Fri | Mar 29, 2024

GK aims to double Western Union network

Published:Friday | March 6, 2020 | 12:24 AMKarena Bennett - Business Reporter

GraceKennedy wants to double the network for its Western Union money transfer service by year end, through a mix of acquisitions and expansion.

Western Union falls under the conglomerate’s GK Money Services umbrella, which also includes FX Trader and Bill Express.

Through the franchise operation, GraceKennedy currently offers money services at 156 locations across Jamaica, but CEO Don Wehby has a road map to get the company to the desired 300 outlets.

“It could be by means of acquisitions, or aggressive identification of new locations, and I know that my team has a significant amount of fit and proper applications at the Bank of Jamaica now,” Wehby told the Financial Gleaner. “I’m not saying we are going to have 300 locations by year end, but the hope is to get it done.”

Wehby’s renewed focus on the expansion of the Western Union business comes three years after a low period for the remittance sector, at a time when foreign scams were on the rise and such outlets were being used by customers to collect illicit proceeds. It forced GK to increase compliance measures to combat the high numbers of suspected fraudulent transactions reported at its agent locations, and shut down six of its Western Union outlets in a bid to combat fraud across its network, despite enhancement of its anti-fraud programmes and continued investment in technology.

Months prior to the closure, the American parent company for Western Union had agreed to pay US$586 million to compensate victims whom it was accused of not adequately protecting from fraud.

“We have been focusing on strengthening our compliance network and I think it has created some inconvenience to customers. There is always going to be a tension between compliance and strategic growth,” Wehby said.

“Our analysis has shown that because of the increased compliance measures, that did have an impact on the money-service business. We have now put the compliance measures in place, so we now going to be refocusing on introducing new products, digital products,” he said.

GraceKennedy began offering digital services, through WU.com, in 2018; and an Account Payout Network for direct deposits to a remittance recipient’s bank account.

“The biggest opportunity for growth, for me, is in the digital space. When we look at the growth worldwide, cash-to-cash transactions growth remains flat, while digital transactions are growing at 30 per cent. So it is very clear where our strategic efforts should be,” said Wehby. “We don’t expect to cannibalise our existing customers but, instead, reach out to new ones,” he said on a streamed investor briefing on the company’s yearly results on Wednesday.

“I’m fairly confident that you are going to see a return to growth in our money-services business certainly within 2020 and 2021,” he said.

GraceKennedy in 2019 made record revenue of $103 billion and profit of $5.1 billion. GK Money reported improved revenue of $7.9 billion, up from $7.68 billion, but the subsidiary’s bottom line shrank narrowly from $2.5 billion to $2.4 billion.

karena.bennett@gleanerjm.com