The Postal Bank: simply a competitor to traditional banks or a major player committed to financial inclusion?
I. The « Postal Bank» concept
The concept of ‘’Postal Bank” refers to a financial institution that differs from traditional banks both in terms of objectives and characteristics:
In terms of specific objectives, the main aims of the Postal Bank in developing countries are to:
- Broaden financial accessibility by offering banking services to as many people as possible, particularly those who are underbanked or in financial difficulty.
- Strengthen social inclusion by committing to promoting financial inclusion through services tailored to customers’ needs, such as free accounts and microcredit.
- Supporting local development by investing in local and sustainable projects, thereby supporting the local economy.
- Promote financial education by offering services and tools to help customers better manage their money and understand financial products.
Moreover, in terms of characteristics, the Postal Bank differs from traditional banks on several levels:
The Postal Bank is often integrated into the postal network, which gives it a firmer foothold in rural areas or areas less served by traditional banks.
It privileges an economic model based on public service, with objectives of social profitability rather than strictly financial.
The Postal Bank is developing a varied range of financial products, from current accounts to loans, while maintaining a customer-focused approach.
It is often perceived as having a more advantageous pricing policy, with reduced charges for its services.
In the financial landscape, the Postal Bank is therefore positioning itself as a player in responsible finance, seeking to combine economic profitability with social commitment.
II- Postal Bank and Traditional Bank
To what extent is the Postal Bank positioned at the crossroads between increased competition for traditional banks and a player committed to financial inclusion?
The Postal Bank can be seen as a competitor to traditional banks in that it:
- Offers a full range of financial services, from current accounts to credit and insurance, making it competitive with traditional banks
- Offers attractive rates, which attracts cost-conscious customers.
The Post Bank is also a Financial Inclusion player, as it:
- Offers easy access to banking services, thanks to an extensive network including in areas less served by traditional banks.
- Offers specific solutions for people in precarious financial situations, such as free accounts and reduced-rate loans.
- Engages in financial education initiatives to help customers better manage their finances.
III- Experiences in postal banking
Here are a few examples of postal banks operating successively in mature and developing economic and financial environments.
- In Europe :
With ‘Post Finance’, the Swiss postal bank has attracted more than 3 million customers and manages more than 140 billion Swiss francs in assets. Its digital approach has boosted the use of online services, which account for around 80% of transactions.
The ‘Banque Postale’ has registered 11 million customers in France by 2022, with significant growth in access to banking services for vulnerable populations. It has also introduced solutions such as the ‘deposit account’, which is accessible regardless of income.
‘Poste Italiane’ has launched savings products that have enabled 12 million people to save, while generating over €70 billion in savings in Italy in recent years.
- In sub-Saharan Africa :
PostBank has contributed to financial inclusion by serving more than 10 million customers in South Africa with low-cost deposit accounts. More than 70% of its customers never had a bank account before.
‘The Uganda Postbank’ saw an 80% increase in its customer base in 2020, reaching 1.5 million accounts. It offers microfinance services that specifically target local farmers and entrepreneurs.
Postbank of Cameroon has developed money transfer services that have seen transactions reach FCFA 50 billion by 2021, mainly serving migrant workers.
In North Africa:
‘Barid Bank’ in Morocco has around 1.5 million customers and manages more than 30 billion dirhams in assets. It is positioning itself as a key player in financial inclusion, especially in rural areas.
It has launched accessible savings products, such as the ‘Barid Bank Account’, which allows customers to save with very low initial amounts. By 2022, total deposits will have exceeded 5 billion dirhams.
Barid Bank has introduced money transfer services with a network of over 1,300 branches.
Transfers reached around 8 billion dirhams in 2021, facilitating transactions for Moroccans living abroad.
Barid Bank’s mobile application has recorded more than 500,000 downloads, offered remote banking services and met the growing demand for digital solutions.Bas du formulaire
IV- Tunisia: Opportunities and challenges of the Postal Bank Project:
With the ‘Daba’ product launched in 2019, the Tunisian Post Office has helped to open more than 500,000 digital accounts in two years, facilitating access to financial services for young people and rural populations.
The aim of the Postal Bank project, which is part of a wider drive to strengthen financial inclusion and modernize Tunisia’s financial infrastructure, is to offer basic banking services such as current accounts, loans and money transfer services.
The creation of a Postal Bank in Tunisia offers a number of advantages, including:
- Financial inclusion: The Postal Bank could play a key role in financial inclusion by offering banking services to people who do not have access to traditional banks, particularly in rural and remote areas.
- Accessibility: With a network of existing post offices across the country, Postal Bank could benefit from an already established infrastructure to offer financial services. This enables greater geographical coverage at lower cost.
- Reduced Costs: Postal financial services can be less expensive to manage than those of traditional banks, which can mean lower charges for customers.
- Support Local Economy: By providing financial services, the Postal Bank could help stimulate the local economy by facilitating access to credit and other financial services for small businesses and individuals.
- Modernizing Postal Services: Integrating financial services can modernize and diversify the activities of post offices, making them more relevant in a digital world.
The success of such a project nevertheless requires a number of different constraints to be taken into account, such as:
- Infrastructure and Technology: Although post offices are widely available, they may require significant upgrades in terms of technology and infrastructure to offer modern and secure banking services.
- Training and Human Resources: Post office staff will need to be trained to provide banking services, which may require an investment in time and resources.
- Competition with Traditional Banks: Postal bank will need to differentiate itself from traditional banks and other financial institutions to attract customers, which can be a challenge in a competitive market.
- Regulation and Supervision: Postal Bank will have to comply with strict financial regulations and be supervised by the Tunisian financial authorities, which may add administrative complexity.
- Security and Data Protection: Managing financial transactions requires solid security measures to protect customer data and funds. Ensuring cyber security can be a challenge, especially with limited resources.
- Public Acceptance: Public perception of postal banking can differ, and it may be necessary to work on customer awareness and confidence.
In short, the Postal Bank in Tunisia has the potential to transform the financial landscape by offering essential services to a greater proportion of the population.
However, it will have to navigate through challenges related to infrastructure, training, regulation and competition to succeed.
A successful project requires close collaboration with the Tunisian Post Office and the other key players involved, namely:
- Public authorities with an interest in improving financial inclusion and economic development. Government authorities often provide the regulatory framework and strategic direction for the project.
- The Central Bank of Tunisia, which plays an important role in the regulation and supervision of financial institutions in Tunisia. It is responsible for establishing the rules and standards with which the Postal Bank will have to comply.
- International Financial Partners, which may be involved as partners or lenders. They often provide technical, financial and strategic support to help set up the project.
- Consultants and Experts in financial services and technology who may also be engaged to provide advice on the implementation, strategy and technical aspects of the project.
V- Conclusions and Recommendations:
The project to set up a Postal Bank in Tunisia faces a number of challenges and obstacles that could impact on its implementation and success.
- Infrastructure and Technology: Existing post offices may require major renovations to integrate modern banking services. This includes updating IT systems, improving connectivity and securing transactions.
- The development and integration of digital banking solutions requires considerable investment in technology and cyber security to ensure the protection of data and transactions.
- Training and Skills: Post office staff will need to be trained to offer banking services, which represents a significant cost and logistical challenge.
Attracting and retaining financial and technology experts in a postal environment can be difficult, especially if salaries and working conditions are not competitive.
- Regulation and Compliance: Complying with local financial and banking regulations can be complex and requires constant vigilance to comply with the requirements of supervisory bodies and international standards.
- Funding and Resources: Setting up a Postal Bank requires significant investment in infrastructure, technology and training, which can be a financial challenge. Return on investment may take time, and achieving profitability may be a challenge initially, particularly in less densely populated or economically less developed regions.
- Operational and Security Risks: The postal bank will need to put in place effective mechanisms to manage financial, operational and security risks.
With the integration of digital services, cyber security risks become more significant, requiring robust measures to protect customer data and transactions.
By overcoming these obstacles with well thought-out strategies, appropriate investments and effective management, the Postal Bank project in Tunisia could offer valuable services and improve financial inclusion in the country.