Irish An Post seeks partner for new move to banking
An Post has written to 28 financial institutions in the first stage of a process which could see the post office network restructured as a fully-fledged bank by sometime next year.
The postal company is hoping to leverage off its network of 1500 post offices and its reputation as a safe and reputable company, in order to take a slice of the most profitable banking market in Europe.
An Post wrote to five indigenous and 23 foreign banks earlier this week asking them to submit initial proposals within 10 weeks. Based on these submissions, the list of possible partners will be reduced to less than 10. Detailed discussion will then take place with the short-listed banks and the final partner is expected to be chosen by the end of the year.
Irish post offices deal with 1.7m financial transactions every week and handle more than 13bn in cash every year. They already have a significant savings business with 2.2bn invested in savings certs and a further 1.5bn put away in bonds. An Post also offers a limited number of financial services on an agency basis, through its One Direct subsidiary.
But with the traditional business falling off as less people use traditional postal services and more social welfare recipients choose to have their payments made directly into their bank account, the future of the post office network is in doubt.
Derek Kickham, the commercial director of the semi-State said: “An Post needs to tap into strategically significant sustainable revenue streams to counter the decline of our existing services. Financial services naturally complement the brand, infrastructure and retail network which An Post already has.”
Irish banks and insurance companies made profits of 3.4bn last year. Were An Post to take even 1pc of this amount it could have a significant effect on the sustainability of the post office network.
An Post is hoping to provide only basic services aimed mainly at the lower end of the market, which is less attractive for traditional banks.
Most banks aim their services at the ABC1 socio-demographic, taking in professional and skilled workers.
An Post, on the other hand, has a strong relationship with many in the C1D categories, which includes social welfare recipients.
It is also trusted by the older generation, many of whom have significant savings – another market which might be tapped by the new joint venture.
An Post is the traditional starting point for children beginning to save, and until now they have been forced to opt for a commercial bank once they reach adulthood.
