Interview: How Postal Banking Makes a Difference Around the World

The US had a postal banking system from 1911-1967. Many international post offices still operate postal banks. What is the global landscape of postal banking?

With more than 90 percent of posts worldwide offering financial services, postal operators provide 1.5 billion people with access to basic financial services (payments, money transfers, and savings).

These services ensure financial access for customers in remote, rural, and traditionally marginalized/underserved communities, in emerging and advanced economies alike.

How does postal banking help post offices around the world fulfill their public service mission?

In many countries, the big banks refuse financial services to all but the wealthiest (and most profitable) clients, excluding working people from many economic activities.

In contrast, postal banks typically offer inclusive services, serving the entire community.

Posts are typically well placed to provide these basic services due to their dense network of postal outlets throughout the country.

Postal banks can play an important role in economic development by carrying out a public mission in finance as they do for postal services. The idea is simple: if more people have access to financial services, they can get economically active, creating a positive impact on the overall economy of the country.

How do postal financial services differ from commercial banking?

The post bank is often only offering a limited range of products, mostly focusing on simple accounts. These products satisfy the needs of the vast majority of the population and make them a bank for the people.

By not competing in the same market as big banks, the postal bank is under less pressure to generate big profits.

Mail volumes in the US and around the industrialized world are declining rapidly. Can postal banking contribute to the sustainability of postal services?

Between 2019 and 2021, letterpost volumes declined globally by 13.6 percent, while according to the Universal Postal Union's (UPU) most recent estimations, global postal revenues stemming from parcels and logistics have reached a tipping point where they are larger than letter-post revenues for the first time as recorded in 147 years of UPU postal statistics. With steady e-commerce growth driven by COVID-19 restrictions, global domestic parcel volumes increased by 33.6 percent between 2019 and 2021.

But the growth in courier, express, parcel (CEP) does not outweigh letter revenue decline. Postal operators need to diversify to keep the network running, and many have found financial services to be second only to CEP strategies for new growth.

Some long-established post banks contribute massively to the overall finances of the post. In Japan, financial and insurance services account for 78 percent of the overall income of the Japan Post Group. La Poste France counted 23.4 percent of its revenue from financial services in 2022.

Do you bank with the post? If so, what’s it like?

Yes, I am a customer of PostFinance in Switzerland. The postal bank, together with the cantonal banks, holds the license for universal obligation for financial services.

The products are limited but satisfy my need as [a] small customer. PostFinance has one of the best networks in the country, with affordable services available at train stations, supermarkets, and every local post office. It’s the most affordable and convenient bank for workers and normal people like me.

Do you have any advice for US advocates campaigning for postal banking?

You need to get the commitment of the postal staff and the support of the population.

A post bank shouldn’t be an ordinary bank, but fulfill a public mission for the people by serving their specific needs. Competing with the big players in the financial market won’t be a successful strategy. Offering a limited range of services and products at an affordable price without the pressure of generating massive profits has been a successful strategy for postal banks worldwide.

At the same time the transition must be inclusive and just for the workers. It needs training and good regulation especially when it comes to sales performance, security, and surveillance. Postal banking should be a win-win for postal workers and postal customers alike. ■