Hans Boon, managing director at PostFinance International Development, presented additional postal financial inclusion models with special reference to Russia – the first case study of the session. “Rural post offices are portals for financial access, inclusion and literacy,” emphasized Boon. “In the Russian Federation their network is much denser than that of banks, with a post office per 6,000 but only one bank branch per 150,000 inhabitants.” Because many people in the countryside had no access to banking cards, they effected daily financial operations through post offices.
As a result, posts processed at least the same number of transactions as banks. By contrast to low mail volumes, financial services were thus the largest revenue source of Russian posts. In spite of this, recent reports by CGAP, the Bank of International Settlements and the World Bank tended to underestimate the role of posts in financial inclusion due to missing data, Boon said.
Russia initially implemented the historical model of a postal savings bank (1841) and later worked under agency agreements with a bank. This allowed the Russian Post to operate outside direct competition of the financial sector, but this also entailed many limitations on postal financial activities, according to Boon. Today 40,000 post offices in Russia offer access to payment services, the collection of insurance, and consumer credit. The creation of a separate postal bank, however, is presently not supported by the Russian Central Bank.
In order to avoid marginalization, Posts had to develop cost-efficient and innovative approaches to financialservice provision, said Boon. A promising but challenging way of doing this was post banking as public-private partnership. “Conditions for this are very rarely ideal,” he admitted. In the public sector there was a need for crosssectoral policy coordination, a regulatory framework for both the postal and the financial side, transparency and corporate governance. On the private sector side, qualified institutions prepared for strategic long-term commitment, a viable business case, resources and synergy potential were essential. “Brazil is lucky in these respects to have Bradesco,” said Boon. “In this approach there is no quick return on investment; there is a lot of commitment involved that no regional or local bank can supply.”
An extra dimension in the challenges to lie ahead was the incorporation of new technologies, such as mobile phone banking or e-banking – topic of the next presentation. “For unlocking the postal potential we need to think and move out of the (mail)box,” said Boon, adding that new business models to be considered might include postal banking across national borders.
Victor Dostov, chair of the Electronic Money Association (EMA), illustrated how Posts and electronic money institutions (ELMI) could benefit from collaboration. “Russia is a great example in which non-banking operators play an important role,” said Dostov. “In mobile phone top-ups, only 6 percent of payments are done through traditional banks and 70 percent through automated kiosks.” About 200’000 kiosks nationwide combined a touch screen with a cash-in function to allow utility payments. An average transaction value of 15 USD led to a monthly turnover of
1 billion USD, the business yearly growing by 30 percent, said Dostov.
While the use of banking cards was largely limited to ATMs, Russia’s big webmoney companies had four million clients, and Internet payment (e.g. via Paypal) was quite common. By incorporating existing technologies posts could avoid direct competition with banks and ELMIs, while saving costs for own IT development, Dostov illustrated. Due to the great popularity of automated electronic payments, posts could e.g. improve their public image by placing kiosks in their branches. The inclusion of Internet and mobile services in post offices would allow deposits or withdrawals from virtual accounts, and would be a useful tool for client identification.
To date, collaboration was still inefficient, however, as postal operators were hesitant to implement new technologies, service quality varied, and specific regulation was missing. To improve the situation postal authorities should actively participate in regulation development, defending the interests of posts and issuing recommendations for collaboration with ELMIs, said Dostov. “Finally, it would be good to develop and disseminate best practice cases.”