There’s further evidence that the money-transfer industry, once seen as a sort of black sheep of finance, is being welcomed into the global banking family. Western Union announced it was bringing its services into SunTrust branches, and said it wants to co-brand prepaid cards with major banks. In the meantime, rival MoneyGram signed a deal to bring its services into the 10,000 branches of the Bank of China.
The moves have the potential to transform the face of banking and, more importantly, to bring millions of un- and underbanked customers into the banking world.
For banks, the benefits of an association with Western Union, the largest money-transfer company on earth, are obvious. In an interview with Dow Jones NewsWires, Philip Philliou, a payments consultant with Philliou Partners LLC., said the payment giant has a “tremendous loyal following and strong brand awareness,” which could help banks attract new customers — particularly from among the ranks of the un- and underbanked.
For Western Union, the benefit of such a deal would be a boost in cachet. A prepaid card co-branded with a big-name bank could give Western Union “kind of a halo,” Ben Jackson, a senior analyst in the prepaid advisory service at Mercator, told Dow Jones in that same interview.
The deal with Atlanta, Georgia-based SunTrust could eventually give Western Union retail space in some 1,700 of the bank’s branches.
MoneyGram’s deal with Bank of China is larger by far. By teaming with BofC, MoneyGram wins wider access to the extraordinary amonts of money moving between China and the vast Chinese diaspora, according to a written statement announcing the deal.
According to the World Bank, China, with about $57 billion annually coming into the country, is the second largest recipient of money transfers globally. The demand for money transfer services is driven by the growing number of Chinese studying, traveling, working and migrating abroad.A Bank of China account is not required to use the service. Money transfers are available for receipt at Bank of China locations from any of MoneyGram’s 267,000 locations globally in as little as 10 minutes.
The announcements come just weeks after Regions Bank unveiled an entire suite of products aimed at the un- and underbanked. Central to that initiative is a plan to bring Western Union bill-payment and money-transfer services into branches across Regions’ 16-state footprint.
As we’ve written before on MyBankTracker, these types of deals will continue to grow in popularity. It seems both wise and likely that banks will expand partnerships with brands that have already won the business of the un- and underbanked.