Transforming disaster into a triumph [Daily Star, The (Lebanon)]Elias SakrAl Bawaba Ltd.
BEIRUT: Losing the privilege of being the sole agent for an internationally known brand can prove crippling for most businesses.
However, Online Money Transfer, facing imminent competition from new Western Union representatives and similar financial services providers such as Money Gram, in a relatively small market, managed to defy the odds.
In 2007, nine years after its establishment, OMT recognized the need for a new growth-oriented business model to face emerging competition, executive board member Hikmat Abou Zeid told The Daily Star.
Abou Zeid, who joined the family-founded business that year, decided to launch an aggressive two faceted strategy: Expand OMT's network to control the largest possible market share and create a brand name side by side with Western Union.
In under seven months, the number of OMT outlets increased from 350 to 700 in what proved to be one of Lebanon's most successful business ventures in the electronic money transfer industry.
"It wasn't an easy task to convince the company's management to shift away from the classic business model," he says.
Abou Zeid took full advantage of his background in law and his experience as a former field officer in charge of Western Union Inc.'s Ontario corridor in Canada to launch a successful expansion strategy.
The strategy divided Lebanon into six areas each handled by a field task force.
"Each FTF had to achieve a goal of recruiting 20 new retailers per month. When a team failed to achieve the defined objective without a valid reason, they were fired," Abou Zeid says, and adds: "I had to fire six FTFs."
Today, OMT offers services at over 900 locations across Lebanon.
OMT's point of sales comprise standalone outlets that are owned and operated by the company as well as independent retailers, which constitute more than 85 percent of such POS, according to Abou Zeid.
OMT provides independent retailers with the needed equipment, systems and periodical training in order to perform operations, Abou Zeid says, explaining that those retailers earn commissions on the transactions.
The successful geographic expansion strategy was coupled with a marketing plan to strengthen OMT's image as a clear brand name alongside Western Union, Abou Zeid adds.
"OMT-Western Union Haddak," which is the Arabic for "OMT-Western Union at hand," is one of several slogans that featured in OMT's recent advertising campaigns in a bid to promote the convenience of using OMT services.
As it built up its brand name, OMT broadened its portfolio of financial services to go beyond the international and domestic money transfer services traditionally offered by Western Union.
Abou Zeid says OMT partnered with players in both the private and public sector to target both unbanked and banked Lebanese residents and expatriates.
Between 2007 and 2009, OMT partnered with the Telecoms Ministry to offer telephone bill payment services and other prepaid mobile phone services before entering into an agreement with the Finance Ministry to facilitate tax payments without the hassle of going through bureaucratic procedures, Abou Zeid adds.
He says that while most OMT services targeted unbanked people until 2009, the company in 2010 began to target the banked population through cash-to-business and cash-to-bank services in partnerships with more than nine banks.
The cash-to-bank services offer customers the convenience of transferring cash to their bank accounts from any OMT outlet, Abou Zeid says.
He highlights that the partnership is mutually beneficial to OMT and banks which seek to gain customers untapped by their small network of branches.
Unlike other Lebanese businesses lately feeling the ripples of the Syrian crisis, Abou Zeid says OMT is seeing better times than the 2008-2009 period.
He explains that the influx of funds to Lebanon that mainly originatesfrom expatriates in the Gulf has increased compared to the 2008-09 period, when oil-producing countries were hit by the global financial crisis.
"It is the internal money flow that reflects Lebanon's GDP growth and so far it hasn't been affected much mainly because people will have to continue to pay taxes and telephone bills among others,"Abou Zeid says.