Congratulations to Hans Boon and Marie-Odile Pilley for their posts, which were the most-read in 2009 according to our blog statistics! Please find them below and do not hesitate to react yourself! Best wishes to all for 2010!
Branchless banking or post- branch_banking in 2020 ?
By Hans Boon
One week after the UPU-AFI workshop CGAP newsflashed with scenarios for branchless banking in 2020. That is interesting ! See:
However the word “ post” occurs in the paper only in combination as POST-conflict, and branchless banking does not identify (yet) the post office as the post-bank_branch option, including the mobile phone technology to reach out to the poor. The cases discussed in those scenarios regarding e.g. Brazil, Kenya, South Africa do not mention the ongoing role of the post offices in mobile money and the reference list does not include any postal data/publications.
The “branchless banking 2020″ scenarios build on the feature of the 250.000-300.000 brick and mortar outlets for mainly urban banking, and expansion is indeed limited from an economic point of view. Expansion through ATMs faces also limitations, as capital expenditure remains relatively high, maintenance, and often usage is only to withdraw a monthly salary or remittances. The question whether some one is “banked” if he/she has an account and a card to withdraw 10 times per year the income is not answered. The scenarios overlook the nearly 500,000 post offices in the developing world, with more than 350,000 in rural areas. If equipped with EFT POS terminals and other standard and connected ICT they could be a part of the basic global access infrastructure. The paper also does not view on the linkages between post and telecom. Many post offices do have a function in sales of telecom services and cash collection, providing a phone booth, and mobile technology is also emerging for the postmen, to provide an efficient delivery service, but linked applications between mobile mail logistics management and mobile money delivery have yet to be designed.
Perhaps one could indeed agree that 2020 is the post-bankbranch era, as by then MFIs, Agents, Post Offices, ATMs, Self Service Terminals reach out to the “unbanked”.
That is all very much dependent on the degree of financial literacy.
In that respect the Post office is not only a potential “library” but with proper ICT it could be the local “e-learning” centre, as part of a broader “portal” function to the e-conomy. Moreover post offices and schools could re-invent a new tradition of ’school savings’ to help to familiarize the new generation with financial literacy and encourage savings and cashless payments.
This sounds extremely nice, but as the CGAP scenarios indicate, there is a dramatic gap in today’s “literacy” about the dream potential and the real problems in involving the post offices in financial literacy, access and inclusion. The challenge today is not only at the bottom of the financial pyramid but more at the top. Apparently there seems to be a lack of convincing “literature” for mobilising broad support to an internationally coordinated approach to involve the nearly 500,000 post offices for financial services delivery through standard ICT solutions and effective business models.
From a high-level macro perspective 500,000 post offices in the developing world serving each on average 5000 micro-customers is 2.5 billion people being included, from unbanked young school children to old aged pensioners. To enable that globally requires an investment and development budget in the range of US$ 5 to 10 billion (PostFI editor’s note: Russia is planning a US$ 1 billion investment in its forthcoming Postal Bank). A enormously large amount, but much bigger sums have recently been injected in commercial banks to “rescue” them. Many of these banks spent US$100 or more to acquire a retail client.
The UPU-AFI workshop was an unique event to highlight the potential and to improve awareness. The follow up is a challenge. With the technology developments in mobile and internet gaining pace the pressing question emerges : Will 2020 be the year of branchless banking, post- branch_banking, or less post offices?
A long-kept secret in facts and figures: the role of post offices in financial inclusion.
By Marie-Odile Pilley
You are surely aware that post offices are among the most trusted institutions in many countries. Their position has been strengthened by the financial crisis with many people switching from bank accounts to post office accounts.
Did you know too that there are :
• 1.5 billion existing financial services users through the post office network;
• 500,000 post offices in the developing world with an average of 5,000 micro-customers
• 350,000 rural post offices in developing countries
Indeed, which other network is better positioned to take up the challenge of financial inclusion for a large section of the remaining 2.5 billion un-banked citizens in the developing world ?
However, there is little hard data to argue this self evident case with policy makers.
Postal financial institutions, which can be century old entities rooted in their local culture, often fall under specific regulations. These regulations have evolved especially in the last twenty years, as a result both of liberalization and new public policy initiatives in the field of financial inclusion. The word “Postbank” covers all sorts of organisational and legal structures. Some postal financial services institutions have become, or been merged into, fully fledged publicly quoted banks. Others are privately owned while some remain fully state-owned. Some are part of the post, and the post can be itself an administration. Postbanks can be dedicated postal financial institutions subject to specific regulations. “Postbank” can refer to a brand for banking services provided through the post office by means of an agency agreement with a financial services provider. The brand “postbank” can even be used by banks which do not have much in common with the post apart from an historical connection, but that prefer to keep this name for marketing reasons (trust building and customer retention). Some postal financial institutions have been absorbed into financial conglomerates, themselves dramatically affected by the recent crisis. New “postbanks” were also created and they reflect the diversity of postal financial services institutions.
The value propositions of these postal financial institutions have evolved in parallel with their organisational structure, from traditional postal savings and payment services, to:
• banking services ,
• reinvented fully modernised services
• new services delivered through integrated physical and virtual channels.
Thus, words like “postal savings accounts or giros” may cover services very different in nature.
As a result, new data need to be gathered and a consistent basis for collection developed. This has to take into account the existing information base, which includes:
1. UPU statistics that focus on traditional postal financial services (savings and payments )
2. Central banks: national, regional (EU) and world statistics (CPSS/BIS)
3. Other specialist statistics such as those of the World Savings Bank Institute or microfinance networks
A two-part study on the regulatory situation of postal financial services and related statistics would be more than welcome. This would be a natural complement to the IMF’s Access to finance project pioneered by the UN Secretary General’s Special Advocate for Inclusive Finance for Development
Please feel free to provide any idea about :
• Possible methodologies
• additional sources of information