INTERVIEW : KIRAN SHETTY, COUNTRY DIRECTOR, WESTERN UNION FINANCIAL SERVICES

'Recession has not affected remittance business'
Posted: 2009-05-14 (Financial Express)

KIRAN SHETTY, COUNTRY DIRECTOR, WESTERN UNION FINANCIAL SERVICES

Offering services to over 6.6 million customers and reporting revenues above $5 billion annually, the US-based financial and communication company Western Union has seen an exponential growth over the years in India. Having spread its footprint from 3,000 locations in 2001 to over 50,000 locations across India, the company has a significant share in the country's remittance market. Responsible for managing and developing the company's business in India, Kiran Shetty took over as the country director in April. Shetty, at the helm of affairs, has chalked a clear roadmap for the company in the coming years. In a candid chat with FE's Kavitha Venkatraman, he talks about the impact of recession on the remittance market, competition and future plans for the company. Excerpts:

•After having assumed the role of country director, what are your plans for the company?

The US-based Western Union Financial Services Inc is a world leader in global money transfer services. The company, along with its affiliates, operates via a network of 379,000 locations in more than 200 countries and territories. It has over 5,800 employees in more than 40 countries. During the calendar year ending December 2008, the overall remittance done into India was $50 billion as against $42 billion in 2007. In India, nearly 60% to 70% of the business comes from the rural part of the country and Western Union plays a pivotal role in financial inclusion. The company, during the current year, plans to expand its distribution channel by enhancing the location network. Besides, it is also planning to popularise the brand and create awareness among the public regarding the services being offered by Western Union.

As a first step in that direction, we have already identified certain states where we want to ramp up our location network. The company wants to penetrate deeper into places like Orissa, West Bengal, Karnataka, Bihar, Andhra Pradesh, Rajasthan. Our idea is to expand aggressively. Right now, we are present in about 52,000 locations across the country.

The company has a strong presence in the southern states and will improve it further. We plan to enhance the location network (including agent network) in Tamil Nadu to 6,500 from the present level of 5,200, in Kerala to 4,200 from 3,200 locations, in Andhra Pradesh to 7,500 from 6,100 and in Karnataka from 3,800 locations to 4,800 locations. This year, in south, our agent location network would go up to 500 from the present level of 300 agent locations. This would mean jobs for about 750-800 people.

Western Union has tie ups with about 30 banks including nationalised banks , private banks and some local area banks. It is our constant endeavour to look for opportunities and forge more such arrangements.

•How has the economic slowdown had an impact on the money remittance business? Do you see this affecting your topline and bottomline?

We have a very positive outlook on the country. Globally, the remittances market is estimated at $373 billion to $380 billion. The Indian market is estimated at $50 billion. Total remittances that come into the country can be classified in three categories-retail, corporate and personal.

Western Union operates in the personal money transfer space which is estimated at $20 billion to $25 billion. We have a significant share in that space. The company will continue to grow strongly. We will maximise the opportunities and continue to grow business in India. Western Union has been operating in India over the past 16 years and already has over 6.6 million customers.

During the year 2008, money remittance into India was to the tune of $ 50 billion, which was about $ 8 billion over the previous year. This growth came in during the last quarter October-December 2008. This is a clear sign that the recession has not affected the money remittance business. Infact, in the first quarter of the current year, Western Union grew by about 42%. We will continue to grow and we are quite confident that the growth momentum will not get disrupted by the slowdown.

•The company recently brought down its remittance fee for money transfers from Kuwait and India. Was it done to tide over the slowdown?

Globally, nearly 50% of remittance comes from North America, including Canada, 30% to 35% comes from Middle East and the rest comes from Europe and Asia Pacific countries. For Western Union India, maximum remittance to India happens from the Middle East, followed by North America and Europe. We cut down the remittance fee for transfers from Kuwait to India with an idea to enhance the volume of business. We constantly evaluate the fee structure to add more value to our customers.

•Which are the other emerging markets for remittances into India?

India is a dynamic market and our people always look for new opportunities in newer markets. Even if Indians are getting laid off in foreign countries because of the slowdown, they will definitely look for other avenues. So, we will have a close watch for the next 6-8 months to understand the trend. If any new market emerges we will try and tap the opportunity.

•How do you look at competition? Do you have any plans to expand your service offering?

We welcome competition. There are not many big players in the market. Western Union is a significant player in the market in the personal money transfer space and we will consolidate our position in the country. The market in India is developing and as we penetrate deeper into the rural market, we will have more business opportunities. Our USP is our product. Western Union Money Transfer service is an electronic money transfer product that offers a reliable and convenient way to transfer funds worldwide. The beneficiary can receive money within 10 minutes from the time he/she enters the branch or location or any outlet.

As per the Payments and Settlement Act, we are allowed to operate only in the personal money remittance space. If things evolve, we will be ready to offer customised solutions. We believe any opportunity is a good opportunity.