Postal Financial Inclusion, a Sustainable Growth Opportunity for Posts

How can Posts make their business strategy efficient and at the same time ethical? We are pleased to welcome a guest contribution by Christel Koehler, Chairwoman of Koïnè Conseil, Ethical and Social Strategy consulting company, on this subject.

Ethical and social issues are increasingly integrated in corporate strategies as business opportunities. Recent marketing developments (specially following K. C. Pralahad’s “Base of the Pyramid” theories) have shown that finding inclusive solutions for vulnerable customers are opportunities and that not taking into account these clients is not an option anymore. These solutions were often born in emerging countries but are fully relevant and economically performing in industrialised ones.

Postal operators and, above all, postal banks, are key actors in inclusive banking and can be leaders in these marketing policies. La Banque Postale of France (LBP), for instance, has developed a very ambitious and performing social marketing strategy towards its vulnerable customers. LBP has built strong partnerships with NGOs in order to develop customer empowerment and financial literacy programmes, has become in a few years a major micro-credit actor inFranceand offers an ethical and responsible finance product range to its customers. Ethics are then business opportunities and business can sustain an ethical strategy!

To learn more about this, read Christel Koehler’s full article here.

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Should the USPS re-launch a postal bank?

The United States Postal Service is currently facing a very tough financial situation. Losses are piling on and could reach $14.1 billion for fiscal year 2012. Drastic decisions must therefore be made to ensure the viability of the Post. Most of the focus is currently placed on slashing costs, by closing post offices, reducing the workforce (155,000 jobs could be cut in the next 4 years) or cutting on the service (for example by going from 6-day to 5-day delivery).

Others are pushing for the USPS to expand into other services, such as electronic or financial services. From 1911 to 1967, a postal bank has already been operating in the US. Various articles (here, here, or here) have been published in recent months to lobby for the USPS to expand its financial services offering. In a country where more than one quarter of all households are unbanked or underbanked (FDIC, 2009), this could be an interesting proposal. However this project faces strong opposition, the arguments being that the postal staff doesn’t have the capacity to offer financial products or that the Post would bring unfair competition to private banks. What do you think? Post your comments below!

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Inclusive Postal Financial Service Seminar – Romania – May 2012

More than 100 million of the 370 million inhabitants in Central and Eastern Europe and Central Asia are un(der)banked. This includes many of the 60 million poor and a part of the 150 million economically vulnerable people. Ratios of unbanked people vary from an average 25% in Central Europe to more than 80% in Central Asia. Especially, rural areas are underserved. With 110,000 post offices in the region and more than 75,000 of them in rural and peri-urban areas, postal networks present a potential to fill in part of the gaps in the financial market infrastructure. Proximity, low-threshold, trust, cost-efficiency and transparency are often heard as part of the values that post offices can add. The path to upgrade the post offices as portals for universal access to basic financial services appears to be long and difficult.

All these subjects will be tackled during a seminar organized by BancPost of Romania and Postfinance International Development (Netherlands) which will take place from 28 May to 1 June 2012 in Romania. The detailed agenda as well as inscription forms are available here in English or Russian.

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When Financial Inclusion becomes an argument for keeping posts alive

In a recent article, a Trade Union in Ireland stated: “People trust organisations like the post office and the credit union. However,  the post office alone has a single, coherent accessible infrastructure that can  deliver the banking solution that will help to achieve financial inclusion” Read more

This article confirms that the two key factors for financial inclusion are people’s trust and the network (coherent accessible infrastructure) and that the post has both. The other interesting point of this article is that financial inclusion becomes an argument to defend the existence of rural post offices.

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Should we Bank on Phones or the Post?

The financial inclusion community has been focusing on branchless banking over mobile without considering existing infrastructure like the Post. Today we highlight a brief from Microsave that asks whether we should be using phones or a physical network that already exists: the Post.

At the end of the document, the author states: “Given a choice, those currently without bank accounts, or with inconvenient dormant accounts, might open and more actively use postal accounts if the post office were close by and able to offer full banking services.”

Read the complete paper Branchless Banking Update: Should We Bank on Phones or The Post?

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Branch post office modernisation in India

New Delhi, Dec 7 (PTI) Over 1 lakh branch post offices will be equipped with IT infrastructure by 2012-13, Parliament was informed today. “About 24,015 departmental post offices have been supplied with computer hardware. The remaining 1,279 departmental post offices and 1,29,497 branch post office of the Department would be equipped with Information Technology infrastructure under ”India Post Technology Project-2012” by 2012-13,” Minister of State for Communications and IT Sachin Pilot said. There were 1,54,866 post offices in the country at the end of March 31, 2011, of which 24,015 are computerised and 12,202 have Internet connectivity, Pilot said in a written reply to Lok Sabha. In reply to another question, he said there were 98 Telegraph offices in the country as on November 30, 2011 and all of them are working on modern technology — WTMS (Web Based Telegraph Messaging System). To yet another question, Pilot said India Post has signed an agreement with the National Stock Exchange on September 26, 2011, for installation of LCD screens in the post offices that is aimed at creation of financial literacy and awareness leading to financial inclusion. “All expenditure, except electricity charges on setting up of LCD screen in post offices, shall be borne by the NSE,” the minister said.

Source: msn news, 08/12/2011

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Roadmap for Postal Financial Inclusion

During the last UPU Financial Inclusion Workshop in Bern, a group of stakeholders (Operators of champion countries, Financial Sector Regulating Authorities and Governments, Development Partners, Standards-Setting Bodies and UPU) agreed upon a Roadmap for Postal Financial Inclusion.

The document includes the next steps the initiative should take together with the commitment of the stakeholders in  fostering and deepening this process.

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Postal financial inclusion in Bangladesh

When a video says more than one thousand words. More on our new page covering the 2011 Postal Financial Inclusion Workshop.


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PostFI to CGAP: Postal Banks Have the Potential to Open 1 Billion New Savings Accounts

Toward the end of the 19th century, postal services began to contribute to the development of a savings culture in many of today’s industrialized countries. And they are playing a similar role in developing and emerging countries at the dawn of the 21st century.

A number of postal banks meet several of the key elements needed to effectively mobilize poor people’s savings: proximity, trust, simplicity, broad network, affordable services, and state-of-the-art communication technologies.  And very important, postal banks in developing and emerging countries have significant scale. Thanks to a network of more than half a million post offices throughout the world, trusted postal financial institutions have around half a billion deposit or savings account holders – in many cases, people who were previously excluded from formal banking services. There are 1.5 billion users of some sort of postal financial services – payments, remittances – and the potential to open a further billion accounts.

Read PostFI contribution to the CGAP’s blog.

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A well kept secret: posts in financial inclusion

By Marie-Odile Pilley

The essential role of posts in financial inclusion remains a well-kept secret. Did you know that China Post Savings Bank on its own holds 30% of the accounts in China ? With deposits amounting to €2.700bn, the Japanese Post Bank remains the largest financial institution in the world.  Japan Post Insurance manages in addition life assurance assets worth €2,000bn.

In the last ten years, BRIC posts have contributed in a major way to the rise in financial inclusion. In Brazil, through the Correios-Bradesco strategic alliance, ten million accounts have been opened … 10 million mainly to the previously un-banked population.

Developing countries have developed innovative financial services approaches with a view to inclusion. Among the best known examples, Bangladesh with its solidarity-based microfinance system and Kenya with its mobile payment system, M-Pesa. Posts in developing countries are well placed to increase inclusion through their outreach and their trust capital with the un-banked. The challenges they face are to understand the users’ needs and the informal mechanisms in place to meet formally those needs with affordable solutions making use of the appropriate technology.

Key to their success: mastery of cash flow management and cash logistics, appropriate regulation, alliance management and gradual capacity building. There is no room one-fits-all solution. If you want to know more, please read the articles attached in Cahiers de l’ARCEP, January – March 2011. Read it in original version (French language). Or download its translation into English language.

For a broader overview of the transformation of the postal industry, also read the latest issue of “Les Cahiers de l’ARCEP” (en français, in French language).

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