Imagine your company has a potential customer base of 2 billion people worldwide. None of them have bank accounts, but a growing number of them have cell phones.
These "unbanked" millions are firing up your competition like never before--from big banks to Internet entrepreneurs--as the mobile banking revolution rolls on. Digital disruption isn't some media buzzword. It has your business model by the throat.
Western Union is living this reality today, which is what made it such a fascinating subject for our cover story ("A 163-Year-Old Company Seeks Its Digital Future"). In reporting this multifaceted company profile, Managing Editor Kim S. Nash delved into documents from the Securities and Exchange Commission, Wall Street briefings and patent filings, as well as interviewing company executives and outside sources.
"The question is whether Western Union will be fast and bold enough to emerge as a winner in the game of digital disruption," Nash writes, noting that much of its business is conducted in person and in cash, "in a world where money cards, digital currency and mobile payments are proliferating."
Having survived multiple business upheavals over the past 160 years, Western Union now makes most of its money by charging fees for money transfers and bill-paying, and by hedging global exchange rates. The $5.7 billion company is counting on a mix of mobile and social technologies, data analytics and proprietary systems to map out a profitable (but still largely uncertain) future.
In hiring a new CIO in early 2012 to launch the digital transformation, CEO Hikmet Ersek turned away from financial industry IT leaders. Instead, he chose high-tech industry veteran David Thompson, former CIO of Symantec, Oracle and PeopleSoft. Thompson's $3.4 million compensation package made him the second-highest-paid company officer--a clear indicator of the high-stakes nature of this digital gamble. "We don't pour money into anything without returns," Ersek says frankly.
As the company figures out how to extend digital capabilities directly to customers, data analytics will of course play a starring role. For example, Thompson put six data scientists in strategic locations in the U.S., India and China to create a "follow-the-sun" analytics system. That and other IT strategies will be worth watching closely as this live case study in digital disruption unfolds.