There's no shortage of upstarts trying to cut cost, time and risk out of global money transfers. To maintain its position, Western Union is investing in the technologies it finds the most promising while keeping others at arm's length.

The foundation of this strategy is social interaction. Western Union is turning to social technology to make sure consumers don't have to visit a brick and mortar location unless it's their preference. Any type of customer interaction can and should be able to take place digitally.

The fact is Western Union isn't driving this change; the consumer is. It's imperative that as consumer interaction shifts to online and mobile channels, Western Union be there. Its recently announced partnership with WeChat is just the first step.

"Since mobile phones have become so ubiquitous, even in developing nations, the need for the agent network…has greatly diminished. Partnerships such as WeChat help diminish dependence on the agent network," said Ben Knieff, a senior analyst at Aite Group.

The partnership allows WeChat's users to send money to about 200 countries and territories through the WU Connect platform.  WU Connect enables third parties to offer transfers through debit cards, credit cards or a bank account. Western Union wants to integrate WU Connect with more social platforms; WeChat provides an addressable global market of more than 650 million monthly active user accounts, but the company predicts this would be used primarily low-dollar transfers.

"Remittance is very social," said David Thompson, executive vice president and global operations and chief information officer at Western Union."I see a mother and a daughter having a chat, and the mother sending a daughter a gift via WeChat."

The fee will be a flat $3.99 per transaction over WeChat. Consumers will likely use other Western Union services for larger online transactions, he said. The WU Connect integration is available initially in the U.S., though Western Union plans to expand to other countries soon.

Western Union's digital strategy has also led it to enter partnerships with mobile network operators in developing markets to enable mobile money services, offer an application programming interface to software developers, and work with MasterCard to reach small businesses. Western Union has additionally partnered with Apple to extend mobile payments to underbanked users.

But there is a limit to Western Union's appetite for newer technology. For example, it is not actively pursuing the use of a blockchain, the distributed ledger system most commonly associated with Bitcoin. The benefit of blockchain technology is its speed, and this system is fundamental to the strategies of new cross-border transfer companies such as Align Commerce and Earthport.

"Blockchains are trying to solve a problem that we don't see in our marketplace," Thompson said. "We're moving 30 transactions a second and the tech component is not the challenge. The real challenge is in anti-money laundering and compliance and settlement technology, and that's what we have in our portfolio."

While Western Union would not rule out using blockchain technology, incumbent and startup cross-border payment companies are frequently at odds over the disruptive potential of new technologies.

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