Irish An Post to set up new banking service by January
An Post expects its new financial and banking service to be ready by January, with the new entity to offer bank accounts, savings products and insurance services.
According to a new document circulated by the company, potential partners for the project will submit proposals to An Post on September 9th. Following evaluation, a partner will be selected in the autumn and a joint venture agreement will be concluded in January to set up the new service.
An Post said its new “virtual bank” would operate through the post office network. This would represent its contribution to the joint venture, with the partner coming up with the products.
Under provisions of the Postal and Telecommunications Act 1983, An Post needs the approval of its shareholder, the Department of Finance, to enter into joint ventures or partnerships.
A co-ordination group comprised of members from the Department and the Department of Communications has been established to oversee the process. An Post already offers some financial services via its One Direct subsidiary. However this company does not operate directly through post offices, offering its products instead through a series of partners such as Hibernian Insurance, MBNA and ICS Building Society.
The company envisages the new entity having several functions. One of these could see social welfare claimants being paid electronically. Some AIB banking services are available via the post office network but it is unclear whether this arrangement will continue in future.
The circulated document suggests the new service should enter the market in stages in an attempt to build brand awareness and sales momentum. Despite this it envisages offering a range of products from the start, including consumer credit and insurance products.
The document also sums up the current position of the company: “An Post is nearing the end of the first phase of its strategic recovery plan. It now wishes to build on its success in financial services and capitalise on what it believes is an attractive opportunity in the Irish retail financial services market.” The company operates the largest retail branch network and one of the largest point-of-sale systems in the Republic.
“It has a large number of customer relationships, a distinctive Irish brand and considerable regular footfall. It also has a track record of processing high-volume financial transactions,” the document adds.
The document makes it clear that offering a range of financial services is among the best ways of sustaining the post office network into the future. An Post is currently addressing several years of major losses. A cost cutting plan has been negotiated with unions, but agreement has not been reached.
The other central element is raising the price of a stamp from 48 to 60 cent, a 25 per cent rise. However, the postal and telecommunications regulator ComReg has refused to sanction this. It will not sanction the rise do so until it has completed consultations with business and consumer groups. A spokesman said yesterday this process had yet to begin.
