Western Union is a company for which management of data is central to its operations, enabling its customers to transfer money to and from almost every nation on earth.
Since setting up shop in the US over 160 years ago, the firm has grown its business to serve 70 million customers in 200 countries, enabling 650 million transactions every year. This has contributed to what has been described as “one of the world’s largest enterprise data sets”, with masses of information generated across its consumer and B2B operations.
Capturing and analysing this information can be a challenge, as Western Union shifts its focus from cash to digital transactions, but the insight gained is key to the company's primary objective - improving customer experience in an increasingly competitive money transfer market. With the introduction of a host of new firms offering remittance services - from start-ups to larger players such as Vodafone, Wal-Mart and possibly even Facebook in future - Western Union face pressure to modernise its business and provide a widening range of online and mobile services.
Leading the company’s data strategy is CIO and EVP of global operations David Thompson. Thompson joined Western Union from security firm Symantec in 2012, where he served as global CIO, and has a strong roots in the technology industry having also worked as CIO at Oracle and PeopleSoft.
Along with CTO Sanjay Saraf, recruited in 2013 to drive digitisation and revamp the firm's technology back-end, Thompson has led a programme of change with investment in advanced analytics tools.
"When I started my first question was: how are we using this data, and what business areas are using this to make decisions about pricing, product, service, availability," Thompson said.
"One of the things I found was that the business was not always leveraging that data as effectively as it could have been.
"Big data analytics have given us an excellent tool because we have now have access to data which we couldn’t have gotten our arms around before. In this new world of Hadoop technology and cloud-based analytics solutions, you can get answers in a much more economical fashion, and with dramatic speed."
Next section: Big data analytics
Big data analytics
Thompson and Saraf have overseen investment in a range of analytics and data management tools in the past two years, building on its existing Oracle databases and Business Objects data warehouse. These tools provided summarised reporting and statistics, but did not enable the level of detail required to build useful customer profiles.
A major component of its analytics plan was an implementation of Hadoop with close help from Cloudera, with the company setting up a 32 node cluster.
“With the size and scale of data we have, the best choice was clearly going with a Hadoop type of ecosystem. This allowed us to start leveraging the scale of structured and unstructured data to drive decision making,” said Saraf. “We did it at a breakneck speed, and we stood it up in five months.”
The Hadoop cluster has since grown to 64 nodes, holding up to 70TB of data, which is "growing at a pretty rapid pace".
“The beauty of this system is that going from a 32 node cluster to a 64 node clusters in Hadoop, it is not a massive investment at all. To process this kind of data in your traditional databases, you are talking a 10x multiple,” Saraf said.
The cluster is used to analyse a variety of structured and unstructured data by a team of data scientists. This includes transactional data, click-stream data from Omniture to provide insight into digital services, log-monitoring from Splunk and risk management information.
Through the Hadoop platform, Western Union is able to support the pattern recognition and and predictive modelling that allows it to personalise user experience.
The company has also invested in other analytics technologies. This includes a range of Tibco tools to speed processing and enable real-time decision making, SAS business intelligence software, Tableau for data visualisation and reporting, and Informatica for data integration.
By harnessing its data Western Union is able to enhance its relationship with customers in a number of ways, Thompson says. For example, for a business with a global reach, there is value in tailoring its services for returning customers to provide them with the right currency and targeted recommendations.
A major part of Western Union's business is supporting consumer transactions - which account for around 80 percent of its overall revenues - particularly migrant workers sending earnings back to their home country. According to the latest World Bank figures, remittance payments are expected to reach $550 billion this year, and set to grow to $707 billion by 2016.
By analysing the patterns of worker movements across the globe, Western Union is able to anticipate the needs of customers as they move across the world with greater precision - monitoring the flow of data across the thousands of different ‘corridors’ through which Western Union operates, and identifying customer behaviour.
"We are now able to clearly see immigrants living in, lets say, the Netherlands, and very quickly pick up the habits of that country. They might prefer payments that are native to the Netherlands, meaning they won’t use credit cards as much as they use online banking and transfers,” he said.
"Very quickly we saw that, when we offered the payment method customers wanted in certain regions, we would see a dramatic uplift in our conversion rate - it has a direct correlation.”
Gaining this feedback was possible before, says Saraf, but it was slow to capture, and hard to scale. This made it difficult to recognise returning customers and preempt the services they would require or decisions they would make - such as offering recommendations based on past transactions.
Next section: New competitors
One of the driving forces for Western Union’s need to modernise its business with enhanced digital services is the prospect of new players entering into the market for money transfers.
A host of start-up companies have joined the fray, such as Dwolla and WorldRemit, which recently received $40 million venture capital funding, while tech giants such as Facebook have indicated their desire to be involved in money transfers in future. At the same time the prospect of wider adoption of Bitcoin is also on the horizon.
“Locally our business was being challenged with small start-ups coming and trying to offer something similar, or moving much faster. It was taking our business a lot longer to to get any kind of a change. That is just because we didn’t know whether we were making the right decisions,” said Saraf. “With access to data we are now able to act so much faster.”
Many of the start-ups that are offering remittance services, are centred around transfer of funds through mobile devices, as well as online. At the same time smartphone adoption in both developed and undeveloped regions continues to rise, leading to adoption of mobile banking services in many countries. This has put pressure on Western Union to rival the agile companies with a strong mobile of its own.
The company launched a mobile app to allow users to send and receive money, pay bills and find local agents. However it was not well received by customers initially, said Thompson.
The Hadoop analytics was used to provide insight into use of mobile and online services, allowing the company to respond quickly after identifying customer preferences. This has driven improvements in its mobile application, said Saraf.
“We have started to take steps in embedding this data into our web and mobile front ends, so that we can now capture web interactions, and place it into Hadoop, even click stream data from Omniture. We are now able to feed that information into our UI/UX design process, and then look at how we start driving more personalised landing pages and changes in the interaction flows. That work has started in Q4 of last year.
“The immediate result of doing customer experience UI/UX is that our mobile reading on iOS and Android has really dramatically scaled up,” he said, adding that the app rating on App is over four stars.
Western Union has also used analytics to improve it’s ability to build a picture of risk on an individual and transactional level. Making the wrong decision on a transaction can mean either wrongly rejecting a customer - who may decide to look elsewhere - or approving a transaction that could see the company lose out.
In the past it would take up to six weeks to implement a rule change in its risk systems. This has been brought down to four to five days, thanks to running risk decisioning in Hadoop. “It is a massive reduction,” said Saraf.
“Now with the power of our data it was easier to make it frictionless for some of those existing customers. For brand new customers we were able to identify good customers from bad customers much more effectively and more accurately, he said.
“That has made a huge difference to our business from a shareholder perspective, and more importantly from a customer experience standpoint.”
Going forward, Western Union’s use of big data analytics is set to expand, with plans to introduce more new data base systems such as MongoDB.
According to Thompson, fears of using open source technologies for enterprise workloads are no longer an issue.
“I have seen open source mature, and we have seen value in finding ways to leverage that in our ecosystem. But it is also a journey – picking the right tool for the right business problem.”
Saraf adds: “There is great power in technologies like Hadoop. The challenge for firms like Western Union is that while there are some great open source technologies we have to make sure that make sure they are rock solid because we are dealing with people’s transactions and hard-earned money.”
“So we are doing our best to be at the cutting edge of technology, but we also have to ensure that we are not introducing risk for our customers. So even with Hadoop we decided to go with a partner like Cloudera in this place, because it has put a lot of structure around Hadoop to make it enterprise class.”
Next section: Future plans - big data in B2B operations
Future plans - big data in B2B operations
There are also plans in place to utilise big data analytics across more parts of its business. Saraf says that Western Union will also offer services across its B2B division, which currently serves 100,000 customers.
“The next big area we are going to make a push for is learning from these technologies that are proving huge value in the C2C space and applying them to the B2B, which is a big focus of growth,” said Saraf.
“For example, the customers in the B2B area are very sensitive to FX changes, and they want model risk to their business based on changes that are happening.
“We have huge amounts of data relating to how FX changes are happening around the world, and trends within this. It would be easy for us to build a data driven product offering for how to model FX and risk to their business.”