Irish An Post plans for range of bank services
An Post will soon be competing with credit unions when it starts offering a range of banking and financial services, if proposals by senior management are accepted by the board of the company.
In a significant shake-up of its commercial strategy, An Post management believes it should offer banking and credit facilities, ATM services and financial products such as home and life insurance to customers.
The new financial services portfolio will be put to the board of An Post in the coming months. It is unlikely to include mortgages, opting instead to compete at the lower end of the scale with credit unions.
Donal Curtin, the chief executive of An Post, told a Dail committee on communications last week that he aimed to “capitalise on the footfall in our offices and, in particular, develop a financial services portfolio capable of delivering significant levels of profitable business'”. He warned that two key contracts with the Department of Social Welfare and the National Treasury Management Agency (NTMA) are “at risk'”.
These contracts represent 70 per cent of An Post’s retail business. An Post earns 50 million a year from its contract for social welfare payments, but this is under challenge at EU level and may have to go to tender in the future.
The company will also sustain a drop in social welfare payments as a result the Department of Social Welfare’s policy extend electronic access through the banks. On top of this, the NTMA is considering a cut to fees paid to An Post for over-the-counter savings products.
The branch network currently offers some lodgement and withdrawal services for AIB. But the latest plan would see An Post branches assume their own financial services portfolio. It may also consider a partnership with another banking institution.
Approval from the government and the financial regulator, the Irish Financial Services Regulatory Authority (IFSRA), must first be sought before the company embarks on such a strategy.
An Post’s large post office network is the most widely used outlet for over-the-counter utility bill payments and banking services would boost footfall further.
The company had operating losses of 30 million in 2003 on the back of a sharp decline in postal deliveries linked to the rise of electronic services.
It will come close to breakeven for 2004 as a result of a pay freeze and other cost-cutting measures introduced during the year.
The closure of its parcels delivery division, SDS, which lost 12 million in 2003, has sparked opposition from the trade unions.
