed a deal to be inside 10,000 Bank of China branches. In a statement announcing the deal MoneyGram said it hopes to tap into the growing money transfer business in China, the second largest recipient of money transfers in the world. The money transfer industry there is driven by more and more Chinese who are working, going to school, or traveling in other countries.
For money transfer companies, teaming with banks represents an opportunity to get in front of more customers. It also adds a certain prestige to be linked with name-brand bank that clients trust. For Western Union it also may provide a foot in the door as it plans to offer a co-branded prepaid card in the near future.