MoneyGram bids to save $20 million per annum from restructuring
11 February 2014 | 1647 views | 0
MoneyGram (NASDAQ:MGI), a leading global money transfer and payment services company, today announced several operational and organizational changes to better support the Company's corporate objectives, including its goal of reaching $2 billion in annual revenue in 2017.
These actions include realigning the organizational structure and commencing a global transformation program designed to help MoneyGram lead the industry in compliance, fuel multi-channel growth and improve its cost structure.
MoneyGram has made several changes to its executive committee to position the Company for continued growth.
W. Alexander Holmes has been named chief operating officer, effective immediately. He will also maintain his current titles and responsibilities as executive vice president and chief financial officer. In his expanded role, Holmes will be responsible for oversight of all finance, technology and operations functions.
Several key leaders who focus on sales and revenue growth, emerging markets and new product development and innovation have also been promoted. The following executives have been named executive vice president of their respective positions and will continue to report to MoneyGram's chairman and chief executive officer, Pamela H. Patsley: W. Alexander Hoffmann, Global Product Management and Emerging Channels; Grant Lines, Asia Pacific, South Asia and Middle East; and Peter Ohser, U.S. and Canada.
In addition, given the increasing importance and strategic benefit of leading a world-class compliance function, MoneyGram's chief compliance officer, Phyllis Skene-Stimac, has joined the executive committee and will report directly to Patsley.
"I am excited about the changes we've announced today on our executive committee," Patsley said. "Alex Holmes has been a tremendous asset to MoneyGram since he joined us in 2009, and we look forward to benefiting from his considerable insights in this additional capacity. His demonstrated track record of success across multiple areas of our company, from finance to corporate strategy, has distinguished him as an exceptional leader. We have an incredibly talented leadership team focused on ensuring that MoneyGram continues to be the preferred brand for millions of consumers arounsumers around the world who rely on our services to meet their everyday financial needs."
These changes support a three-year global transformation program designed to strengthen MoneyGram's competitive position and ensure continued growth. The program will consist of the following initiatives:
Enhancing compliance. The legal and regulatory requirements for the financial services industry continue to increase. Since 2009, MoneyGram has invested more than $120 million in its compliance and anti-fraud programs and has successfully prevented more than $365 million in fraud losses, with $135 million prevented in 2013. The Company will continue to advance its leadership in global compliance by implementing market-leading systems, technology and processes, and increasing agent oversight around the world. This program now incorporates an accelerated timeline and certain additional enhancements which were recommended by the monitor. At this time, the Company expects to incur cash outlays of approximately $80 million to $90 million over the next three years.
Investing for growth. MoneyGram is increasing its investment to accelerate the growth of its market-leading self-service products in order to achieve a truly multi-channel strategy focused on consumer choice and convenience. By increasing investment in its products like MoneyGram Online and mobile, account deposit, and kiosk-based money transfer options, the Company aims to generate 15% to 20% of money transfer revenue from self-service channels in 2017. To reach this objective, MoneyGram will expand self-service to more markets, implement user enhancements, improve back-end processes, and market these channels and products more aggressively.
Reorganization and restructuring. MoneyGram will commence a reorganization and restructuring initiative to enhance operating efficiencies and reduce the Company's cost structure. At this time, the Company anticipates that the initiative will result in annual pre-tax cost savings of approximately $15 million to $20 million on a run-rate basis exiting 2015, resulting from expense reductions and the realignment of certain business functions. The Company currently estimates that it will incur cash outlays over the next two years of approximately $30 million to $40 million in connection with these actions.
Patsley commented, "The actions we are taking today are designed to make MoneyGram a more profitable enterprise that is better positioned to compete in today's changing world. In the coming years, our goal is to cement our position as the preferred global network to send and receive funds by providing our consumers with diverse and innovative options for moving money. Our deep bench of executive talent, combined with strengthened financial metrics, operating improvements and compliance enhancements, will allow us to achieve our financial and operational goals while managing the rising costs associated with the increasing regulatory oversight of our industry."