UPU: Post office potential for financial inclusion “underused”
The world’s post offices now provide banking services for more than 1bn people – but their potential to aid the economic development of nations is being “underused” according to new research from the Universal Postal Union. The UPU issued a report at its Congress in Doha, Qatar, yesterday, stating that 51 postal operators provided 1.6bn deposit and savings accounts as of 2010.
The report also suggested that several hundred million people without a bank account also often use postal operators to undertake basic payment transactions.
The world’s postal operators offered 662,000 contact points in 2011 – more than the 523,000 bank branches and ATMs available worldwide. In lower-income countries in particular, post office networks can be more than 50% larger than the networks of all banks combined.
Yet the UPU report, written by UPU financial inclusion expert Alexandre Berthaud and financial inclusion consultant Gisela Davico, said the global postal network was being underused considering its potential for financial inclusion.
Partly, this underused capacity was the fault of postal operators for not offering financial services across their whole networks, the report suggested, with 23% of postal operators providing financial services only in select post offices.
But the UPU report suggested that at least 500m unbanked people could be included within the global financial system over the next 10 years if the other 141 national postal operators decided to offer postal banking.
This situation is “slowly changing”, said the study, but it said financial inclusion was not always considered a core part of a postal business, while some postal operators may deprioritise efforts at financial inclusion because of their own financial struggles – the UPU states that only 65% of postal operators worldwide are profitable.
Champions and technology
The UPU study highlighted the importance of individual governmental or postal “champions” to drive forward the issue of financial inclusion, and also stressed the need for automation and technology in allowing postal operators to run competitive financial services.
“The use of a management information system for postal financial services with all the operational data gathered in a single system can not only greatly facilitate strategic decision-making, but also limit the risk of fraud,” said the report, which said 63% of 123 operators surveyed were now using a management system for their financial services, including most recently Pakistan Post, which has just installed a $800,000 USD centralised IT system.
In this area, posts were “lagging” behind banks, it said, which are virtually all equipped with such technology.
The UPU report called on governments to invest in postal operators to support the spread of postal banking, and encouraged central banks to develop regulatory frameworks to allow post offices to foster financial inclusion.
“If 51 postal operators offering savings accounts can bank a billion people, the other 141 member countries of the UPU, which do not offer savings services – including strongly-populated countries such as Nigeria, Russia, Mexico, Ethiopia or the Democratic Republic of Congo – could easily provide a gateway to financially include at least 500m unbanked people directly or through partnerships with banks,” the UPU report concluded.
Financial services accounted for almost 12% of global postal revenues – or $304bn – in 2011, according to UPU figures. In several countries, including China, Italy, India, Tunisia and Bangladesh, financial services represent more than half of the national post’s revenues.
The UPU said yesterday that financial services offer new growth opportunities for posts suffering from declines in letter volumes.
