June 10, 2015
Authors
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Racheal Meiers
Former Director, BSR
As part of BSR’s Business Leadership for an Inclusive Economy initiative, we are running an interview series with thought leaders from business, government, civil society, academia, and philanthropy. Their voices and perspectives will help deepen our conversation on how we can collectively build a more inclusive economy, as well as how business can most effectively contribute to that vision. This week, we are sharing the conversation we had with Talya Bosch, vice president of social ventures at Western Union, on the role of the financial services sector in an inclusive economy.
Racheal Meiers: What is an inclusive economy, and how is it experienced by different economic actors like employees, employers, small businesses, government, and others?
Talya Bosch: To me, an inclusive economy is underpinned by the realization that we’re all interdependent, requiring a shift from an individualistic view of our economy and ourselves. Ideally, an inclusive economy creates the groundwork for equality of opportunity and the ability for everyone to be able to at the very least meet their basic needs and desires in a sustainable system.
Meiers: Is this vision of an inclusive economy something new, unique to this moment in time? Or is it reflective of our ongoing struggle to balance different demands on our economy and the roles of business in society?
Bosch: I think it is both. On the one hand, I think it was Wallace Stegner who said that even our most rebellious crusades follow paths that our great grandfathers' feet beat dusty—and this is true in this case as well, thinking back to the more progressive businesses of the early 20th century. At the same time, I hope that we are taking those crusades further and higher, and that today’s visionary corporate leaders and social justice movements are progressing beyond where we have been before.
Meiers: What assets does Western Union bring to bear on inclusive economic development?
Bosch: First of all, our business model is about financial inclusion and promoting access to finance. We take a customer-centered approach and listen to our customers on what inclusion looks like for them. That’s why we’re combining online, digital, account-based, mobile, kiosks, and cash. We believe people, not the company, should to determine how they transact. That is particularly true at the base of the pyramid. At the same time, we know that most people still live in a cash-driven world. It is a hybrid economy, and giving people choices is very important. When we start with our customers’ view of the world rather than our own, we can create a virtuous cycle.
Providing financial access is one of our strengths. Yet, when it comes to bank accounts, for example, we know that simply having access is not necessarily enough. Millions of bank accounts lie dormant or underutilized. Increasing the use of these is key to realizing access, and our business can help with that. For example, a World Bank study found that receiving international remittances increased the probability that a household would open a bank account.
We also see that a significant positive byproduct of our core business activities is economic growth. Money sent through Western Union enables people to send their kids to school, to purchase medicine, or to start a small business. In 2014, we moved US$185 billion, which is more than the GDP of 147 nations.
Through work with the University of Colorado, we’ve seen that people who receive remittances through Western Union see their income go up 14.5 percent on average. The study focused on the Philippines, which is one of the largest remittance markets in the world. This report was the first to find a ripple effect—when there is an influx of remittances into a community, overall wages increase from 3.8 percent up to more than 5 percent. Each Western Union agent handles enough funds to support 85 non-Western Union jobs. So we know that the movement of money, and remittances in particular, is not only benefiting receivers but also their whole communities.
Meiers: We’ve done some interesting work together on your shared value initiative, organizing and facilitating stakeholder dialogues on key customer groups and needs. How has that helped shape your understanding of Western Union’s contributions to inclusion and helped you identify business opportunities to do more?
Bosch: This process has been a great one for us. Our stakeholders may frame our efforts or see opportunities in areas that we wouldn’t. For example, our first gathering brought together education experts to map our capabilities against societal needs in that area. We found that there's a huge challenge with teachers not getting paid and money not getting where it needed to go due to lack of infrastructure, as well as corruption—in some markets in Africa, only US$0.38 of a dollar reaches school districts. Our company has the capability to provide safe transfers of funds with paper trails of cash payments on par with the auditability of electronic transactions, since Western Union’s network is fully digital. So we set about developing a product to help move money and solve this issue. Ultimately we decided it should be broader than education, which led to the creation of NGO GlobalPay, which transferred US$2.3 billion in its first 18 months.
Another really interesting byproduct of that stakeholder workshop was our discovery that 30 percent of our customers use our services to transfer funds for education—this was a huge eye-opener for us, and helped us understand our customers’ needs more effectively. A similar outcome resulted from the second workshop, which focused on women’s empowerment—we learned that half of our senders are women and two-thirds of our receivers are women; we also started to get an understanding of how women used our services differently and for different purposes than our male customers. For example, in some countries, women benefit from our account payout network, while in others, women don’t have access to accounts on their own. There, being able to pick up transfers in cash was a big benefit. These insights and our work with BSR overall has helped accelerate our wider organizational transformation around customer centricity.
Meiers: One of our goals as part of this initiative is to also expand the conversation to also include more advanced economies, where we know poverty is growing and the middle classes are coming under increasing pressure. A lot of Western Union’s business is in those markets—how are you supporting inclusive economies in those contexts?
Bosch: This is so important. You know it took an act of Congress, the Community Reinvestment Act, for some financial institutions to operate in neighborhoods that we serve. And lower-income neighborhoods have too often been the first to see bank branches close during the economic crisis. Other financial services companies aren’t always convenient for or welcoming of our customers. Personally, I’m proud that anyone—no matter how they are dressed or what they look like or where they are from—can go to a convenience store in their own neighborhood and transact with Western Union. Paying bills on time, in minutes, can help protect your credit rating. Something like seven out of every 10 Argentinians use Western Union every week, largely for bill payment. And while we are strategically focused on cross-border, cross-currency transactions, U.S. domestic money transfer is an important part of our business. Very often, that involves an emergency send. We’re a safety net for many of our customers.
Meiers: Knowing BSR as you do, how do you think we can make the most meaningful contributions to realizing the vision of an inclusive economy?
Bosch: It’s a big question. I think you play an important role in helping set the vision and bringing people together to make that vision actionable. I’ve seen you point to what’s possible, what we want to achieve, as well as where the gaps are. Secondly, you help us share information and ideas across sectors—public, private, and nonprofit—as well as across industries within the private sector. That cross-fertilization is essential to innovation. For example, I think there is so much that the financial sector could learn from healthcare models, and vice-versa. We need to break down these industry barriers to solve complex problems, and to achieve an inclusive economy, and BSR can help us do that.
Read our first inclusive economy thought leader interview with The Rockefeller Foundation’s Zia Khan.
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