In many countries, postal services are recognizing an opportunity to increase revenue and provide value added services to their clients. In fact, competition means that letter-post volumes and revenue are stagnating. Email, courrier services and other electronic substitution mean that additional revenue streams, such as providing postal financial services could represents a sector of activity that is still not widely exploited. With outlets in prime locations and often underutilized capacity postal companies are in a unique situation.

Canada Post have always provided money orders and other financial services. Around the world according to documents provided by the Universal Postal Union, "More than 160 postal administrations currently offer basic financial services,including money orders, transfers, post cheques and postal savings accounts. Others also supplement their range with pension payments, credit cards, life insurance and consumer credit. And where legislation permits, the Post even operates a full-scale bank."

For many Posts, financial services generate an average of between 25% and 35% of their total revenue. Others estimate that these services represent up to 65% of their income. Money transfers – some 10 billion are made worldwide every year – and postal savings services– over 700 million account-holders worldwide and deposits totalling more than three trillion USD – are among the most lucrative services. And that’s leaving pension payment distribution out of the equation.Services that are indispensable. Universal Postal Union (UPU))

The French Post actively delivers financial services and revenue from this segment represent 23% of La Postegroup turnover. Currently they have 23 regional financial service centres,7,100 specialized financial advisers and 17,000 contact points. La Poste has 28 million customers,12 million of whom are active.The latter generate current account funds of 200 billion EUR, accounting for four billion EUR of the French Post’s net banking product.Having recently added home loans and providentloans to its range of giro, savings and life insurance services, the French Post now has plans to launch consumer credit, mortgage loans without prior savingsand P & C insurance. Its objective is to ensure customerloyalty by proposing a fast-growing array of servicesthat customers currently have to obtain from banks.“Financial services are essential to the Post. It must find ways of providing them where they do not exist, ascompetition and deregulation are causing postal activityto fall off,” says Patrick Werner,Director General for La Poste’s Financial Activities and the Public Network ,in justifying this expansion. (UPU)

The same message can be heard from Swiss Post,where 22% of turnover (6,287 billion CHF in 2002) is generated by financial services, making it the second largest activity after mail collection and distribution.Faced with a slight downturn in priority mail andcross-border international mail in 2002, a trend electronicsubstitution might well reinforce, Swiss Post isintensifying its financial activity. For many years, it has provided account-based services, and May 2003 saw the launch of mortgage loans in collaboration with oneof the country’s major financial institutions. Swiss Postalso hopes to add to its product mix loans for public authorities and business loans for small and medium sized companies. In due course, it fully intends to become a fully-fledged postal bank, like Deutsche PostbankAG and New Zealand’s Kiwibank.

Some of the opportunities for postal services lie in money transfers and micro credit retail banking. One of the main advantages postal authorities have over traditional banks is unequalled access to remote populations.

An interesting case study with respect to money transfers is the Peoples Own Savings Bank of Zimbabwe (POSB). In speaking with George Agu, Director of Sales for a banking solutions vendor based in Southern Africa, "POSB has evolved from an uncompetitive organization to about the best and most competitive in Zimbabwe. They are one of the countries only institution capable of managing their customer efficiently as they can combine remittances of foreign currency from overseas with a range of products geared to remote regions. This is because of their widespread branch network."

According to statements found found in UPU documents, Tetsuo Onda, General Manager of International Business, Postal Savings Business Headquarters of Japan Post, and new Chairman of the Postal Financial Services Project Team, quality of service is a decisive success factor, especially for postal administrations operating in a deregulated environment. The Posts must ensure an extremely high level of service by weighing in sufficient human and financial resources and the latest technology, he says. (UPU)

One of the organizations geared to supporting postal banking is the UPU’s International Financial System (IFS). This service was launched in 2000 and provides support for international money order transfers to several countries. At the same time, the UPU has created a Quality Charter defining service standards for electronic and paper money orders. According to UPU, to date, 57 countries have signed the Charter, 42 of them without any restriction.

According to statements made by Jean-Luc Demierre, Head of International Postal Relations with Swiss Post Finance and Chairmanof the POC Quality and Regulations Sub-Project Team, this Charter is important because it clearly spells out consumer requirements in relation to trans-border money transfers. It also recalls signatory countries’ obligations with regard to these requirements. The latter have evolved considerably over the years, he says, without many postal administrations having responded to these changes. (UPU)