postal financial services for anywhere, anytime banking -transformation of...
TRANSCRIPT
Postal Financial ServicesFor
Anywhere, Anytime Banking-Transformation of India Post for Vision 2020-
Hans BoonVice President
Core Counter Core Counter
Fast ‘moving’ transactionsFast ‘moving’ transactions
Financial ShopFinancial Shop
Get help sale & adviceGet help sale & advice
Post Office Network and retail formulasPost Office Network and retail formulas
The Dutch Postal Law requires that – there are a minimum of 2102 postal outlets, of which 902 full service outlets – 95% of all consumers should live within 5 km of a full service postal outlet– all places >5000 inhabitants have a full service postal outlet < 5 km– For every 50.000 inhabitants there should be at least 1 full service postal outlet
Within the borders of the Postal Law, TPG Post and Postbank try to optimally balnace costs with service level by applying specific retail formulas”On top of this basic shared network there are :
– stamp resellers (bookshops, supermarkets, kiosks)– TPG Post Business Point in business areas, dedicated to bulk volume corporates and institutions- not for the individual public) – ATMs (for Postbank cash withdrawals)
Managing the post officesManaging the post offices
Post Offices Ltd
Board of Commissioners TPG - Postbank
Contract Postbank Contract TPG Post
SLA and Cost
Profit and performance
Structure of Post officesa shared mass retail distribution infrastructureStructure of Post officesa shared mass retail distribution infrastructure
50% 50%
CustomersInternet: 170.000*
Call Center: 220.000*
Mail: 365.000*
Face: 650.000*
WAP/SMS: 25.000*
Customer database
Back Office*Customer interactions per day
Multi-Channel DistributionMulti-Channel Distribution
This is PostbankThis is Postbank
Insurance Products4-10%
Market Shares 2002
Acquisition7.5 Million
Private GiroAccount Holders
77.5.5 MilMillionlionPrivate Private GiroGiro
Account HoldersAccount Holders
Payment Products42%
Savings15%
Consumer loans14%
Investment Fundsand Broking Service
4%
Mortgages7%
SME (Payments+Savings)
25%
Postbank, NetherlandsKey figuresPostbank, NetherlandsKey figures
8 million clients (75% of adult population and 80% of companies)9 million cards issued (debit card + chip)6 million payment transactions per day1.3 million On-line (Internet bank) clients0.6 Mobile bank clients>600 million mail items per year>Eur 400 m profit; per employee EUR 100.000
Responsible for all financial services through post offices65% of transactions at post offices: Postbank15% traditional postal transactionsPost offices: nearly 2,300 outlets. Organized in a Joint Venture with TPG Post as a profitable cost-centreLargest mail client
Netherlands and PostbankNetherlands and Postbank
Considered as the world’s most advanced Postbank in terms of market and financial performance
Strong impact of Postbank on:– Accessibility to basic financial services;– Efficiency in the payments system;– Sustainability of the post office retail network
Postal reform sweeps through AsiaPostal reform sweeps through Asia
Postal reform taking shapeChanging scene postal sectorIncreasing volumes Asia PacificOverview Asia postal operatorsIndicated gaps in Asian postal servicesFacing the big issues?Broadening the revenue base?Increasing efficiency?e-Commerce and e-GovernmentAssessment management priorities
Postal reform taking shapePostal reform taking shape
Increasing awareness of Post as a business leading to incorporation of Posts in many countries
– Key issue: what is (or can be) done more or differently with independent position?
Increasing private sector participation in new business markets
– Key issue: which markets are most potential?Trend towards further privatization of postal operatorsGlobal integrators taking away core markets especially in international letters and parcelsChallenge for Posts to change business models
Changing scene postal sectorChanging scene postal sector
Challenge of handling more mail in efficient wayUPU statistics indicate higher growth in Asia Pacific region
Background reform in AsiaBackground reform in Asia
Increasing efficiency ?Increasing efficiency ?
New technology enables Post to improve productivity and efficiencyNew business models requires new management style and approach of human resource management
175,823
na
51,794
85,811
232,759
34,219
129,463
na
89,523
26,250
112,191
367,617
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Australia Indonesia Philippines Japan Hong Kong China SouthKorea
Malaysia Thailand India Taiwan Singapore
Item
s pe
r em
ploy
ee
Mail items per employee - EfficiencyMail items per employee - Efficiency
76,231
na3,546
66,627
79,558
10,942
74,355
10,063 10,955
1,765
46,885
86,421
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Australia Indonesia Philippines Japan Hong Kong China SouthKorea
Malaysia Thailand India Taiwan Singapore
US$
per
em
ploy
ee
Revenue per employee - EfficiencyRevenue per employee - Efficiency
Overview Asia postal operatorsOverview Asia postal operators
China
• Domestic Monopoly• 100% Govt. owned• Reform under consideration
South Korea
• Domestic Monopoly• 100% Govt. owned• No privatisation plans
Philippines
• Domestic Monopoly• 100% Govt. owned• Privatisation adviser appointed
Japan• Deregulated open market• 100% Govt. owned• Privatisation in 2007
Singapore
• Domestic monopoly• Recently privatised IPO
Indonesia
• Domestic Monopoly• 100% Govt. owned• Placed on privatisation list but seen
as medium rather than short term
Australia
• Domestic Monopoly• 100% Govt. owned• No firm privatisation plans
Thailand
• Domestic Monopoly• 100% Govt. owned• Incorporated as per 14 Aug 2003;• IPO in 2008
Indonesia
• Domestic Monopoly• 100% Govt. owned• Incorporated as per 1 Jan 2003 and
privatisation being prepared
Hong Kong
• Domestic Monopoly• 100% Govt. owned• No privatisation plans
Malaysia
• Domestic Monopoly• Privately Listed Company• Privatised in 2001 via trade sale
India
• Domestic Monopoly• 100% Govt. owned• Turn around plan under preparation
Indicated gaps in Asian postal servicesIndicated gaps in Asian postal services
Opportunities in postal marketsOpportunities in postal markets
Value added servicesHybrid mail solutionsLogistics and supply-chain managementAdvertising mail and mail orderPostal financial servicesRetail services
Assessment of management prioritiesAssessment of management priorities
Declining market share Not-competitive
Declining market share Not-competitive
Antiquated servicesPoor service qualityCost inefficient
Antiquated servicesPoor service qualityCost inefficient
Limited investmentsNo access to capitalNo policy priority
Limited investmentsNo access to capitalNo policy priority
Many Postal operators trapped in a vicious circle Many Postal operators trapped in a vicious circle
What future ?Acute need to Break-through with
new services and fresh capital
Worldwide PFS Development Review
TransactionsSavingsAccountsPost OfficesRegion
94 mill$5.7 bill26 mill20,000MENA (6)
7 mill$0.5 bill5 mill11,500AFR (17)
354 mill$83.0 bill335 mill289,000ASIA (6)
65 mill$0.2 bill1.5 mill37,000LAC (7)
2,850 mill$ 4.6 bill16.2 mill106,000ECA (27)
3,370 mill$93.0 bill387.5 mill463,500TOTAL (63)
> 600 million individuals access financial services through post offices
Payments
Savings
Pensions
Insurance
CreditBill Payment
Payments accounts/cards issued in an increasing number of CEE countries; also electronic money transfer networks
Tradition as agent of State Savings Bank replaced with partnerships;
Introduced in several CEE countries
Introduced in several CEE countries
Provided in cooperation with (postal) banks in Romania, Czech Rep., Ukraine..Widely existent, in many countries postal networks are large(st) operator of small value payment transactions
Europe and Central Asia
In most cases, public-private partnerships Institutional
Europe in evolution Europe in evolution Postal Financial Services in the European UnionOne Stop Shopping- Broad Range of Services
CountiresPayments
Accounts/Cards
SavingsConsumer
CreditMutual Funds Insurance
Pension Plans Internet
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Iceland
Ireland
Italy
Luxemburg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
Europe in evolutionEurope in evolution
As a phase in the transformation,Swiss and Italian Posts have
established alliances for specificproduct lines (mutual funds,
insurance)
Transformation ofFinancial Services into abank or an alliance with abank is being considered
Creation of alliancewith banks in
consideration orpreparatory stage
Postbank is asubsidiary of the
Posts
Post Offices are 50%owned by Postbank (ING)
Partnership Post- Bank PFS Division of Posts PFS Subsidiary Company with >50% ownership by Posts
Originally organized within the PostTrend towards ‘partnership’ between Post and (Post) bank
– Alliance/ Contract/JV– Subsidiary
Significant market share in payments and savings
Europe in evolutionEurope in evolutionPostal Financial Services in the European Union/ Western Europe
Countires PFS division PFS Subsidiary PFS Partner Comments
Austria BAWAG- PSK Group
Belgium Fortis Group
Denmark Danske Bank
Finland Sampo
FranceDivision, Asset Mngt by Caisse des Depots et Consigniations
Germany Deutsche Postbank AG
Greece TT; 100%state-owned bank
Iceland Postgiro
Ireland AIB
ItalyBanco Posta and various Financial Institutions
Luxemburg CCP
Netherlands ING (Postbank)
Norway den Norske Banken/ Postbanken
Portugal Caixa Geral
Spain Deutsche Bank (Espania)
Sweden Nordea
Switzerland UBS/ Winterthur
United Kingdom All large banks
Central and Eastern Europethe leap forwardCentral and Eastern Europethe leap forward
Postal Financial Services Overview in The Central and Eastern EuropeBosnia & Hercegovina
Postbank in Restructuring; Raiffeisen Zentralbank acquired Hrvatska poštanska banka- Mostar
BulgariaBulgarian Postbank (Alico+ EFG-Eurobank) has been privatised
CroatiaHrvatska Poštanska Banka will merge with Croatia Bank early 2003
Czech RepublicPoštovni Sporitelna (a division owned by CSOB-KBC)
EstoniaPostipank operated as brand allliance between Eesti Post and Eesti Uhis Pank (Sampo-Finland)
HungaryPostabank in privatisation process; has 30% owners
LatviaPostal Giro Accounting Centre (PNC) as aprt of Latvia Pasts
LithuaniaContracts with various banks for a limited scope of services
MacedoniaPoštenska Stedelnica (limited banking license, majority owned by the post)
Poland Bank Pocztowy (66% owned by the Post)
Romania Banc Post (70% private, EFG-Eurobank)
Slovak RepublicPoštova Banka (11% owned by the Post, in privatisation process)
SloveniaPoštna Banka (38% owned by the Post and 62% by a State Fund, in privatisation process)
YugoslaviaPoštenska Stedionica- in process of being licensed as a full-fledged bank
Middle East North Africa
Payments
Savings
Pensions
Insurance
CreditBill
Payment
7.5 million accounts for salary payments and strong position in cash payments and remittancesStrong penetration (up to 30% of adults) and over 10% of market value, usage high (few dormant accounts)
Access to pensions non-existent;
Access to insurance non-existent, except Morocco
Virtually non-existent but some preparatory activity
Some success in bill payment (cash society)
All state-owned, some as separate divisions, and some product partnerships with private sectorInstitutional
Africa
Payments
Savings
Pensions
Insurance
CreditBill
Payment
0.5 million accounts for salary payments (teachers, military and public servants)Strong penetration (up to 30% of adults) but low usage (high number of dormant accounts)
Non-existent
Non-existent, some small scale pilots
Virtually non-existent, except through some postal banks and small-scale pilots
Widely differing per country, often non existent
All state-owned, some postal banks function as companies separated from PostsInstitutional
Payments
Savings
Pensions
Insurance
CreditBill Payment
Non existent, with the exception of Brazil
Virtually non-existent; Brazil has successfully introduced savings services
Non-existent
Non-existent
Brazil recently developed credit services, meeting strong demandBeyond Brazil existent on a small scale and where new technology exists (Uruguay, Chile, Argentina)
Latin America, Caribbean
Brazil is a public-private sector partnership; in some other cases product partnerships Institutional
Banco Postal, BrazilBanco Postal, BrazilPolicy ideas 1996-1997Feasibility Study 1998-1999 including nationwide market and opinion research) Pilot with 36 Post offices (April 2000-April 2001)Change of regulatory framework allowing post offices to become “correspondent”of a bank (March 2001)Public auction “Banco Postal” (July 2001 Bradesco won all 15 licenses (Sept 2001)Contract negotiations and preparations for implementationLaunch of services in 1,000 Post Offices in March 2002; Product offer includes VISA electron card, and current account and deposit accountSubsequently expansion to currently 5,000 post offices>3.500,000 accountholders, previously unbanked;averagedeposit > US$ 600; Micro finance offered since August 2003; within 2 weeks more than 6,000 contracts; now leader in Microfinance with > 300,000 contractsExpansion to pensions, life insurance as “Seguros Postal”expected to be launched in next 6 months.Further product diversification...
Asia
Payments
Savings
Pensions
Insurance
CreditBill Payment
Few offer services for the payment of salaries
Strong penetration with 335 million accounts but high number of dormant accounts; small product rangeAccess to pensions non-existent; except for pilot projects in India Access to insurance non-existent; except for pilot projects in India, China
Non-existent but being considered in some countries
Exist in several countries, Thailand, China, India, Sri LankaAll state-owned; very diverse models, including product partnerships/ relations with banksInstitutional
China PostChina Post
Thailand Post / Pay-at-PostThailand Post / Pay-at-Post
Vietnam Postal SavingsVietnam Postal Savings
Countries PFS divisionPFS
SubsidiaryPFS
Partner(s) Comments
AustraliaNationwide transaction and sales network for payments, current accounts and deposits
Bangla DeshMainly money transfers and collection, but also savings mobilisation
CambodiaMainly money transfers and collection, but also savings mobilisation
ChinaEstablished in 1986, strong payments and savings function; product scope being expanded through partnerships
IndiaPOSB + money transfer function within the country; new partnerships established- postal finance marts
Indonesiamainly money transfer services and savings bank agency relationhips
IranPostbank established in 1998; being developed as a provider of modern retail financial services also in rural areas
JapanDeposit, insurance and payment services; largest postal financial institution in the world
MalaysiaPrivatised postal operator operates giro and has arrangements with 6 banks, including National Savings Bank
MongoliaPostbank recently established; main focus on corporate financial services
New ZealandPostbank privatised and sold in 1988; new Kiwibank established to provide retail financial services
PakistanPakPostbank provides payments and savings services; credit function under discussion
PhilippinesPhilPostbank provides mainly deposit and transfer function; earmarked for privatisation
SingaporeAfter separation/privatison of POS Bank, a new initiative is launched to introduce financial ser
Sri LankaNational Savings Bank utilises post offices as ancillary network; money transfers done by Post
TaiwanPOSB largest deposit taker in the country; provides also money remittances; earmarked for privatisation
ThailandAfter incorporation of Thailand Post, contract with 3 banks to expand range of services "Pay-at-Post"
VietnamVPSC recently established to develop savings and money transfer services through Post
Japan Post’s Privatization 2007-2017Japan Post’s Privatization 2007-2017
Post Office Network Co.
Japan Post
Postal Savings Bank
Postal Life Insurance Co.
Holding In 2017 <30% state ownership
Third Parties’
Services
Phased restructuring ensuring the sustainability of the postal network as access point
Postal Savings Bank obliged to used all post offices for delivery of its financial services
DiagnosisDiagnosisThe Study reviewed financial service operation through postal networks in 63 developing countries, with a total of 463,500 post offices, (91% of all post offices in developing countries.
Postal networks are uniquely large. In 73% of the countries there are more post offices than bank branches, agencies and micro-finance outlets together. As a result of their historic role as component of the public communications and information infrastructure, post offices tend to be evenly spread over the country, and much more strongly represented in rural areas than banks.
Private-public partnerships between postal operators and private financial institutions have emerged in 15 countries. In the past 8 years postal banking partnerships have expanded access to more than 12 million poor and low-income individuals in both rural and urban areas with a full range incl credit and insurance on a competitive basis
DiagnosisDiagnosis
In about 50 developing countries, the historically evolved postal financial operations provide access to an estimated 600 million individuals mainly for money transfer services and small savings. This concerned in 2002 370 million postal savings accounts with a total balance of more than US$ 90 billion and 3.4 billion cash-based money transfer operations (including international remittances). In view of their network size and accessibility, the Study also finds that post offices leave much of their potential in financial service delivery to the poor and in rural areas uncaptured. Nevertheless, in 54% of the cases reviewed financial services are the single largest revenue source for the postal operator. In more than 70% of the cases, revenues from financial services are estimated to cover the expenditure of the entire post office retail network and to produce profits that help to cover losses in the postal mail services.
Historic models need to be reformedHistoric models need to be reformed
Features/SymptomsPoor service qualityLoss of market share; less than 3%Increasing dormant accountsHigh cost; inefficientLosses in asset managementInternal clashes between Post and provider of Postal Financial Services
ReasonsLack of response to customer needs due to legal and institutional frameworkLack of business orientation -unstable environmentInadequate investments in product and IT developmentLack of credible partnersConflicting missions (post-bank)
Typical product featuresState Guarantee on DepositsTax exemptLow minimum deposit requirementAvailable at all post officesLimited fragmented product approach
Typical institutional featuresOwned by Ministry of Finance or specific fundOperated and managed by PostsNot supervised by Central BankResources invested in State Treasury / Gilt-edged titles
Bypassing Capital and Money markets
Reform needs to be based on an in-depth economic analysis of the postal operator and its markets... Reform needs to be based on an in-depth economic analysis of the postal operator and its markets...
Post
Financial Services
(Money Orders, Bill Payments, Savings, Cash Management)
60% revenues
Retail and Internet Services
20% revenues
(Reserved Area)
Letters, Parcels
15% revenues
Post Office (Retail) Network
40% of total cost
Postal Logistics & Transport
Network
60% of total cost
(Liberalised Area) MailExpress, Courier,
Advertising5%revenues
Public postal operators tend to be vertically integrated structures, and diversified service conglomerates of which mail under the USO generates only a small part of revenues, which cannot sustain the postal logistics infrastructure nor a dense postal retail network.
.
From an economic point of view, in many cases, mail is not the core business of the postal operator. Through intransparent accounting, the USO for mail services is financed from revenues from other services
Market Prospects ?Market Prospects ?
Market environmentMarket environment
High-end marketProfile: payment account with savings accountcredit card and investment account
Poverty line
B&C market Profile: majority has savings account,no payment account
D marketProfile: no savings account,no payment account
Market environment (II)Market environment (II)
Volume
Value
Low
High
Low High
Bank A
Bank D
Bank B
Bank C
Bank E
Challenge (I)Challenge (I)
High-end marketProfile: payment account with savings accountcredit card and investment account
Poverty line
B&C market Profile: majority has savings account,no payment account
D marketProfile: no savings account,no payment account
Strategy outline: migrant remittancesStrategy outline: migrant remittances
Portal
Post Office
Post OfficePost Office
Post OfficePost Office
Post Office
Post Office
Phase 1
Gateways to International
Payments
Strategy : payroll/payment servicesStrategy : payroll/payment services
PONSCounter ATM
Post Office
Post OfficePost Office
Post OfficePost Office
Post Office
Counter
Post Office
Counter
Phase 2
Strategy : other (postbank) servicesStrategy : other (postbank) services
PONSCounter ATM
Post Office
Post Office
Counter
Post Office
Post OfficePost Office
Counter
Media kiosk
Paymentterminal
Media kiosk
Paymentterminal
Post Office
Counter
Phase 3
ATM
Counter ATM
Internet café
Internet café
+ Other
Postbankservices
A learning curve- for Post, its partners and clientsA learning curve- for Post, its partners and clients
Time
Functionality
(inter) national money transfers
+ Payroll services, Internet access, e-mail, service portal
Current situation
+Insurance, mutual funds, securities, credit
+savings, /(bill) payment services, EFT POS
+loyalty/ticketing/transport applications
Value Added Postal ServicesVirtual Mobile Operator (VMO)
Internet Service Provider (ISP)
An ICT based “overlay” network for the Post OfficeAn ICT based “overlay” network for the Post Office
Physical network
Electronic network
Services Financial services
Financial Services can trigger the development of Post Offices as ICT based “portals”, starting with the introduction of basic financial services that can earn back the initial investments
Physical network
Electronic network
Services Other e-services
And provide the infrastructure towards other e-servicesAnd provide the infrastructure towards other e-services
Post Office“Portal”
PostTelephone
Banking
Government
Postcards
Fax
And help to reposition Post Offices as Portals-And help to reposition Post Offices as Portals-
Service Access Points
to a broad array of (e) services
Payments
Profile of the Financial Services offered through the Post Profile of the Financial Services offered through the Post
Customers:Focus on local consumer market and corporates (employers, utilities, retail chains)Products:Full range of standard financial products and servicesDistribution:Direct marketing approach via multichannel distributionInstitutional:Various options/model, trends towards partnership with fully licensed financial institutions
Consumer: Post (bank) is Different!Consumer: Post (bank) is Different!Traditional bank
SegmentedHigh entryPersonal sellingBroad range ofspecialist productsIntransparent
Own branches
Short opening hours/ 5 days
Post(banking):a viable solution for mass financial services
Post(bank)Mass scaleLow entry“Anonymous”Broad range of standard productsTransparent
Post Office with multichannel
Long opening hours/ 6 days
Direct BankSegmented High entry“Anonymous”Broad range of standard productsTransparent
Internet/Phone
24 hours/ 7days
Growth inaccounts
accountholders
Postal cards/accounts: the gatewayPostal cards/accounts: the gateway
Mortgages
Consumer credit
Investment fundsand discount broking
Savings
Payment products
Insurance
Retail Concept Retail Concept
Convenience• Easy access and
low threshold• Standardized products
Competitive price• Free (basic) payment
package• Value for money
Credibility• Good, efficient service• Decent (no fine print)• Reliable (mail and IT)
Crystal clear products• Full basic range• Transparent product
rangecontinuous communication pressureexcellent service qualityintegrated customer approach
++
+
... The account is our ‘shop’ without thresholds, accessible for everybody
Multichannel DistributionMultichannel Distribution
Mass media
Internet PC Based Banking
ATMs
Post officesTelephone
Moving ForwardMoving Forward
Key ObjectivesKey Objectives
Expansion of the range of financial services into a fully-fledged financial institution and the set-up of a regulatory and governance framework in compliance with the financial sector;Sustainable, competitive package, that also meets public sector policy objectives (access to financial services, financial literacy, efficiency..)Transparency in accounting between postal (mail) and postal financial services and the cost/revenues related to the postal network;Economic sustainability of the postal network after the set up of the financial institution.
Key Issues (I)Key Issues (I)
Regulatory Framework Financial ServicesCorporate GovernanceManagement and managerial autonomyHuman Capital and CapacityBuildingAccess to finance to fund ModernisationChange Management and Project Implementation capacity
Key Issues (II)Key Issues (II)
Cross-coordination of Government’s sectoralpolicies (Financial, ICT and Postal);Commercialisation and building sustainable public/private sector partnerships based on a Corporate Strategy (Organic Growth vsIn/Outsourcing); Management accountability;
From strategy to action From strategy to action
Strategy/Action Plan
Phased rollout proliferation and service diversification
4-7 years
Pilots- Showcasesprototyping; demonstrating viability
1,5 year
From Strategy to Action PlanFrom Strategy to Action Plan
Market analysis and DiagnosisStrategic Concept Short-term steps
– Optimizing current PFS– International Payments– Consolidated Cash Management– Building of a Business Unit Financial Services within Post with Cost-Allocation/MIS
Implementation of the Strategy– Pilots– Stakeholders’ approach– Building Partnerships with other parties– Finance– Regional and International Cooperation