Mapping Financial Opportunity: Can Post Offices Increase Access to Financial Services?

A post by:
Mathieu Despard, University of Michigan
Terri Friedline, University of Kansas

Does the availability of financial services and post offices vary by geography and community characteristics? This is one of the questions we’re trying to answer through the Mapping Financial Opportunity project.

The short answer is yes. We recently released five research reports concerning US households’ access to financial services. In one of our reports, Can Post Offices Increase Access to Financial Services?, we find that 37% of all zip codes in the US lack either a bank or credit union. Not surprisingly, 87% of these “banking deserts” are in rural areas. The good news is that the density of post offices in these deserts is 1.11 per 1,000 people, compared to only 0.27 in non-deserts. This means that post offices are abundantly located in places where financial services are lacking.

Yet, even in non-deserts – zip codes where there are banks, credit unions, and alternative financial services (AFS) providers – post office locations might play a role in improving access to financial services. This is especially true in rural and/or highly impoverished areas as well as most of the western region of the United States. On a very broad scale, post offices could fill gaps in rural and impoverished areas because the density of post offices is often much higher than the density of banks and credit unions. According to our study, for instance, post office density is nearly double bank or credit union density in high poverty zip codes where 20% or more of residents live in poverty. Moreover, in “extreme poverty” zip codes – where 40% or more of residents live in poverty, post office density is 3.5 times higher than bank or credit union density.

On a regional scale, post offices are best positioned to fill financial service gaps in the West, which stands out from other parts of the country as having the highest average density of post offices and the lowest density of banks and credit unions. This region also has almost as many AFS providers (e.g., payday lenders) as banks and credit unions.

Of course, there’s growing speculation that mobile banking will render physical bank and credit union branches obsolete. Yet there are technical obstacles and consumer preferences that may prevent individuals from using these new technologies. On the technical side, broadband access in rural areas lags far behind access in urban areas – the very parts of the country that arguably have the greatest potential to benefit from some form of postal banking. On the consumer preference side of things, some individuals have concerns about the privacy and security of doing things online while others may simply prefer to make their financial transactions face-to-face with a bank teller instead of relying on their technology. Also, in-person interactions with bank tellers remain high on the list of how people access their accounts despite the efforts of the FinTech industry to promote their mobile technologies.

As long as these preferences for face-to-face interactions remain prevalent, the USPS has the potential to play a role in ensuring that everyone in the US has access to financial services. But what role should post offices play? This is a challenging question to answer because it depends on the capacity of the USPS to offer (or partner with an existing financial services provider to offer) the financial products and services people need – especially low-income people.

This of course begs the question of what products and services people need. The location of financial services is just one part of the equation. The other part is the types of products and services that are offered and whether these products and services help households manage their finances, cope with unexpected life events, and build assets for the future. These products and services are further defined in the Bank On National Account Standards within the Cities for Financial Empowerment fund. According to these standards, people need access to affordable short-term credit or savings when a financial emergency strikes, particularly as an alternative to payday lenders which charge exorbitant interest rates – an average of 339% – and trap consumers in a cycle of debt.

All households need safe and affordable financial products and services to manage their resources, cope with the unexpected, and build a better future. Accessing these products and services is important for all US households to achieve financial security. Given the widespread distribution of the USPS in areas with limited access to banks and credit unions, postal banking is one strategy to consider for ensuring that we reach this goal.

Mathieu Despard is an Assistant Professor at the University of Michigan School of Social Work and a faculty associate with the Center on Assets, Education, and Inclusion at The University of Kansas School of Social Welfare and the Center for Social Development at Washington University in St. Louis. He can be contacted by email at or followed on Twitter @DespardMat.

Terri Friedline is the Faculty Director of Financial Inclusion at the Center on Assets, Education, and Inclusion, a Research Fellow at New America, and an Assistant Professor at The University of Kansas School of Social Welfare. She can be contacted by email at or followed on Twitter @TerriFriedline.


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