TECH: “This Business is all about Mastering The Network” MoneyGram Interview

Issue Date - 21/07/2011

Daniel J. O’Malley, Executive VP, Americas at MoneyGram International, joined the American global money transfer giant in 1988. The 22-year MoneyGram veteran was a banking professional prior to this and worked with leading American banks like NCNB Bank and Southeast Bank N.A. in Atlanta. In an exclusive interview with B&E, he talks about MoneyGrams’ modus operandi, and its business in India. He also throws light on their partnership with Walmart globally, and their expansion strategies. by onkar pandey and anirudh raheja B&E: Given that you currently have operations in 191 countries, how strategic is India to the entire business portfolio? Daniel J. O’Malley (DJOM): We have a strong presence in India with over 30,000 agent locations. We also recently tied-up with Bharti Walmart for money transfer at their retail locations. As MoneyGram continues to grow in various markets, it’s important to segment and channelise the business, move along with the socio-economic strata of consumers, and make sure that we are present where our consumers want us to be. We have a global network of over 233,000 agent locations, business transactions with top banks, and post offices. In the US we have relationships with thousands of retail stores (both small and big) and with local communities in over 190 countries. At the same time, we also do business with US based Walmart in around 4000 locations. In this particular sector, you should know how to channel your business and understand where your consumer wants to transact. The importance of being close to your consumer is a key determinant of being able to offer remittances. We are present in both urban and rural areas with a vision to serve as many customers as possible. B&E: Western Union money transfer is very active in India. They have been very proactive in marketing, while MoneyGram has maintained a relatively low key profile. Why is it so? DJOM: I think it’s the foundational activities that we have focused on India so far. We have come up with 30,000 stores in just three years, and we want to continue expanding. With these initiatives, we want to ensure that there’s awareness at the store location by increasing on-ground visibility so that more and more people come to our stores. We have invested in creating signage for the brand as well. Now we will invest in the brand to top it all. In fact, we made significant investments in the ICC Cricket World Cup this year and have also entered into multi-year sponsorship deals for a lot of Cricketing events. Besides, we also ensure investment in local community festivals and use those same connections in our above-the-line (ATL) and below-the-line (BTL) marketing activities. We also try and connect our activities in India to the ones that we undertake in, say for example, Toronto.

B&E: What was your revenue and growth in FY 2010-11? How much did India as an SBU contribute? DJOM: We do break-up our business into various segments, but overall, MoneyGram is a $1.2 billion revenue company. Our India business is relatively small in size but it’s growing significantly. We also have other products that add up to the revenue base such as bill payments in the United States and Financial Paper Orders that we sell at our retail partners’ outlets. Though it cannot be broken into segments separately, but we are experiencing a high single digit growth rate y-o-y. We had a good first quarter in 2011 and are looking forward to strong growth. B&E: Every company is talking about the growing importance of emerging markets for their business? How significant are these markets for Money Gram International? DJOM: Expanding into emerging economies is an imperative. But we are a little different here compared to other companies. For us, these markets did not become important in the last three years (unlike the opposite which is true for other entities). We have been solidly building all of our networks. To be honest, this business is all about dominating the network. The more you grow, the more important the network becomes. India certainly plays into that, China is also an important market. And if you go out and look at our network expansion, BRIC countries make up for the bulk of it. The challenge for us remains to find ways to invest effectively without overstepping. B&E: Which is the most primary immigrant group you target? DJOM: That is the best thing about this business. Our target market is spread across demographics, so we’ll always have customers at any point of time. With 233,000 locations, you have to be able to support and serve any consumer, no matter where they are. The worst possible case for us would be not having a recipient location where the customer wants to send money. B&E: Don’t you provide focused services to countries like Mexico and India where more transactions take place?  DJOM: We do; but in any given market there is a mixture of 6 to 7 different demographics that we are trying to cater to. For instance, if we talk about New York City, you cross one street and you will be in an entirely different demography. We work towards providing a great level of convenience to our consumers at the right price point and place depending on the level of service that is required. Considering the US case, at any given location, you can have as many as 75 different demographics. I have also experienced that in one day eighteen different demographics actually go to one location and we have to serve them all together. Once you have mastered this art, it becomes relatively easier to expand and work efficiently. B&E: How much of your business transactions come through Walmart? DJOM: Walmart makes up for almost 30% of our global revenue. Besides, we also do business with Walmart in Mexico and Central America. Continuing this relationship on a global level is very important for us. Our recent alliance with Bharti Walmart is a step in that very direction and we hope to take this forward to other markets as well.