World's leading money transfer company, Western Union (WU - Free Report) has signed an agreement with Michigan-based Citizens Bank. Per the agreement, Western Union will provide its global remittance service to Citizens Bank customers via its 219 branches across Ohio, Michigan and Wisconsin.
The service will be available to the customers after a few months, required for the development of the processes. The service is expected to be a success given Western Union’s strong brand awareness and good reputation.
The service will increase the speed and accuracy of both domestic and international transactions.
Forging alliances with leading banks is integral to Western Union’s long-term strategy. It recently signed SunTrust Bank as an agent in the U.S., adding to a list that includes the U.S. Bank, KeyBank, Regions, Fifth Third and others. Banks as agents provide an easy reach to a local customer base apart from reducing Western Union’s capital needs.
Revenue from account-based money transfer transactions increased 43% in first quarter 2012. The company now has an agent network comprising nearly 90 banks signed for account-based money transfer, with 44 active agents, including U.S. Bank and Regions Bank in the U.S.
The company has traditionally focused on its physical agent provider network. But, with increasing competitive threats from electronic money transfer modes, it has been compelled to increase its new-age technology channels – WesternUnion.com, account-to-cash, mobile and pre-paid cards for money transfer.
Peer MoneyGram International Inc. (MGI - Free Report) has also entered into agreements with banks to provide its money transfer services.
In a separate development, Western Union announced an agreement with IBInvestor Inc., a broker dealer and a business incubator. Per the agreement, iMoneywire.com, a service offered by IBInvestor, will be powered by Western Union’s technology, enabling customers to make expedited payments 24x7.
This online service will provide customers the option to transact in any of the 135 currencies, monitor real time exchange rate as well as access customer care support.
The service is currently available to customers making payments from the United States. The service, however, will be made available for use outside the U.S.in due course.
Western Union currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on its shares.