On Wednesday, Hikmet Ersek will take over as CEO of Western Union, the world’s largest financial brand, with about 430,000 agent locations in 200 countries and territories. Western Union is also a significant corporate presence in Colorado, with 1,100 local employees, more than $5 billion in revenues and a market value of $10.5 billion.
The economic downturn has slowed money transfers, the company’s core business, and competitors from Wal-Mart to Visa to Nokia are trying to grab pieces of that market. The Post sat down with Ersek to discuss his plans to get Western Union growing again.
Post: How do you plan to put your stamp on the company?
Ersek: I am working on a strategic plan to present at our Investor Day on Sept. 30 in New York. They want to hear what is new, what is your vision, how do you want to take the company to the next level. New (delivery) channels and new product expansion are the biggest focus I am going to have. To do so, you have to grow and live with the core business, cash-to-cash transfers, because the core is obviously your heart.
What helps also is our geographic portfolio. Being in 200 countries, you can respond to the different opportunities and issues. That is the biggest beauty of our business. In some parts of Europe, Spain, our business is not doing so well, and in some parts it is doing well, Germany and France. Our business in the U.S., which we had some issues with the past four years, is turning back around.
Post: What lessons do you bring from running Western Union’s operations in Europe, and can they be applied companywide?
Ersek: What I am trying to bring in my leadership style is intercultural competency. It sounds like an academic term, but it is actually a pragmatic one. If you don’t have this competency, you can’t be global and do business in different cultures. That is one of my strongest skills. As a leader, I have a reputation of delivering the results. Certain things are common in the world, including being results- oriented. How you get there is different. But I understand those differences.
Post: Some analysts argue that mobile payments and prepaid cards threaten Western Union money transfers like the telephone did the telegraph, the company’s original business. How do you respond?
Ersek: The big difference is that nobody has the business model we have. We own the four P’s — price, product, promotion and the place — on both sides. You know when you send something and when you receive something. Say a company wants to build an international mobile-phone money transfer in Indonesia to Mexico. It is hard to build that out. We have built the network. The last 11 years, that was my job.
The threat (with new technology) is if we don’t do it, somebody else will. Our biggest advantage is that we have the fundamentals in place. If you go with innovation, there is always an unknown. Which customers will use new products and how much will they use them? As a market leader, you try to understand the customers’ needs and you invest there and take the risk. We have to act, not react. We should not be comfortable and I am fine in an environment which is uncomfortable. I love to be uncomfortable. I like change.
Post: Western Union controls about 18 percent of global money transfers through its network of 430,000 agent locations. Do you plan to keep growing that network or to cut back and focus on new technology?
Ersek: There are still huge opportunities in the network. India, with 1.2 billion people, has 60,000 agent locations. In the U.S., with 310 million, we have 50,000 agent locations. There are still needs to grow the network. You can buy anything on the Internet. People really need the face-to-face. Agents build a relationship with customers. You build trust so people can send hard-earned money. You don’t send money only. You send love, you send support, you send education, pension, medicine, food. If I send money to my father, he is 87 years old, I always think what is he going to do with it this time. Will he buy a TV or medicine? You think about those things. I will continue to build that network.
Post: Ten years from now, how will Western Union look different?
Ersek: It will be a recognizable change. The needs of customers change every year. Western Union will be a dynamic company that serves the mass market. We are not Louis Vuitton. We are not Mercedes. We are a company that fulfills the needs of the 4 to 5 billion, not the 100 million at the top. They have the same needs, want the same technology. They don’t send $100,000. They send $500.
Western Union will also be a company with a huge global social responsibility. It is already, but that will play a bigger role. The world has changed in the past two or three years. Governments are taking less social responsibility because they don’t have income. Global companies have to step out and take more responsibility in giving back to the communities where they make money. It is not only making money for yourself, but also about consumer and community satisfaction. If you do that long term, you win together with the community. If you focus only on yourself and your needs, short term you may win, but long term it will be an issue.
Post: Do you still see Denver as a good fit for Western Union’s corporate headquarters?
Ersek: The biggest advantage of a global company is that you have experts everywhere. I have them in Hong Kong, Dubai, Vienna. I have a huge office in London, in New York, in New Jersey — Montvale, in Denver. That is the beauty of our business. Having a headquarters doesn’t mean you need all 7,000 people in one point. You need to be close to the market and we have the right people in place. I believe the headquarters is more of a holding function. Denver is the right place to do that. Denver is the headquarters because I am here and I like it here.
Edited for length and clarity by Denver Post business reporter Aldo Svaldi.
