Banking partner deal near for UK Post Office's
The Post Office is close to signing a banking partner, which will enable it to go head-to-head with the clearing banks and supermarkets to sell personal loans, credit cards and savings products.
David Mills, the man who founded First Direct and is now chief executive of the Post Office network, will take responsibility for the changes, which are designed to make branches more commercial.
The Post Office’s first financial product, an unsecured personal loan, will go on sale in October, Allan Leighton, chairman of the Royal Mail, told the annual conference of the National Federation of Subpostmasters in Scarborough.
Mr Mills said that he was negotiating with several financial institutions whose products the Post Office will sell under its own brand.
The Post Office needs to find new sources of revenue as the Government’s decision to pay social services benefits directly into bank accounts will reduce the need for many people to visit post offices.
The introduction of the Universal Bank in April was intended to mitigate the impact, but take-up of the accounts has been slow. Mr Mills said that of the 2.7 million claimants contacted by the Department of Work just 60,000 had a Universal Bank card, though 300,000 more have applied. In total, 13 million pensioners and benefit claimants will be transferred to direct payment over the next two years.
Introducing financial services products is part of Mr Mills’s strategy to bring the Post Office back into profit.
Without the initiative he has said it would take five years to turn around the Post Office. By introducing financial services sales he expects to cut that to three years.
