The Western Union Company (WU) Earnings Call Transcript & Summary

Ladies and gentlemen, please welcome to the stage, Brad Windbigler.

Good morning. I'd like to welcome you to Western Union's 2022 Investor Day. Those of you who are with us in person, it's great to see you. We also have folks joining through the webcast, so thank you for joining. Over the next few hours, you'll be hearing from members of the management team, providing insights into what we're calling our Evolve 2025 strategy, followed by Q&A. Before we kick things off, I'd like to refer you to the safe harbor statement, which you can see on the very big screen behind me. But if you prefer to see the slides I would be projecting, those slides are available on the Investor Relations website, and they'll remain available after the program. Today's meeting is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the presentation and in the company's filings with the Securities and Exchange Commission, including the Form 2021 10-K for additional information concerning factors that could cause actual results to differ materially from forward-looking statements. And now we'd like to play a short video, and then you'll hear from our President and CEO, Devin McGranahan. [Presentation]

Thank you for joining Western Union's 2022 Investor Day, Evolve '25. I am Devin McGranahan, and I am looking forward to sharing with you our plan to energize this iconic 171-year-old company and set us on a path delivering sustained and profitable growth. The video you just saw encapsulates the strategy for me. We will be evolving this company with and for our customers. Today, you will hear how. How we are doing some important things differently, how we intend to expand our products and services. And finally, how we will invest in our future by improving execution and repurposing our cost base towards growth-oriented investments. I waited until today to hold this Investor Day because I wanted proof points that would make our strategy credible. You will hear and see many of the foundational elements required for success are already being executed with quality and speed. We believe these are the building blocks to a different revenue growth trajectory. I joined Western Union because I believe in the power of a purpose-driven company. I love the globality and the strength of our brand. And I believe this company can be a platform for making the world a better place for millions of people and provide strong returns to our investors. Today is about sharing with you our plans and our approach. We have a talented and diverse leadership team, which positions us well to successfully deliver on our new strategy. Today, I am joined on stage by only a portion of our team. But now the broader management team leverages both the knowledge and the strengths that exists within the company, but also brings new capabilities and experiences from outside Western Union. Every one of us shares a passion for our brand, our customers and a conviction in the opportunity we have. Today, you'll hear from Gabriella, who leads North America; Bob, our Chief Marketing Officer; Joaquin, our Global Head of Digital Banking; Andrew, our Chief Operations Officer; and Matt, our Interim Chief Financial Officer. Over the last 10 months, I have traveled to 11 countries, heard from hundreds of our employees and met with many of our most important agents. I've also worked as a frontline associate, but most importantly, I talk directly to our customers one-on-one. Through this process, I came to see the strengths of our franchise, the trust that we have built with our agents and our customers. And frankly, the need to drive a different level of execution at the front line every day. It helped me understand the market we compete in and what it will take to begin winning again. I am even more energized as I stand on this stage today than when I started back in January. We have branded our next chapter, Evolve 2025. We see our new strategy as an evolution, not a wholesale transformation, The foundation of the company is solid, and our strengths easily built upon. In the short time since I arrived, we have already begun making progress, much of which you will hear about today. We have evolved our company many times in our 171-year history. At our heart, we are a global technology and financial services company with a history of innovating and a passion for customers. We started as a telegraph company in 1851. We introduced the first consumer-to-consumer money transfer business in 1871. I think that makes us the original P2P company. We then launched an early consumer charge card called Metal Money in 1914 and by 1985, money transfer was the largest business within Western Union. We became a digital company with the launch of westernunion.com in 2000, and we followed up with our digital mobile money transfer product in 2008. This year, we have successfully launched our digital bank and ecosystem, positioning us for the next evolution. Today, we have a market-leading retail and digital footprint, providing payments and financial services in over 200 countries and territories around the world. For our attendees in person, you will see a box on the table. On the box, you will see a face. These are the faces of our actual customers. They are the foundation of our new strategy. We aim to be the global leader in providing accessible financial services to the world's aspiring populations and, in turn, increase global financial inclusion and drive strong returns to our shareholders. If you'll bear with me, I would like to share a couple of examples of current customers and how we positively impact their everyday lives as we envision focusing the company on serving our customers with a broader range of products and services. This is Rahul. He grew up in India, and moved to Germany 6 years ago. Currently, he works as an entrepreneur building his own business. Like many of our customers, family is important to Rahul. He uses Western Union to provide for his family. With the money he recently sent, his mother was able to travel to Germany and be reunited with Rahul. We help bring families together. This is Zaia. She resides in France and her family lives in Algeria. Like many of our customers, Zaia is extremely driven. She now works as an assistant at an international company. Zaia sends money through Western Union to pay for her cousin's education. Thanks to Zaia, her cousin is becoming a nurse, her dream job. We support economic improvement across generations. This is Paula. She lives in Mexico and has family that lives and works abroad. Paula's cousin is in the United States and uses Western Union to send money to her bank account every week. Once when Paula's mother was very ill, her cousins sent money for an operation that helps save her life. We are there when it matters most. There are 120 million stories of senders and receivers just like that of Rahul, Zaia and Paula. We play a critical role in our customers' lives, enabling them to provide for their families and their loved ones. As the largest provider of remittances in the world, we connect individuals, families, communities and countries to further economic development and prosperity. As you will see, we are relaunching our iconic yellow and black brand around the face of our customer. We are building from a message of being the most trusted and the largest to being the right partner for your journey through life. Wherever that journey is taking you, we will be there by your side, making it easier and simpler. I would now like to invite Bob on to the stage to share with you the exciting launch of our new brand positioning. Bob?

Thank you, Devin. Let me start by saying it's a privilege to be the CMO of this historic company. Now I've spent the last couple of decades leading global marketing teams and digital teams at Wrigley Mars, Kraft Heinz, McDonald's and most recently, PayPal. I'm a passionate brand builder and a customer-obsessed marketer. And after working at some of the world's most iconic brands, I jumped at this opportunity to help evolve this renowned brand and truly create global impact. So let's start by talking about the Western Union brand itself. Now we've been at the center of fast-moving shifts in technology and consumer demands for decades. In fact, we've been doing it since 1851. We've evolved from uniting Americans from east to west, to moving money for better. And after those decades, something interesting happened. People started to know us. People have started to trust us. In fact, in many languages around the world, Western Union translates to, you guessed it, Western Union. We have unrivaled brand recognition. We have incredible real-world reach. But as we set out on this path of consumer-driven innovation and growth, it became clear. Our marketing, our communications and our brand experience had to evolve. We need to become more authentic, more connected and more distinctive than ever before. We knew we had a line behind the power of the iconic Western Union brand. Then we have to create experiences across products and channels that ladder up to that north star of our already established brand equity. And while in the past, we've explored acronyms, initials, modifiers, it was evident that we needed to get back to the power of the brand equity that exists already in the globe, the power of the Western Union brand. So the question is, where do we start? Obviously, with our customers. So to do this, we started by talking to them around the globe, from Malaysia to Australia, from Nigeria to New Jersey. We uncovered insights that shifted our perspective. Despite differences in age and geography and education, whether they were sending money or receiving money, we discovered a unifying customer mindset. They are all people who aspire to more. Their internal optimism and their perseverance propels them forward. They believe in their own potential, and so do we. Hearing their stories, inspired us to focus on our mission to something everyone at Western Union can rally behind every single day. We make financial services accessible to people everywhere. That is our mission. We are moving beyond money transfer from holding money in accounts to converting international currencies to paying via debit card. Western Union's digital and physical ecosystem provides access to flexible, secure and reliable tools needed to power everyday life, no matter where you are in the world. And when we deliver on this mission every day, we are moving towards our aspiration to becoming the world's most accessible financial services company transforming lives and communities. We will power our customers' pursuit of more. And this positioning evolves how we show up for them. Tapping into the brand DNA with the customer at the center, we unlocked a fresh yet undeniably Western Union brand expression and here it is. As you can see, we've built so much equity in our black and yellow, it's become synonymous with the Western Union offering. So those elements, obviously, are not changing. As part of our master brand strategy, we've retained the full brand name Western Union, a name we're proud of. We've designed a logo in a lockup system where the icon and the word mark are deliberate and inseparable. Our new symbol is uplifting, and it connotes a forward momentum in progress. It doubles as both a W and a hidden U. This gives us a modern yet timeless global feel and the parallel lines are a nod the Western Union's telegraph heritage. Overall, the new essence of the brand leads with real-world imagery to celebrate the vibrant aspiring populations that we serve around the world. These are real people doing real things in real places. They are on a journey with us, and we will embrace and serve these diverse global communities in both a relatable yet aspirational way. We love the power of this new visual direction for the brand, and we're going to take it further. We're going to go beyond how we look, but we're going to also evolve how we operate. That's why we're aligning all of our touch points. Our brand principles will extend from retail to the new app to everyday customer interactions. We will treat our customers, their money and our relationship with them with increased importance, elevating their experiences and relentlessly working to advance their aspirations forward. I hope you're excited by this refreshed expression of our brand as we are. And we will welcome all of you to join us in 2023 as we ignite this global effort in Evolve Western Union. And now I'll pass it back to Devin to take us through strategy.

Thank you, Bob. I could not be more excited about the power of our brand and the impact we can have by focusing on it. I am grateful and humbled that our customers trust us to help them achieve their aspirations. We believe that by expanding our products and services, we can do even more for those customers, and we know we can do it successfully. Our recent journey as a company has prepared us to do more for our customers. After our 2006 spin-off from First Data, we grew our retail money transfer business expanding geographies and adding agents and locations to our network, which today is the largest retail network of its kind in the world. We now have nearly 600,000 retail locations, covering over 200 territories and countries supported by some of the best agent partners in the business. We then focused on modernization and accelerating the growth of our digital business through westernunion.com and our mobile money transfer business. Today, we are the world's largest digital remittance provider with over 9 million digital send customers and nearly $1 billion in revenue from our digital money transfer business. Since 2015, as our retail and our digital business continued to grow, we doubled down on continuous operational improvement. We focused on building a resilient and scalable global cross-border platform and expanded our network, which currently allows our customers to send money domestically in cross-border in over 20,000 corridors. We strengthened our world-class compliance to protect our customers. We are proud of our high compliance standards and our strong fraud protection capabilities. This brings us to today, where we are well positioned to expand our impact, given our brand, our retail network, our risk and client capabilities and most importantly, the existing scale of our current customers. Our strategy is to evolve the business from being focused primarily on cross-border remittance into being the world leader of branded payments and accessible consumer financial services serving the aspiring populations of the world. Our opportunity will continue to begin with the first cross-border money transfer whether that's retail or digital. And then we'll grow with our ability to broaden that relationship across products and channels. Our customers are on a journey through life aspiring to better themselves and those they care about. We start with that privilege of having more than 120 million people who already see us as a trusted partner. Given that many of them are financially underserved, our assets make us uniquely positioned to do more, to help them improve their lives by providing accessible financial services. Our customers, in many cases, have unique and sometimes difficult to manage circumstances. Sometimes they have language or documentation issues. Sometimes, they have trouble meeting minimum balances or for others, they might have a thin financial file or their financial history is in another country. Solving these kinds of problems is what we mean by accessible financial services. To drive this strategy successfully, we must improve our operational execution, deliver in a more integrated manner across our channels and our geographies and evolve and innovate our product offering with pace and purpose. To achieve these objectives, we have launched Evolve 2025 with 4 strategic initiatives. First, we will position our retail business as the gateway to Western Union. Over the course of time, we have slowed the investment in our core retail franchise. As our digital business grew, we moved leadership, resources and effort away from driving our day-to-day retail operations. Additionally, the impact of COVID has been most strongly felt by our retail agents and their retail customers. That said, while the retail money transfer market has been and will likely to continue to be flat, it remains an attractive market that we estimate at more than $350 billion in principle. Our retail network is a strategic asset that gives us direct access to new customers. Our agent partners want and need our retail business to thrive. Many have not recovered the customers and the transactions that they lost during the COVID lockdowns. With their help, we want to position our retail business as the gateway to Western Union. Changing our trajectory in retail can be done. Gabriella will lay out our program in more detail. But we believe with focused effort in 2 to 3 years, we can achieve revenue, stability in retail. We need to focus on improving retention, defending in our core corridors and growing share where we still have low market share. At the core of our approach is a transformation of our operating model, our technology platforms and our marketing approaches from driving transactions to supporting customers. As an example, you may have seen in the lobby, we have updated our point-of-sale platform to better recognize, serve and reward our customers while making it easier for our agents to do business with us. Our program includes driving new customer acquisition through community and corridor marketing, delivering improved customer and agent experiences and optimizing our network and brand at the geographic level. Second, we will accelerate the growth of our digital business. Digital money transfer is an attractive and growing market. We estimate it over $400 billion in principle, growing 10% to 20% per year. We aspire to maintain our market leadership position by delivering on the high expectations of our customers. Our brand is strong. Our new platforms and our world-class compliance across more corridors than anyone else gives us a unique ability to accelerate growth. Nevertheless, as you know, our digital growth has slowed over the course of the last 6 quarters following the significant increases we saw during COVID. Our customer experience has begun to lag relative to our digital-first competitors. And our approach to new customer acquisition is reaching limitations in its ability to successfully scale. These, however, our opportunities we can address. In 2022, we invested in a new digital platform and have now launched this next-generation experience in Canada and Australia. I anticipate we'll be bringing it to Europe soon. This new platform enables us to rapidly enhance customer journeys. It simplifies our legacy approach which entailed over 50 separate apps, quickly making ongoing and incremental improvements so important in the digital world was simply not possible with the old platform. The new platform will be composed of only 4 to 6 regional variants, thus allowing much faster iterations on a global basis. We have also been working on how we will scale our marketing-driven acquisition platform. This year, we invested in a host of new Martech tools and capabilities to better enable targeting of our marketing spend and overall performance management. Using this platform and our strong pricing capabilities, we believe we can significantly accelerate new digital customer acquisition. Bob will share some exciting results from North America to demonstrate the effectiveness of our revised approach. Post-COVID, the world is increasingly digital, and every year, we see millions of our retail customers go digital. Sometimes with us, unfortunately, many times with our competitors. Historically, we have been reluctant to aggressively market to our own competitors for fair channel conflict. Therefore, our opportunity is to capture our own retail customers before they go digital with another company. We can do this by integrating our channel experiences, creating incentives for our agent partners and improving our loyalty programs to drive omnichannel customer behaviors by purposely transforming our retail business into the gateway to Western Union, we will be much better positioned to capture this natural customer migration. We acquired over 20 million new retail send customers each and every year. We believe that with a focused and purposeful program, we can create a powerful and cost-effective retail to digital escalator. With focused investments in our platforms, our marketing tools, consistent levels of marketing spend and an activation of this retail to digital escalator, we believe we can accelerate strong growth in our digital business. Third, delivering accessible financial services. Much of the growth the company anticipated from opening our platform to others has not materialized. After some initial success with digital white label, including STC and [ Spur ], momentum has slowed, and our go-forward outlook for these kinds of mega deals is not strong enough to drive our overall growth trajectory upward. Given the macro conditions surrounding our retail business, our long-term strategy must expand our total addressable market opportunity. Building on the strength of our brand, our large retail network and our existing base of 120 million customers, combined with our strong risk and compliance capabilities, we quickly arrived at expanding our consumer-facing product offering as the most executable and near-term expansion strategy. When I arrived in January of this year, we were piloting a digital wallet-based offering in Austria with employees, friends and families. We quickly recognized the potential of this platform to be the basis for our new offering, and we have been aggressively rolling it out since. By focusing on the unique needs of our customers, we have built a product offering that while still centered on international money transfer broadens the Western Union value proposition to enable savings, spending and transferring. We aspire to become an essential partner and our customers' journey through life. We believe that by growing our product and service offering with value propositions tailored to their specific needs, we will drive overall customer engagement, grow revenue per customer, improve loyalty and ultimately, increase lifetime value. Gives me enormous pleasure to share with you today that we have successfully onboarded over 100,000 customers into that digital banking offer since we launched it in March. Additionally, we are seeing significant acceleration since I last updated you in August when we had 20,000. Joaquin will share more about the learnings to date, the economic model and our plans for rolling this out aggressively across our footprint. Fourth, driving customer experience through operational excellence. Our strategy is grounded in our brand. It is focused on serving our customers. It depends on integrating across channels, geographies and products. Thus, it will require world-class execution. Strong execution offers us the opportunity for increasing performance and driving better financial outcomes. This year, we have funded nearly $50 million in investments in the platforms and the technologies required to implement our strategy. These investments were funded by a strong focus on operational improvement and resource reallocation. If you get a chance, I encourage you to experience some of these platforms today with the demos that are in the lobby. We also made investments in moving our data into the cloud via Snowflake, moving our core processing platform into the cloud with AWS, building our next-generation loyalty platform and increasing our marketing capabilities and tools via new technologies. Underpinning all of these investments is a 3-part philosophy that will govern our strategy going forward. First, build best-in-class platforms; second, increase our customers and our agent's ability to self-service; and then third, drive automation across all of our core processes. Andrew will share more on the program, but we believe we can fund the majority of the required investments for our Evolve 2025 strategy through operational performance improvement and cost reallocations. Another exhibit in the lobby, I would like to draw your attention to is our ESG booth. We are truly a purpose-driven company, and we have a purpose-driven strategy. We take our approach to ESG very seriously and have continued to make significant progress over the last 2 years. The foundation of our approach includes moving money with integrity. By protecting our customers from fraud and by helping improve the safety and security of money movement around the world, enabling financial inclusion across the globe. With our new strategy, focused on consumers, this becomes even more important. Champion, diversity and inclusion in everything that we do. We are rightfully proud of our highly diverse workforce. And then finally, supporting the aspiring populations globally. With the expansion of our products and services, we are now even better positioned to support our customer in their everyday lives. Over the next 90 minutes, we will share with you in more details this strategy and how it will translate into a growing customer base with higher lifetime value and in turn, improve financial results and grow shareholder value. I believe our strategy will position retail as the gateway to Western Union. We expect the retail money transfer business to stabilize over the next 2 to 3 years. It will accelerate digital growth. We will return our digital business to strong growth. It will deliver accessible financial services. We will rapidly roll out our financial ecosystem to generate hundreds of millions of dollars of incremental revenue and it will drive operating excellence. We will deliver strong ongoing execution with detailed operational orientation in everything we do. By delivering great customer and agent experiences across products and channels, we can improve the underlying performance of our business and reduce our ongoing operating costs. This will fund our growth initiatives. Next, Gabriella is going to talk to you in more detail about exactly how we are going to make Western Union -- make retail, the gateway to Western Union. Bob is then going to talk about how we accelerate digital growth. Joaquin will discuss expanding our financial ecosystem. Andrew will talk about operational excellence, and then Matt and I will return to stage to talk about financial implications and strategy. Now let me bring Gabriella on to stage to help us talk about retail as the gateway to Western Union.

All right. Good morning. Thank you, Devin. It's great to be here with all of you today. My name is Gabriella Fitzgerald. I lead our North America business, but I'm here today to speak to you about our retail business globally. As the daughter of an Italian immigrant, I was drawn to being part of this iconic brand and to be able to serve our purpose of supporting the aspiring migrants and aspiring populations in the world. Prior to starting with Western Union, I spent more than 20 years with American Express, where I managed a range of businesses and functions, mostly with a focus on activities that needed transformation and renewal. So let me dive into our money transfer business, our retail money transfer business and the important role that this business plays in the future of Western Union. As you just heard from Devin, we are defining an updated strategy, new brand positioning and innovative growth initiatives, all of which set the stage and create an imperative for us to transform the retail business. Some might think of the retail business as a legacy asset; respectfully, we disagree. A year into my tenure with Western Union and having many opportunities to see and participate in our retail business, what has resonated the most with me is the visibility and power of the brand, the breadth and the global footprint of our agent locations, the commitment from our agents to serve our mutual customers and the desire from our customers to be able to engage with Western Union in multiple channels across multiple products and services. In short, this business is an asset that with updated positioning can play a meaningful role in our overall strategy and company performance. In fact, we have the opportunity to make the retail business the gateway to Western Union. So what do we mean by this? The retail channel is an enormous opportunity to drive the growth of our overall customer base and leverage that customer base across our new business opportunities. Specifically, we can leverage our brand, our vast agent network and our high foot traffic that drives the acquisition of over 20 million new annual retail customers to provide cost-effective customer acquisition, cultivate an omnichannel customer and create the retail to digital escalator to fuel some of the ecosystem initiatives that you will hear more about from Bob and Joaquin. Importantly, we are uniquely positioned to do this, and we will be competitively advantaged given that we are a market-leading money transfer business with a globally scaled retail and digital offering. To set the stage, let me share some quick stats on the current business. Our retail business constitutes about 70% of company revenues. We have nearly 600,000 agent locations worldwide. Last year, we sent roughly $70 billion in principle through the retail channel. We executed almost 200 million transactions on behalf of 40 million send customers and their 50 million received customers. Additionally, we paid out more than 75% of our digital send transactions at our retail locations. So while we are competitively differentiated by our scale, scope and assets, we acknowledge that our retail growth has been challenged as of late. There's been a secular shift to digital, which has driven declines. We have not kept pace with the rising bar for customer and agent experience and competition has intensified, particularly from regional specialists who focus on fewer markets and narrower customer segments. These dynamics, plus the significant impact of COVID shrunk our retail customer base by more than 10 million customers. This has put downward pressure on customer acquisition and retention performance and has negatively impacted our retail revenues over the last couple of years. This is unsustainable and simply has to change. So how are we going to drive improvement and deliver against our vision of leveraging retail as the gateway to Western Union? We have 3 core areas of focus: number one, accelerating customer acquisition by targeting specific corridors and customer communities; number two, driving retention by enhancing our overall customer and agent experience; and number three, ensuring that we have a high-quality and productive agent network. So let me dive in. Key to attracting, serving and retaining our customers is to deliver the right value proposition, the right price, the right experience corridor-by-corridor. Getting our value proposition, price and experience right across thousands of global corridors can result in a complex mix of decisioning criteria. We need to understand global migration patterns. We need to understand customer preferences and we need to understand competitive dynamics. For some of the largest and most competitive corridors in the world, such as the U.S. to Mexico or France to Morocco, we need to do this on an almost real-time basis. In order to meet this challenge, we are refining our operating model to be able to deliver prioritized quarter-by-quarter strategies and value propositions. This requires us to be more regionally and market focused, more responsive to competitive dynamics and to develop and execute strategies jointly between the send and receive market teams. Our operating model has evolved rapidly over the last 4 years, as you can see. In addition to being more regionalized and market focused, we are adding more leadership and depth of resources to these areas. Another critical part of this quarter specific strategy and value proposition is pricing. Over time, we've invested in a robust set of capabilities that enable us to set prices at a micro level and according to a range of criteria, including location density, customer segment and even time of day. We continue to expand our pricing capabilities and have added features around transaction value and pricing by an agent location even this year. More importantly, we are taking on a more integrated view pricing within a particular market, focusing on comprehensive pricing strategies across brand, product and channel. Leverage effectively, we believe our pricing tools platform and data provide us a powerful opportunity to drive new customer acquisition and create competitive differentiation. Once we have the quarter of value equation right, we have to communicate it and deliver it at the community level. So we tailor value by corridor, and we deliver it by community. What's important to understand is communities are the nexus of our consumer demand. Migrants tend to settle in communities that reflect their culture and way of life. So when we follow migrant populations and immerse ourselves in their communities, we can be more effective at targeting and acquiring customers. As a result, to know the areas in which our customers work and live and shop, we are managing at a granular street level and applying some advanced analytics to define what we call a sales block, a territory that can be as small as 1.5 square miles and in which we can assess the composition of communities and their activities. What you see on the screen is an opportunity that we identified in Salinas, California. The ethnic mix in this county suggests good customer acquisition potential and our ability to assess customer behavior through third-party data also tells us where we will have good potential demand and where we might need to place our next agent location. Being able to find and reach our customers is key but being able to communicate and engage with them in meaningful ways is even more important. One lever we have to do this is our community managers. For example, in Paris, we have North African born community managers embedded in the North African neighborhoods. These community managers keep their fingers on the pulse of the wants and needs of our customers there. We plan to leverage this model more extensively in scaling our community manager network by at least 15 new managers globally in 2023. We also know that our marketing needs to be tailored to the hearts and minds of each of our customer communities. Migrant communities are tight in it and word of mouth remains an incredibly powerful tool to reach them. So we're utilizing local grassroots marketing and media agencies that can speak to our customers through influencers, music and messaging that will resonate with them. A very current example of this is a campaign we are launching in Philadelphia, leveraging Jamaican influencers, a local DJ and imagery and language that speak to the culture of our customers. We will be tracking closely a range of performance elements on this campaign, including new customer growth, community response to the brand and performance of various media channel tactics. We're beginning to see some positive impacts from this campaign and are planning to do a lot more of this in the future. In fact, we're planning to reallocate as much as 30% to 40% of our 2023 retail marketing budget to community-specific and diaspora marketing. Now once we've acquired customers, we need to be equally obsessive about driving repeat customer behavior by delivering a great -- consistently great customer and agent experience. Retention is a critical method for us to be focused on. We know that every 1% of increased customer retention we deliver at retail is worth an incremental of approximately $30 million in revenues. And with current retention at about 45%, we know that this is one of our largest opportunities to stabilize retail and achieve share and revenue gains. Let me walk you through some of the key drivers of our customer attrition and how we are planning to address these. In any given year of our traded customers, approximately 60% are onetime users. Later, Bob and Joaquin will speak to some key opportunities we have to convert these customers into repeat customers. There's another 40% of customers that don't return due to factors such as pricing, the time it takes to complete a transaction or a poor customer service interaction. We would consider all of these to be opportunities to deliver better customer experience and to be very addressable retention hurdles. In sum, we need to improve the customer experience to be able to drive our retention. Improving our customer experience is first about delivering on our brand promise each and every time a customer interacts with us. Specifically, we need to know who our customers are, we need to recognize them and we need to provide them with efficient and effective service. Our focus areas will be overall in-store experience, the transaction experience and the servicing experience. Let me share a few highlights of what we're doing. Regarding our in-store experience, we're embarking on an initiative to improve the look and feel of select stores. We're going to reflect the updated brand. And in certain areas, we want to make the stores more culturally relevant and appealing. We're also addressing some of the friction customers experience in the money transfer transaction by rolling out a new and updated point of sale. Andrew will be providing you with more detail on the key features of our new point-of-sale solution but overall, we're delivering a platform that will enable customers to interact in their native language, to register seamlessly and to be recognized upon repeat transactions and across channels. I view this point-of-sale update as a game changer. And I'm also really excited that we'll be starting to pilot the new solution in 20 locations within the U.S. in the next month. If you have a moment, check out the short demo of the interface in the lobby. Now let me pivot to our agent partners. Agents are core to our distribution. They are our partners in maintaining and growing our global scale but most importantly, they are the face to our customers. We need to deliver a better value proposition to them so that they, in turn, can deliver a better value proposition and better experience for our customers. We are investing in providing our agents with the tools and technology to make transacting with us as easy as possible. For example, we're updating our agent credit processes to give our agents greater access to credit, which means they can serve more customers. And we're updating our collections and cash management processes so our agents spend less time on administrative tasks like making bank account deposits and more time focused on our joint customers. Finally, that new point-of-sale system I mentioned earlier, will provide our agents with an intuitive user interface and self-servicing tools. All of this means less time interacting with our systems and more time doing what our customers -- what our agents do best, connecting with customers. Andrew will be going into more detail on all of this later and reinforcing that we cannot have a great customer experience without having a great agent experience. So let me address our final initiative, ensuring that we have a high-quality and productive agent distribution network. As mentioned, our network is one of our key strategic assets with nearly 600,000 locations, spanning 200 countries and territories in the world. Our network is comprised of agent types ranging from large national retailers through regional check cashers to local mom-and-pop stores. Additionally, we operate under different brand constructs in certain parts of the world, and our services are offered through both exclusive and nonexclusive arrangements. The composition of our network allows us to operate at a global scale and to attract and serve customers cost effectively in the locations that they frequent and want to do business in. But harnessing the full power of the strategic asset presents material incremental customer acquisition and revenue opportunity. In fact, we know that when we align and optimize our mix of Asian locations to the quarters and communities that we are serving with an eye towards where our competitors are, we deliver outsized growth. Let me give you an example of this. We partnered with a local ethnic supermarket in Indianapolis in an area concentrated with Asian grocery stores, restaurants and markets. This grocer is in a shopping center that already had competitive money transfer operators. Adding this grocer to our agent network drove a 9x increase in our transactions to Haiti coming from the ZIP code. That's a 900% increase simply by finding and partnering with the right agent. We will do more of this across the world. Today, we see that our network productivity is concentrated within certain geographies, customer segments and agent types. We have the opportunity to capitalize on this, but also to drive higher levels of productivity across the full network by centering around the community, being location-focused and optimizing our mix of agent types. Specifically, we want to focus the retail experience on the Western Union brand and our most valuable agent partnerships. This is our core and largest revenue and profitability generator. More importantly, this gives us more influence and control in our highest demand and most competitive areas and it gives us more influence and control over our customer engagement. This will be a key lever in developing retail as the gateway to Western Union. Let me show you a little bit of what I mean. In Brazil, we've developed a hub & spoke model, leveraging a small network of owned Western Union branded stores, which is the hub in the city centers and highest demand areas. As you move outside of these high-density areas and more into suburban and rural areas, we're able to leverage independent and non-exclusive agents or spokes to provide coverage. This strategy has been highly effective in Brazil, is a large and fast-growing market for us. The own-store format is also a highly impactful one. In fact, in Brazil, 50% of revenues are delivered through these stores, which only account for about 5% of locations in the market. The own-store format allows us to pick prime locations, leverage our branding, have more oversight on training of frontline associates and provide a better overall customer experience. We intend to leverage the own-store format further around the globe, but keep the footprint relatively small and focused on high-density city centers and competitively strategic markets. I would like to highlight another Western Union branded concept -- I'd like to highlight another Western Union branded agent format, and that is our concept store. A concept store is formed through an exclusive partnership with an agent who has a proven track record of offering the highest quality service to customers. We identify high potential areas where we have low penetration and intensive competition. We then select partner agents and help them stand up a custom Western Union branded location. Let's take a live look at a concept store. [Presentation]

I hope you agree to that, that's an inspiring story. Melody, in many ways, is the face of our brand someone who has moved abroad to find a better life and is aspiring to do more for her community. We are immensely proud of Melody, the incredible storage she's built and the role she plays in the Filipino community across Italy. We are proud to be her partner. And to reiterate a stat that you saw in the video, our concept stores are 8x to 10x more productive than our average stores in Europe. As a result, we will be leveraging this format further across the globe as well. So let me conclude. The goal of our efforts and focus on the retail money transfer business is to achieve stable revenue profile, enabling us to leverage the full power of this channel. More specifically, let me provide you with 3 things to take away from this discussion. We've defined the role and purpose of retail as the gateway to Western Union. This will ignite a new customer acquisition opportunity that is uniquely ours and will help to fuel the growth of our new businesses. We are driving to improve performance, delivering a stable revenue profile by being customer focused and leveraging better tools, data and technology to more effectively target and market to our customers and to improve our overall customer and agent experience. We intend to deliver incremental productivity through optimizing our agent network to ensure that we are focused on impactful agent partnerships, showcasing the Western Union brand and that we have the right type of agent in the right locations. A productive agent network will support our retail and omnichannel strategies and will fortify the channel as the gateway to Western Union. Clearly, we have work to do, but we're already on that journey, and we are confident that the retail money transfer business will become a strong foundation from which we can deliver company growth. Thank you very much. And we're going to take a 10-minute break now. When we come back, we'll hear from Bob about our digital growth opportunities. [Break]

Ladies and gentlemen, please welcome back to the stage, Bob Rupczynski.

It's great to be back up on stage where we're going to discuss how we will accelerate our digital business here at Western Union. Now one of the responsibilities of being the CMO is direct oversight of the global digital organization. This aspect of the job comes with P&L responsibility of establishing strong growth of that global business. And I'm excited for this opportunity because at its core, it's core to our digital strategy as articulated by Gabriela in her omnichannel vision. Now for roughly 5 years at one of the world's largest quick-serve restaurants, McDonald's, had the privilege of learning in the most retail of retail experiences, selling hamburgers, that customers around the world value omnichannel experiences. The gains that came from loyalty and engagement and cross-selling through multichannel experiences were truly powerful. And that's just selling burgers. So imagine how we apply those lessons to something as personally meaningful as sending money back home. That multichannel experience is at the core of the opportunity and how we accelerate growth at Western Union. Now my relationship with Western Union started as a much more personal one. I grew up watching my grandparents send money back home to Poland every single month. It was a way for them to stay connected and support their family halfway across the world. My experience growing up with the Western Union brand has left a lasting imprint on me. And while each individual's experience is unique, my early interaction with the brand has afforded me the understanding of the opportunity to serve aspiring populations, particularly those who have crossed borders. Today at Western Union, we are at a unique point in our history. We have an incredibly rich heritage and importantly, a powerful brand grounded in trust. And at the same time, though, we also have a tremendous untapped potential. Specifically, we have the unique opportunity to better serve the needs of a modern, digitally connected consumer. I'm excited to tell you about the plans to harness that opportunity. I'm going to share how we can accelerate digital growth through customer acquisition and also retention. I'll show you why it matters and what that impact on our business is going to be. Now we start from an enviable starting point. Yes, what is that starting point? We are already the largest digital money transfer operator in the world by revenue. We have more than 9 million sender customers and the digital market is growing between 10% and 20%. That is an attractive market. And it's a market we are positioned well to win within and our unique advantage of retail customer base gives us that advantage. So let me be clear. I believe in the power of our brand. I believe in the power of our customer base. And I believe in the power of our incredible platform. That is why we believe we will accelerate growth. So let's talk about how we get there. The question is, how do you plan to use your brand to accelerate growth? When it comes to new customer prospects, we need to find them, but we also have to retain them. First, we will increase customer acquisition by becoming truly omnichannel. With the benefit of seeing 20 million new customers a year through our retail network that gives us 20 million opportunities to acquire a customer into our digital business. With the largest ongoing retail network in the world, giving us the unique opportunity to provide differentiated omnichannel experiences. We will do this through scalable marketing, serving our customers in an integrated way across retail and digital, but also by targeting receivers. We believe by doing this well, we can significantly increase our customer acquisition. Based on our surveys, over the last few years, we've lost an estimated 2 million customers a year from our retail channel to digital competitors. Let me be clear. That has to change. We need to create personalized messaging and experiences that make our consumers choose to stay with us when they migrate from that retail channel to a digital one. Second, we will drive increased retention by offering a suite of experiences of products and of services in that same digital ecosystem. We intend to achieve this through an improved customer experience in the money transfer and an expanded value proposition for our customers through products and services that enable them to save, spend and transfer. This should enable us to improve our retention, increase our engagement and increase the value of our lifetime customers. Let's dive in to how we're going to accomplish these 2 objectives. Let me start with how we'll win in customer acquisition. First, we will focus on efficiency within our marketing investments to get more out of the money that we are already spending. Right now, we spend roughly $200 million a year on marketing. We know the effectiveness of this spend can be improved significantly. We expect this to be an immediate driver of our growth over the very near term. We are tailoring our marketing efforts and messaging to drive customers to interact with us across all of our channels. We must be more active in directing our messaging to our retail customers. This is something that simply has not been a top priority for us in the past. Now we're looking to extend our marketing efforts to communicate directly to receivers. Previously, we focused marketing mostly on senders. We're shifting that to include all aspiring populations, including receivers. Let's keep in mind, receivers play a crucial role in deciding which money transfer provider is used. We know how to do that. A recent survey of our own customers that 40% of receivers actually make the decision on which service to use. That means we have an opportunity to acquire more customers by marketing to those receiver populations and making sure that they are known, that they are understood and that they are represented by our Western Union brand. Marketing to receivers mean they can influence the sender to choose Western Union whenever they need a transfer. We can't just take for granted the strength of our brand in receiver markets. And finally, we are implementing a program to optimize our marketing spend using multiple levers that will drive acquisition growth. These includes personalized offers, focusing on acquisition of new customers, driving our media spend to increase awareness and considerations at the early stages of the customer journey and ensuring rapid issue resolution during a transaction and finally, an emphasis on diaspora level marketing activities. Now let me give you some insight into what this looks like in the real world. So we created an agile team to double down on a data-driven, rigorous approach to purely driving acquisition in the U.S. In August, we went to market with new customer pricing paired with lower funnel media. We optimized daily across the micro journeys of our customers across the whole acquisition process. In this concentrated effort, we're able to test and learn on a daily basis and change the entirety of the acquisition experience. Through this approach, we have delivered a 26% year-over-year increase in September in U.S. digital outbound new customers. But we didn't settle with that. We didn't settle there, just bringing people into our franchise. We then monitored their subsequent weeks and intentionally encouraged their next transactions. With this focus, we've been able to achieve 40% lift in transactions from those new customers in their second and third weeks. And finally, to close the loop, we started to communicate with our lapsed customers that had previously left us. With a targeted communication plan, we're able to increase those transactions from these customers by 24%. As you can see, when you put all of the levers into play, we can build a sustainable and accelerated path to acquisition growth. People ask me, Bob, why did you go to Western Union? This right here on this page. This is what gives me confidence that our program to drive acquisition and accelerate growth will work. Why? Because it's already working. This is the real-world evidence. However, U.S. is a large market, but to be successful, we have to scale these approaches. We have to take this mindset market by market by market. And so we've already launched the next phases of this program. And I fully expect this time next year, we have a fundamentally different way of working that has been cost effectively scaled across the globe. But in addition to better marketing, we can drive customer acquisition through what we call the retail to digital escalator. The question always is, what does that actually mean? It means we start with our current retail customer base. And then we connect that retail customer to our digital experience through omnichannel product offerings. That's going to drive growth for us. We can better harness the power of our retail customer base as a cost-effective feeder into our digital offerings. You've already heard Gabriela talk about how our retail network serves at the gateway to Western Union. That opportunity is significant as only 18%, let me repeat that. Currently, 18% of our total send consumers use our digital product. Obviously, there is a huge opportunity still there. Right now, many customers prefer retail because they want face-to-face interactions and they prefer using cash. And while we expect this interaction to continue for a significant portion of our customers, these cash customers also want a personal relationship with us. They want us to know who they are, what they expect, they want that experience to be efficient. So at the same time, we know those same customers are starting to interact more and more with digital products. And we want Western Union to be their first option for their digital transactions. Now I've had the privilege of watching our customers, engage with our retail experience in person. Every one of them had their phone in hand and WhatsApp the recipient while they were still standing in store. Even our retail customers use digital in their personal lives. That is why we believe as we create convenient and valuable digital experiences, bridging the gap between digital and retail is not an impossible task. Now this omnichannel aspiration can be best explained with a story. Let's picture Sarah. Sarah is a full-time registered nurse, but she has a part-time job as a dog walker on the weekends. In her full-time job, Sarah receives a direct deposit into her account. But on her side job, a dog walker, she gets paid in cash. Every week, Sarah walks into her local Western Union agent, sends cash that she's collected back home to her family in the Philippines. However, unfortunately, one day her grandfather falls ill, needs an expensive medical procedure, which her family simply can't afford. At the time of the emergency, Sarah doesn't have cash in hand to do the transfer, and let's be honest, even if she did, she wouldn't have felt safe walking around her neighborhood with that amount of cash in her pocket. Having recently received an SMS with an offer, she downloads the Western Union app, signs up, registers her bank account and makes the $2,000 digital transfer in minutes. That is the retail to digital escalator. Retail customers like Sarah are telling us they need more ways to interact with Western Union. So as we capture more customers like Sarah into our digital ecosystem, we can use the data we gather to inform how we market, how we build experiences for them going forward. We are working towards an omnichannel aspiration by enabling our platforms to identify a customer irrespective of the channel that they've used. We're going to treat them like customers versus transactions. You'll hear Andrew share more about this later today. Our agent partners also play a key role in this as well. Our partners are the ones that onboard customers into our ecosystem. They market directly to our customers. They provide services and products directly to our customers and most importantly, they serve as the face of Western Union to these customers. So we will create incentives in an advanced loyalty program that enable these agencies to benefit from customers who have an omnichannel relationship with Western Union. We are confident that by engaging these agent partners in a purposeful, in a mutually beneficial relationship, we can take advantage of their customer-facing role and create and maintain a competitive advantage while serving our customers well. Activating this retail to digital escalator so that customers interact with us across different channels will deliver significant value for Western Union. We found that customers that actively use retail and digital channels transact with us 2.5 more times than retail-only customers. They also generate 2x the revenue of a retail-only customer. Moreover, we believe that this enables cost-effective, incremental omnichannel customer acquisition. But this is not new to Western Union. Let's remember, we already have 1.5 million omnichannel customers. We see over 20 million new retail customers a year. We have a lot of opportunities still to capture. Now this is just a taste of how we can improve our customers' experience and engage with them in a very different way. We can build omnichannel relationships and can unlock a new kind of growth flywheel for the Western Union business. This is very different than the transactional nature of our past and is a core part of our strategy going forward. Now that I've shared how we can increase customer acquisition across our digital business, let me share how we can expect to increase retention by creating compelling digital experiences. We need to earn our customers' trust and loyalty through an elevated customer experience in everything that we do. And this pertains not only to our retail business, but to our digital one as well. There are several elements to how we will deliver on this customer experience. I'll be talking about our digital money transfer experience. Joaquin is going to talk about growing customer engagement. And Andrew will talk about how we will operationalize it all. I deeply believe in the importance of adopting a digital-first mindset and in designing world-class experiences. Because of our long history in retail, we believe we can be an innovator. We can be a pioneer in retail-led, but digitally enabled omnichannel experiences unlike our digital competitors. To do this, we're going to focus on delivering a seamless transaction experience across channels for our customers and improve on pain points that negatively impact the transaction experience. We believe that our customers will be delighted on how easy and how simple we are making things. And I'm encouraged by the fact that 30% of our digital customers in 2021 actually started in our retail environment. With a focus on this, we should be able to significantly grow that percentage. We know that our consumers expect more from us. They want us to help them transact whenever, wherever, however they need. And we're prepared to meet them in a way that's fast, it's easy, it's transparent, and it's secure, whether it be at the same store they go to every single month, on their phones in their pocket or just at a new location that's convenient to them. And that means accelerating our new product feature and functionality rollout. We believe our investments this year in our new digital platform will enable us to focus our energy against specific customer needs like simplifying our registration process or rolling out e-KYC or enhancing our log-in process with things like social log-ins or as simple as giving our customers easy access to their transaction history and then building one click actions from that history. And even things as straightforward as enhanced real-time tracking of transfers that are in progress. Be assured that we are focusing on these things so that we can more confidently deliver capabilities that match our aspirations to deliver a valuable omnichannel experience. We're also enhancing our communication capabilities. For example, we're developing meaningful interactions with customers via e-mail, SMS, phone calls, chat, social platforms. And these will be automated and personalized. We are considering customer preferences and creating ubiquitous messaging support across all of our channels, helping customers quickly and easily when they need it. We are obsessively focused on finding new digital customers, both from our retail base and from new channels and keeping them through personalized engagement. We expect that the outcome of all of these actions, the increased ROI on our marketing spend, accelerated new customer acquisition and retention rates at or above market levels through our customer loyalty. So in summary, we are focused on effective marketing, a strategic retail to digital escalator, the digital money transfer experience to accelerate our digital business back to double-digit growth rates. And personally, that's an exciting journey to be on. Even beyond what I just discussed, we'll expand further than just the money transfer experience as Joaquin now comes up to talk about this. I'd love for you to take a look at this video that shows how we believe our future financial ecosystem will help our customers aspire to and achieve more. Thank you. [Presentation]

Thank you, Bob and hello everyone. I see a lot of concentrated faces typing away. So let me see if I can get you excited by what I'm ablet o tell you. My name is Joaquin Alemany. I have the pleasure of serving as Western Union's Head of Digital Banking. I joined our iconic firm just over 6 months ago. Before I spent many years at McKinsey helping global financial institutions around the world with some of their most important strategic projects, including digital business building and digital transformations. When Devin reached out to talk about the Western Union Financial ecosystem, I instantly knew this was right for me. A chance to put my experience and learnings from across the industry to work in something that aligned with my passions professionally, but also personally. I, like most of our customers have an international background and a family that is spread across continents. I grew up in Spain, moved around quite a bit in Europe before arriving to the U.S. And then to make things even more interesting, my wife is originally from Germany. So at the dinner table with our kids, we speak in Spanish, we speak in German, we speak in English on a daily basis. Enjoy your meal, [Foreign Language] are some of the things we say at home every day. Our children, while still very young, know their grandparents are back in Germany and Spain. We go there often as a family and part of our life is also there. And as you can imagine, our financial lives are also in the countries where we're from. So whether it is Spain, Germany and the U.S., Mexico, Colombia, Venezuela, or the U.K., India and Pakistan, I understand how our customers' lives and their families' financial lives are complex, cross-border and interconnected. How it is difficult to access financial services when arriving to a new country and how unfair it is having to pay more because you have less. And that is exactly the gap that we are trying to address at Western Union with our financial ecosystem. We're trying to connect senders and receivers with a compelling set of accessible financial services. I believe that Western Union can serve our international customers better by delivering digital products that cover their basic financial needs to save, spend and transfer. And this also presents a meaningful value creation opportunity for us. With our financial ecosystem, we can achieve increased engagement from our customers and expanded relationship value. And together, we believe this will drive improved retention, customer longevity and overall lifetime value. I'm going to cover 3 topics today on our financial ecosystem. First, I will share our vision for the ecosystem, what we are building for our customers and why we believe we can be successful. Second, I'm going to share some early evidence from our launch what successes we've seen in our rollout in Europe and the economic value equation that is starting to develop. And third, I'm going to lay out how we plan to scale in our most important markets based on our brand recognition, our strong trust and our modern scalable technology platform. So let me jump in. First, our vision for the ecosystem. As Devin said, our customers struggle with difficult circumstances in their financial lives as they move to new countries. And financial institutions are not doing a good job in serving those needs. Large banks on the one hand, focus their efforts on the most affluent customers. Smaller institutions like check cashers have experiences and value propositions that do not meet the needs of our customers. And none of them really solve the global connectivity and cross-border aspects. So let me describe in a few words what we're going to provide to our customers. Our intent is to give them simple and easy-to-use products that enable them to save, spend and transfer. And what does that mean? Let me start with save. As we already heard from Juan in the video, he found opening a bank account challenging. This is a very typical situation. A Western Union wallet will provide our customers with the ability to save their hard-earned money, potentially accrue interest or hold money in different currencies. For example, a multicurrency account is helpful for Juan, who pays his mother's rent in pesos in Latin America and he can take advantage of favorable exchange rates instead of waiting to convert at the time the rent payment is due. In the coming days, you will all receive a Western Union debit card in your mail. And sorry, spoiler alert. It is not preloaded with funds for you to spend. It is to illustrate how we aspire to offer Western Union debit cards whether physical or virtual to our ecosystem customers to enable them to spend. One of the most basic financial needs today is to engage in modern commerce, pay digitally at a point of sale or purchase goods online. Yet when you arrive to a new country, face financial hardships, this is not immediately available to Juan or other like him. A Western Union debit card linked to our mobile wallet will open doors to our customers, that many of us take for granted. Finally, our customers also need ways to transfer and make other payments. Cross-border remittances, domestic peer-to-peer and bill pay services products are core products from Western Union today. Now they're going to be able to do these transactions very conveniently from our wallet app. So if you're intrigued by what you just heard, I invite you to try out our demo in the lobby. You will get a closer feel for our modern digital-first ecosystem experience. And I know many of you are probably thinking right now. Why would Western Union be successful among the fierce competition that exists today in the fintech world? We actually believe we have a foundation of unique advantages to do it. Let me explain. First, we focus relentlessly on the needs of our customers. For example, we are creating experiences that make it easy to open an account for someone that just arrived to a new country. Our products are going to be designed specifically for the aspiring populations of the world. Second, we have a global brand that carries trust and the unique ability to build a 2-sided ecosystem addressing senders and receivers in tandem. Today, we already serve 120 million customers per year around the world, and they know us and trust us. Imagine the advantage this gives us versus others that are trying to enter in a new market. Third, we already have a retail presence through our agent network. Our retail business, like Gabriella said is a gateway for millions of new senders and receivers to enter the Western Union family each year. And that is millions of opportunities for us to cost effectively acquire new customers into the ecosystem every year. Fourth, the financial ecosystem will allow us to expand our total addressable market by offering our customers to do more with us. Instead of engaging with us on just money transfer, they will be using 3 or 4 Western Union products on a weekly or even daily basis. And this will make our incremental economics very attractive. And last but not least, we are building our ecosystem, leveraging our world-class risk and compliance foundation. This is a real differentiator to protect our customers, our firm and for us to move quickly at scale. Okay. Now that you understand the simplicity as well as the foundation of our value proposition, let me tell you about the early successes we have found in the European launch of our digital wallet. As you heard before, we launched our digital account earlier this year in Germany and Romania. Our strategy is to build a connected global network of senders and receivers. Germany, on the one hand, is the largest European economy with significant migrant population from Turkey and Eastern Europe. Romania, on the other hand, is one of the largest receiver countries in Europe. And today, as Devin said, we're very happy to announce that we reached 100,000 customers onboarded into our financial ecosystem just yesterday. And while our core strategy is to enhance the value proposition for our existing customers, we've been very pleasantly surprised to see that 50% of our customers in the ecosystem were new to Western Union. They are experiencing us for the first time, using our bank account, our card and sending money with our app. So with these early successes, we're already rolling out around across the rest of Europe. We have recently launched in Poland, and we plan to launch in Italy before the end of the year. Yes, as you see another country pair of senders and receivers. Our intent is to continue enabling this 2-sided financial ecosystem around the world. But let me tell you a bit about the past months' journey and the traction we are seeing. This is our customer onboarding trajectory in Germany and Romania. When we launched, we were onboarding only a few customers each day. We refined our marketing and started to see some momentum with our customers, reaching 20,000 in the second quarter. And just yesterday, we arrived to 100,000 customers in Europe. This accelerated trajectory is what we are most excited about. By the end of the year, we expect to have 150,000 customers in our ecosystem. And all of this is before we launch in our largest geographies, like the United States, the United Kingdom and France. But before I share more on our rollout plans, let me share the economic model that is starting to develop. And remember, our thesis is that the financial ecosystem is a path to increase our existing customers' value. Let's see an illustrative view of how we can increase the value from a Western Union customer today. First, our ecosystem increases customer engagement. On average, we're seeing active customers doing 2.5 more transactions with us today than what they did before. Additionally, 75% of our customers are joining our ecosystem referred by their friends and use our wallet to connect their financial lives. Second, we provide more products and services to them. Customers in our -- in the ecosystem use the international money transfer as they did before, but also use the debit card to make purchases, to take money out of the ATM and use the multicurrency account for their foreign expense needs. In Germany, we're seeing the average revenue per active user migrated from our digital business to the ecosystem being 30% to 40% higher than our average digital users in the country. In Romania, customer revenues are not as high as in Germany. They are $20 to $25 annualized per active user. However, it is also the first time that we have monetized any receiver relationship within Western Union. Imagine the potential of capturing a portion of our global receivers flows into our financial ecosystem. Finally, we believe this will also drive higher retention rates. To date, we have only seen 8% annualized account closures in the ecosystem. We expect customers that use us more often and for more products are going to stay with us longer. Andrew will speak later in more detail about the power of increasing retention for us. So as a result of all of this, we expect the lifetime value for our customers joining the financial ecosystem could be nearly double over time. We also expect that our scalable platform will make the margin and growth profile of this value proposition, very attractive at scale. So now that you know what we're trying to do with the financial ecosystem and have heard about our early launch results, let me tell you how we scale this. Because we believe our assets position us well to deliver accessible financial services to our customers. And we are seeing early positive results. Then the natural question is how quickly and cost effectively can we scale this? As part of our initial rollout, we plan to launch our ecosystem offerings in 10 of our most important geographies, geographies where we already have a strong customer base and strong brand awareness. This rollout is planned to make our ecosystem offerings available to almost 45 million existing Western Union customers. We have chosen these countries based on the size of our customer base, our growth potential as well as our license assets. Our rollout plan includes a combination of our send and receive regions. The United States and Western Union on one side, Latin America and Eastern Europe on the other. Finally, we've made very conscious choices on our technology to ensure we build an ecosystem platform that is cloud-based and globally scalable. We've selected leading technology partners in the market to prioritize speed to market and best-in-class customer experience. With this state-of-the-art setup, we have the ability to roll out in new countries quickly. By the end of 2022, we expect to have launched in 4 countries in Europe in less than 12 months. And as we roll out our offerings in these countries, we expect to bring our core account wallet functionality from the beginning. Remember, save, spend and transfer. This is going to cover our customers' most important financial needs. But in addition to that, we're following an open architecture approach to developing new products. Because we own the customer relationship, this enables us to offer a broader range of products and services through partners, including things like early wage access, cash in, cash out convenience, check deposit options and other financial products that our customers value. To sum up, the financial ecosystem adds a third pillar to Western Union's overall financial model. It should enable us to drive growth, increase retention and improve profitability over time. It builds on the assets and strength of our 171-year history. It can be rapidly scaled and we expect it will represent a meaningful portion of our revenue over time. So I'll leave you now. I hope you're all as excited about the financial ecosystem as I am. Let me pass it over to Andrew. He is going to talk about how we deliver excellence in our customer experience across channels and products. Thank you all.

Thank you, Joaquin, my fellow global citizen. I'm Andrew Walker, and I have the pleasure of serving as the Chief Operations Officer for Western Union. That scope includes overseeing our customer servicing operations or agent operations or procurement or real estate. I'm also heavily involved in our technology operations. Now Western Union is uniquely special to me. I migrated to the U.S. from Jamaica in the 1980s and since the early 1990s, the Western Union brand and the channels, whether it's going to an agent location, using a website or using the app, have provided me the opportunity to support my friends and my family back home. I've relied on and my family has depended on Western Union for almost 20 years now. This is my Western Union Account. I completed my first digital transaction on July 5, 2009. So I proudly speak not only as an employee but as a long-term customer, and yes, I am very proud of this as well. I joined the company 6 months ago, from USA, perhaps the most execution-oriented and customer-focused financial services company that I know, where I was fortunate enough to serve as a member of the executive team charged with leading technology and operations and delivering and serving customers who they refer to as members and doing so with a culture of empathy, and a laser focus on resolving issues with speed and quality. Now I reference this because I know what great customer service looks like. And I know what it takes to get us there with speed, efficiency and high-quality execution. I've been in customer service and operational roles for more than 25 years now. And generally speaking, customer experience aspirations are not taken seriously, unless, of course, you can connect it to a business value. But as Gabriela shared, with a current retail retention rate of 45%, the incremental opportunity from improving experiences for us can be significant. So my objective for today is to share with you how delivering excellence through consistently positive experiences can be the force multiplier, which accelerates and enhances what you just heard from my colleagues. With every great experience we provide, we increase customer lifetime value and we optimize cost management. Well, today and every day, is about Rahul, Zaia and Paula, who you heard Devin mention and the over 120 million people who already see us as an important partner in their journey through life. These global citizens who are no different from my parents who migrated to the U.S., are building a better life. And we, I, get permission to help Western Union expand our ability to help them on that journey. Our goal at Western Union is to provide experiences that make our customers return and tell others about it. Miss the mark on delivery once and the customer may never return. I've been on market towards visiting agents and speaking to customers in Mexico, Costa Rica, the Philippines and a group of us spent a half day here in New York City just a few weeks ago. And I also meet with our customer escalation team almost daily to understand and get to the root cause of issues. And out of many discussions we've had with agents and customers, we've diagnosed break points in the experience that lead to poor retention and unnecessary costs. Thinking back to what you've just heard from my colleagues, Gabriella shared our approach of retail as a gateway to the franchise. Bob highlighted the plan to get digital back to growth and as an escalator from retail. And Joaquin just walked you through how we intend to expand relationships into a financial ecosystem and drive engagement. We expect that by solving break points, by delivering operational and service excellence, it will be the force multiplier for driving growth and increasing retention. And as a result, we have built plans to improve and more importantly, differentiate the customer and the agent experience through 3 levers: first, personalizing our customer interactions; second, creating seamless end-to-end journeys for our customers and agents; and third, maintaining our world-class compliance and delivering it with the customer at the center. Now achieving our full potential across these 3 areas requires that we operate differently. We've already begun to build a discipline of getting to the root of the problem through focus, repetition and accountability. And we are already accelerating the pace at which we solve issues and done well, we believe this will have the added benefit of meaningfully improving our cost structure. First, let's talk about personalizing our customer interactions. You heard this from my colleagues. Our business today is transactional. And we have an opportunity to shift to a relationship-based model with our customers with the business effect of improving retention. So with the implementation of our advanced journey analytics, known as the Customer 360 solution, we are now well on our way of rationalizing our data so we can view each customer as a single record and unify their activities, their preferences and their behaviors across all channels and offerings, helping us move from a transactional to a holistic relationship with the customer. Allowing them to easily access and navigate both current and future products and services. We have also historically offered our services through a disconnected multichannel approach whereas an example, a retail customer's transactional experience can feel like their first without the benefit of building history and the loyalty that is already available in our digital channel. However, with the implementation of our single architecture for both retail and digital and the expansion of the ecosystem, including our digital wallet, customers will also have more options to interact with us through the channel of their choice for a true omnichannel experience. They can seamlessly switch channels mid-transaction moving from retail to digital. And we have had a number of communications channel. Bob mentioned a few of these. We have chat, we have SMS, we have messaging, we have phone, we have retail, we have social media, we have web that were not fully integrated, resulting in inconsistent information and messaging. But by unifying our data, we can constantly learn more about our customers and personalize our communications and our processes so that every experience they have is better than the last. We execute approximately 300 million transactions each year. And while we get it right most of the time, when we do not, it directly impacts our business, primarily in the form of retention. We receive far too many calls in our contact centers, with nearly 40% of those calls representing customers inquiring into the status of their transaction. Service messages and customer limits are also among the themes that are impacting our customer experience. And we also receive thousands of phone calls from agents each month on basic requests, which many of them we can put in their own hands to resolve. So our execution strategy is to find and fix friction and to go from being reactive to proactive. I'll share an example or 2 with you. In June of this year, we targeted a set of initiatives to reduce friction around service message and customer limits. We enhanced the top 10 communication messages accounting for 90% of our service message volume. And within weeks, we're seeing a 4x click-through rate in the improvement. Another example, we estimate that each month, some 300,000 customers across retail and digital were receiving customer limit errors at the end of their transaction. But by making the customer limits transparent and more intuitive, we are already seeing a 60% reduction in cash payout limit errors. While those examples are small changes with tangible results, we've also taken a number of meaningful actions on the journey to create a differentiated and seamless customer experience. We have new technology and product platforms now in place for our customers. We've invested over $25 million in next-generation retail and digital experiences, some of which were shared by my colleagues and while they're not yet at scale, they are live in multiple markets and we are already seeing the benefits. Increasing self-service options for our customers are now available. We've launched chatbots on westernunion.com and the mobile app, and we continue to enhance our interactive voice assistant or IVA to provide customers more options to resolve issues through the channel of their choice. And the level of drive-in automation is substantially increasing. Operationally, we have already begun ramping up hyperautomation practices, including robotic process automation and optical character recognition. And as it relates to the outcomes we're seeing from this, in the past year alone, we have driven down the cost to run our platform that includes technology, products and operations by $40 million, by simplifying the infrastructure and reducing friction points, and we have been redirecting the efficiency to fuel growth initiatives. And while we still have improvements to make, in the past few years, 31 million inbound calls reached the interactive voice assistant, the IVA. And off those calls, 38% have been contained in the IVA reducing transfers to the contact centers. And at the same time, avoiding an estimated $7 million in call center expense all while increasing customer satisfaction. Additionally, we have increased automation by over 200% in the past 2-plus years, making our processes work faster and more accurately for our customers. Now let me turn my attention to our agents. Our agents are community champions. They provide guidance, comfort and a small but constant reminder of home to our customers. And as Gabriella shared, we cannot have great customer experience without great agent experience. So we owe our agents ease of use of our platform to service our customers. Today, new platforms are in place to support agents. We have designed our new point-of-sale system, which you've been encouraged to visit to empower agents with self-service options and capabilities to resolve customer inquiries on the spot. We're enabling agents to process refunds in stores, making the refund experience faster and easier for the customer and the agent while reducing the cost to Western Union. And agents will drive efficiency in their own operations with the availability of new tools to complete things such as password resets, profile changes and view their credit limit in real time to avoid any unnecessary interruption in servicing customers. And some of the expected outcomes from these enhancements include having a new retail experience that typically reduces transaction time by 50% for the customer and reduces transaction errors by up to 65% for agents. Now with technologies such as optical character recognition, where scanning my ID captures all the required information. In today's day and age, who wants to spend minutes keying their data into a terminal? Our initial pilot also suggests that this can reduce the agents need to contact Western Union by over 30% and which can result in significant expense reductions as we expand this program to more agents globally. Now on the final lever. One of our greatest assets is our world-class compliance capabilities. Western Union's compliance is led by my colleague, Cherie Axelrod, who serves as the Chief Enterprise Risk Officer. I will highlight a topic of compliance through the lens of the customer. And those customers, senders and receivers come to us because they trust us. And we work every day to ensure that trust is well placed and well earned. I'm proud of our ESG mission, which Devin spoke about earlier. We are committed to promoting the integrity of money movement and making the world safer each day through our proactive efforts to prevent and disrupt money laundering, terrorist financing, human trafficking, drug trafficking and other illicit activity. We will not sacrifice compliance and we take the safe transfer of legitimate funds seriously. This is our commitment to our partners in law enforcement, our regulators and above all our customers. And while our competitors may have the same goals as we do, they do not have the same results. We have received and we continue to receive hundreds of accolades for our compliance program. The Consumer Sentinel Network Data Book reported by the Federal Trade Commission shows that consumer fraud rates are up, but I'm proud to say they are down for Western Union. Over the past 4 years, consumer fraud and more specifically, wire fraud, which is more aligned to our business, rose by 40% while the amount of consumer fraud losses reported by Western Union customers, has decreased by 41% over the same period. Our world-class compliance capabilities enabled us to expand our remit into financial services, allowing our customers to save, spend and transfer safely across the globe. Now it is not only my mission, but it is the mission of the entire company to elevate the Western Union customer and agent experience for our 120 million customers and our 600,000 agent locations. So in closing, I'll go back to my objective. The topic of driving excellence highlights our focus and our commitment to: one, run our operations efficiently; two, deliver consistently positive experience to customers and agents; and three, to do so with the resulting impact of supporting year-over-year growth and cost management. I am pleased to see the foundational work that has been done over the past 2-plus years. For example, technology investments to move us to be fully cloud enabled and therefore, nimbler and faster to the market, they're fundamentally complete. And we're confident that finding and fixing friction such as enhancing our product capabilities and features will improve experience while significantly reducing cost. In fact, we aspire to achieve 5% year-over-year efficiency opportunities across our $800 million in platform spend, again, that includes technology, product and operations. Now I'll pass it over to Devin and Matt to take you through our capital allocation strategy, our financial goals and to close this out. Thank you.

As you have now heard, we are in the process of rapidly evolving this iconic 171-year-old company into a global leader, providing payments and accessible financial services to the aspiring populations of the world. We have made progress this year building out some of the foundational X elements required to execute at scale and with pace. The hallmarks of progress you can expect include the following. Stabilizing our retail business. We expect to improve the trajectory of our retail business within the next 2 to 3 years. Stabilizing retail is important as it allows us to invest in the additional drivers of growth for the overall company. For too long, the headwinds of a declining retail business have held us back. As investors, you should look for increases in controllable retention, growing new customer counts and share gains in important corridors. Next, we believe we will be able to reaccelerate our digital growth. As you heard from Bob, this year, we have successfully accelerated new digital customer count growth in North America. Now we need to scale that program globally for full effect. In the near term, you should recognize that revenue growth will lag customer count increases as we have begun to implement more introductory offers and new customer segment pricing. You should expect to see gains in transaction completion rates and customer retention as the new digital platforms we talked about today get rolled out across the globe. Longer term, we have a strong focus on growing revenue by delivering accessible financial services. We expect our early momentum from Germany and Romania to continue to build. And within the next year, we expect to more than double our current customer acquisition rate into the ecosystem. You should look for the new market additions and an ongoing expansion of products and services that we bring into each market. Finally, we are laser-focused on driving operational execution. Our planned objectives, our planned objective as we have demonstrated this year, is to fund the majority of our required growth initiatives through operational performance improvement and cost reallocations. You have heard from Andrew that we strive to deliver year-over-year gains in productivity on our nearly $800 million of technology and operation spend. We believe this can fund our growth. Today, we are primarily a retail and digital cross-border remittance company. Our strategy is to build on this foundation, working to drive increased performance across our existing channels and geographies. However, given our market leadership and the GDP like dynamics of our core retail business, this will not be enough to move us forward at a reasonable pace. With the launch of our ecosystem strategy, we believe we can expand the potential of our business and drive incremental growth for many, many years to come. In the future, we aspire to have more than half the revenue of the company come from our digital business and through the delivery of accessible financial services. In the near term, the path to that goal depends on delivering on our product road map and marketing features, many of which you heard about today. Over time, we need a rigorous plan of execution to expand the ecosystem platform across geographies and by adding additional products and services. We will need to strike the right balance between adding new markets and expanding in existing markets. Know that we will view success based on customer and revenue growth, not simply market expansion. Additionally, we will work to bring other providers, products and services into our ecosystem. There are compelling products and services simply better suited for others to manufacture. For these kinds of opportunities, our strategy is to provide access to our customers through a compelling platform for delivery. Before I turn it over to Matt, I would also like to say a few things about our capital allocation strategy. Given our strong balance sheet and ongoing cash generation capabilities, my aspiration is to maintain our history of returning capital to shareholders and in particular, to support our strong dividend. This is the cornerstone of our capital return strategy. As evidenced by our recent small acquisition in Brazil, we will also look for opportunities that can accelerate our strategy while taking steps to ensure that they create value for shareholders. Now let me turn it over to Matt, who will talk more about our near-term outlook and our broader capital return strategy.

Thanks, Devin. Good morning. It's my pleasure to be with you here today. My name is Matt Cagwin and I'm the Interim CFO. I recently joined Western Union after spending the past 8 years at Fiserv and First Data. Today, I want to share some insights into our medium-term financial outlook and our capital allocation strategy. I am excited about the strategies you've heard today. And I believe they will allow Western Union to evolve into the next chapter of growth. I've had the privilege of being part of many organizations that have transformed, reinvented and revitalized themselves. One of them being my time at Fiserv, First Data, where Devin and I worked together, and we implemented rigorous financial processes such as detailed long-range plans, forward-looking scorecards and in-depth operating and performance reviews. This may sound like basic activities, but we believe that a metrics-driven company will help us improve our execution, accountability and financial performance. I've looked at our financial position and track record. And I know what you recognize us for, our healthy balance sheet, our strong free cash flow and our consistent return of capital. In recent years, Western Union has been a story of returning capital to shareholders. However, we have struggled to deliver consistent, sustainable top line growth. We believe that the strategies that you've heard today will enable us to get the growth flywheel spinning. I hope you've had a chance to see our press release we put out yesterday that showed our third quarter preliminary results. We reaffirmed our guidance, and we look forward to discussing this information with you more on November 1. As you've heard throughout the day, we have several initiatives to return Western Union to stable sustainable growth. You might be wondering how are we going to fund these investments and what does it mean to our margins? We are confident that we can maintain our industry-leading margins. Let me explain why. This year, we have freed up $50 million in operating expenses to fund our growth initiatives. We've invested $40 million of these savings in our ecosystem, which we launched in Romania, Germany and Poland. This is in addition to the development of our new digital platform, our next-generation point-of-sale solution and our enhanced customer reporting and analytics. To ensure that we have the capital needed to fuel growth, we plan to drive a continuous improvement culture. Our goal is to free up an incremental $150 million in operating expenses over the next 5 years. This will be accomplished through rationalizing our vendor spend, optimizing our real estate footprint, driving better customer acquisition cost and ensuring we have employees with the right skills and the right roles. We will then use these funds to drive our growth initiatives. As we implement our strategies, we expect our nonfinancial metrics to show progress before income statement. We have identified 4 key drivers and have set targets to ensure we're progressing towards long-term sustainable revenue growth. As Gabriella discussed, stabilizing retail is a key factor to growth. We will target an annual 200-basis-point improvement in retail customer retention. The retail digital escalator is a core component of our growth strategy. We will target an annual 20% growth in omnichannel customers. As Bob highlighted, customer acquisition is essential to accelerate our digital business. We will target double-digit growth in new customers. And finally, we expect to expand our ecosystem by 100,000 new customers per month. Based on our preliminary outlook and current market conditions, we expect revenue to sequentially improve 2 percentage points per year over the medium term. In 2023, we expect revenue improvements to come through customer growth, the enhanced marketing and increased customer retention. I will provide more about 2023 in a minute. Over the medium term, we expect revenue improvements to come through improvements in our digital business, better retention, incremental average revenue per user is a result of the ecosystem. We expect these strategies to enable us to grow earnings per share mid-single digit in '24 and '25. This will be achieved through improving revenue progression, focused expense management and operating margins of 19% to 21%. Now let me give you a little more insights into 2023. Based on what we know today, we expect adjusted revenue to decline by 2% to 4%. This is a 2% improvement versus 2022. In 2023, we will lap the impact of Russia and Belarus in April, which will be fully offset by the loss of the 2 agents we previously disclosed. We have numerous initiatives that will drive the improvement in retention, which will both help our retail and digital business. We also expect marketing to help retail and digital to a greater extent. As Bob explained, we are seeing strong new customer acquisition and subsequent transactions in the United States based on the program we launched in August. These new customers are coming at lower revenue per transaction due to promotional pricing but we expect them to positively impact top line revenue in the latter part of 2023. Now let me give you some insights into our regions. We expect continued strength from LACA, improvements in all other regions, except for Europe, which will continue to be depressed. Our 2023 adjusted earnings per share will be negatively impacted by $0.22 due to a number of factors. This includes a benefit of business solutions in 2022, which we sold, the net impact of exiting Russia and Belarus, the lost agents and currency impact. We expect a $0.02 improvement from our core business. We look forward to sharing more detail about our 2023 outlook in February. Now we'll walk you through how we think about our capital allocation strategy. This has historically been one of Western Union's strengths, but we believe there's room to improve. When we think about our capital allocation strategy, we have 2 principal sources of capital: our strong balance sheet and cash flow generation. And we have 3 principal uses: support our dividend, pursue strategic and accretive M&A and, to the extent possible, return excess capital to shareholders. Let me elaborate. We have a strong financial position and favorable debt maturity profile. We're proud of our investment-grade credit rating that we've had since the spin-off from First Data in 2006. We've accomplished this through a strong cash flow, prudent debt levels and debt maturity profile. For the foreseeable future, we plan to maintain a debt-to-EBITDA ratio of 2.5x to 3x, and we're currently at the lower end of this range. We will also benefit from a healthy debt maturity profile with 67% of our debt maturing after 2025. This gives us the financial flexibility to reinvest a portion of our cash flow in growth initiatives and returning cash to shareholders while still maintaining our investment-grade rating. Over the past 5 years, Western Union has generated $4.8 billion in free cash flow, and maintained a cash flow conversion at or above 85%. Over time, we plan to reduce the amount of cash invested in agent signing bonuses and improve our working capital cycles. We are focused on maximizing free cash flow. In the last 5 years, we have paid 1.8 billion in dividends and are currently paying $0.94 per share per year. Our objective is to manage the company to provide adequate free cash flow and fund our dividend payout at current levels. We will also consider opportunistic and accretive M&A. We will ensure those opportunities -- we will evaluate those opportunities through the following framework. We'll add new products. We'll add new services, capabilities, technology or can we add some new talent? Will it accelerate our speed to market? Will it drive business growth. Let me walk you through a recent example. In September, we completed our first acquisition in several years. We acquired a digital wallet company based in Brazil. This acquisition is expected to accelerate ecosystem launch in Brazil by 12 months versus building internally. After we look at all those items, any excess cash, we will return to shareholders. Now I'd like to hand it back over to Devin.

As you just heard from Matt, we expect to see 200 basis point improvement in constant currency growth rates in 2023. This is a trend that we believe we can sustain over the medium term, striving towards 2% growth in 2025. We expect to achieve this while maintaining consistent margins and growing earnings per share. As I highlighted before, our growth trajectory depends on achieving a stabilization of our retail business, a growing digital customer base and an expansion of our products and services. In closing, I hope you see the enthusiasm, the commitment, and more importantly, the conviction we have for the future of our company. There was an article this week in Forbes Magazine that referenced Western Union. Given the iconic nature of our company, this is not uncommon. It was an excerpt from a 1959 article talking about Western Union's private wire business, which had just hit $42 million in revenue. It noted that the then 108-year-old company had transformed itself from "a onetime, will be gone, has been" into a top comer in the corporate communications field. That was 63 years ago. It was just one of the many transformations and evolutions our company has gone through. We are resilient. We are innovative. But most importantly, we are Western Union, a brand that has stood the test of time for 171 years. We are doubling down on the strength of that brand and evolving our company to better serve our 120 million customers around the world. We have shared with you today our plan for growing our impact around the world, increasing financial inclusion for millions of people while delivering improving financial performance. Evolve 2025 is the next chapter for Western Union. Thank you very much. We're going to take a short break, 10 minutes, and we'll come back for Q&A when we rearrange the stage. Thank you. [Break]

Welcome back, everybody. We look forward to -- I'm sure with all these softball questions. So why don't we get started? There's plenty. Tom, there's a mic. Shannon and Tom have mic. So...

It's Bryan Keane, Deutsche Bank. Congratulations on the Analyst Day today. I know that takes a lot of work. Can you talk a little bit about the ecosystem revenue model? It's almost going to be 1/4 of the business going forward? How do you think about the revenue streams that will drive that kind of a percentage?

Yes. Great. So there are -- and you heard it from Joaquin that the basic premise behind the ecosystem is improving our base business. So it comes from increasing retention. And you heard from Gabriella and from Bob that increasing retention is a strong economic lever from us. Second, it comes from expanding products and services. So today, we don't issue debit cards. Tomorrow, we'll issue debit cards, and that will provide interchange now in some parts of the world like Europe that isn't going to amount to much. But in other places in the United States, it could amount to a material revenue stream. And then the third thing we talked about was expanding the ecosystem, opening it up, allowing other products and services -- other people's products and services access to our customer base on our platform, increased retention, our own new products and services and an expansion by providing access to our products -- to our customers for other people's products and services. As Joaquin indicated, we think that's worth 2x the value per customer from increased retention, broadened products and then as a platform for delivery. Right behind you.

I guess my first question is just on the outlook. We're obviously in very uncertain economic times. So what have you factored into your outlook in terms of macro assumptions? And then clearly, today, you've laid out a lot of different strategies, and it seems like a lot needs to go right for the improvement in the business. So how confident are you that you can achieve these targets by 2025?

Yes, I'll take that. So you're right. There's a lot of moving parts on it. We've currently based in the current macro conditions we're in today. This business is very resilient, typically follows GDP. So we're not immune to a recession or something like that, but we've used today's trends. As you've heard, a lot of our improvements are going to come through better retention, digital and marketing efforts and then the ecosystem. We believe that those can provide a little bit of room, but macros if they massively decline, if a recession comes in place, could have an impact when we talk about the time. But right now, we're using current macros and our assumptions.

I am an internal optimist. And so I believe what we laid out today is both reasonable and can be executed within the capabilities, the technologies and the platforms that exist today. I think we've also been restrained in the aspirations and in the results that we've put on the page. This is a 2% growth objective by 2025. As I have joked with my Board of Directors, if I don't hit that, I won't be sitting on this stage in 2025, right? So I think that we have the ability, we have the team and we have the plan to be able to deliver on this.

It's Darrin Peller from Wolfe. Your metrics on the growth on digital, I think you said 26% towards -- in September, was obviously a nice reacceleration. And then you talked about having 100 -- a goal, I think, of 100,000 users in the ecosystem. I think you said monthly, if I'm not mistaken, from the 150,000 at the end of this year. So all of those are great aspirations and trends we're seeing but it's in a world that's obviously extremely competitive. So customer acquisition cost is really my big question going forward. You have a captive audience of underbanked people all over the world that know your brand and use your brand and that probably helps. But there's a lot of companies competing that don't have to make money right now, all right? And so I'm curious how you think about the unit economics going forward in these opportunities?

So a couple of things. One, you have highlighted. I think one of the most interesting things about what we tried to lay out is how do we compete while we maintain strong profitability. Any world, as you said, where some of our competitors don't feel that same obligation to their owners. That is the beauty of the retail to digital escalator, access to customers cost effectively, allowing us to leverage the strength of our brand and the catchment. You heard Bob talk about, we know 2 million of our retail customers go digital with our competitors every year. They're spending a lot of money in order to make that happen. If we can get to them first, if we can start to talk to them in their language in terms they understand, we will be their first choice. That is on us to go show that we can do. The second thing that you highlighted there is growing the ecosystem. In October, we'll be running 35,000 to 40,000 customer acquisition. Joaquin showed us going from 100 to 150 by the end of the year. So the doubling to 100,000 is merely adding geographies and territories as we do the rollout. It's not expecting incremental gains in Germany or in Romania and Poland. It's adding Italy and then the subsequent 7 more countries that we're going to roll out.

Rayna Kumar from UBS. So 2 softball questions. All right. Number one, can you elaborate on how your pricing strategy will evolve within this new framework?

That's a softball question?

And second, do you expect to release any new metrics to track your retail to digital strategy like customer retention, agent locations? Like in other words, what are the key milestones we should be looking out from here?

Well, let me tackle the pricing one and Matt, you can talk about the metrics. So on pricing, you heard today, one of the ways we're accelerating our digital growth in the United States is we're becoming more aggressive with new customer offers, new segment pricing. You heard from Gabriella, we have an exceptionally strong pricing platform. So the capabilities that have been built up over time allow us to price on pretty much any dimension you'd want to consider, which, therefore, creates for us the ability to create market offer incentives, geography-based incentives, customer segment-based incentives. And so we're going to use that platform and that capability to drive this objective of growing our customers. And so we think it's a unique and strong skill we have and allows us to tailor across corridors, across geographies, across customer types. We can reward loyalty, we can make introductory offers, we can do some combination of both. And so you will see more variance in our pricing strategy in order to achieve our objectives of growing new customers and ultimately growing revenue coming from the retention of those new customers.

And I appreciate him giving me the softball question. As I talked about it earlier, we had 4 targets we gave out because we believe that you'll see the metric up faster than the P&L, and we're going to share those information going forward. So the items we gave earlier will show you our progress towards what's going on with retail like retention. What's going on with the ecosystem conversion from the retail to digital? What is going on with Bob's world as far as we go with new digital customer sign up and then the number of new ecosystem clients? So yes.

Andrew Schmidt from Citi. Thanks for all the work that went into the presentations today. Two questions. First one, just a question on the 2% growth. Wondering if you could just give us the breakdown in terms of contribution between ecosystem, retail and digital that's sort of embedded? And then the second question, in terms of mid-single-digit EPS growth. Is that the right way to think about the ongoing EPS algorithm for the business? Or is it more akin to this is a milestone, we get 1 or 2 years down the line, we'll get another update in terms of how the business will grow? Those 2 questions will be great.

Yes. So let me tackle the first one. So the algorithm that we have laid out, I think, goes as follows: one, we need to get to stability in the retail business. An ongoing 2% to 3% revenue decline in our retail business, in essence, negates all of the benefit of a growing digital business and expanding in the ecosystem. So getting to revenue stability in retail is important to the equation. Incrementally, we then expect to reaccelerate the digital growth achieving -- it's certainly high single digits, if not low double digits, as you heard Bob talk about. The increment then on top of that in order to propel the overall company to the numbers that we offer today is the ecosystem. In the short term, over the next 2 to 3 years, ecosystem will be relatively small. It is a customer acquisition engine. It is about driving increased retention and adding some incremental product -- product revenue economics. Over time, we expect it to be a much more significant contributor to the overall revenue profile of the company.

Yes. So to the second question. We are making meaningful investments in our business as we talked about today over the next couple of years. Our expectation is we're investing in areas that have higher margin, which will ultimately pay out on the bottom line. The pace of how fast that will transition to higher EPS growth will depend on the pace of growth.

Jason Kupferberg, Bank of America. I wanted to ask a question first just on the point-of-sale rollout. It sounds like that's pretty important to reinvigorating the customer experience at the retail locations. I think you mentioned 20 pilot locations coming up soon. Can you elaborate on where does that scale? How does that scale over time? I mean, ultimately, what percent of the 600,000 agents should have this refreshed POS experience? And then the quick additional question is just what have you assumed in terms of share buybacks in that mid-single-digit EPS guidance through 2025?

Thanks. On the first question, so we are piloting -- we launched the development of our new POS platform in March. We will be in market before the end of this year in our pilot locations as Gabriella discussed. It is our plan to hit the majority of our markets for ensuring initial rollout in next year. So we'll be in North America, we'll be in Europe and in certain parts of Latin America. That expectation is then to scale that across those geographies through the back half of '23 and into '24. I can't give you a specific how many of that will be because we're doing that on a geography-by-geography basis. But it is important to the strategy to have relatively significant and broad-based implementation of that point-of-sale platform to change the customer experience and to simplify the agent experience. So it's an important metric that we'll continue to update you on.

So as I talked about earlier, our usage of cash. Obviously, we're going to pay our dividend. We're going to look for a strategic M&A that's accretive and whatever is left over will go into buybacks. So we want to use our shareholder money appropriately. As far our goal will be to buy things that can do value, but if there's nothing there is useful, we will then return it.

Great. It's Tien-Tsin from JPMorgan. Thoughtful presentation. I wanted to ask a couple of things, if you don't mind, just on the banking ecosystem concept, trying to think how to ask as well. Devin mentioned a lot of competition. A lot of your peers are looking to bank their customers as well, and it makes a lot of sense that Western Union should do it. You have the trust and brand as you rightly said. But some of your agents are also trying to bank customers. You pick at Walmart, a lot of different players globally. And I think if you're successful on the ecosystem side, you might also take traffic away from some of those agents that you're calling the gateway, right, to Western Union. So I'm just trying to better understand how that is thought through and if there's any implications in terms of revenue generation or productivity from a conflict management standpoint?

That's a great question. One of the most important things for us to get right is aligning the incentives with our agents for both the escalator strategy and the ecosystem. And so one of the things we've been working on is what are those models? What are those incentives? And how do we do that in partnership with our agent partners. In the pilot that we've been running in Germany, we went to 10 of our most important agents in the market and created a, I'll call it, a bounty program to help them help us enroll customers into the ecosystem. 9 of the 10 were enthusiastic and signed up for the program. The tenth said exactly what you said, which is, I'm sorry, I'm trying to do that myself. I don't wish to help you do that. I don't know that, that will be the experience that it's 1 out of 10 that don't want to participate. But we do believe the majority of our agents, particularly our smaller agents, our independent agents -- are looking for incremental revenue streams. They're watching their retail business slowly erode whether that business is selling magazines, whether that business is operating a tobacco shop, retail is struggling, and so looking for opportunities to monetize their foot traffic in partnership with us. And as you heard, we actually -- many of those customers become omnichannel. They become more valuable to us, which means we can share some of that value with the agents. They don't necessarily leave the retail channel just because they've enrolled in our ecosystem.

That makes sense. Sharing on the omni side that is creative and it makes sense, never thought of that. So my quick follow-up time, if you don't mind, just thinking about how to ask it. On the -- I think, Devin, you mentioned you're not -- you're abandoning the white label?

No, I didn't say that.