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Postal financial inclusion discussion paper: graphs and tables

Postal financial inclusion discussion paper: graphs and tables

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Table 1: Summary overview of Postal banking models and Financial Inclusion

​ 

Number of countries

Model / Status

Providing access to:

52

Corporatized, licensed PFIs

 

  • 1 billion clients with 1.8 billion accounts

  • 0.4 billion users of agency services

24

Corporatized, licensed FIs

agency banking via post offices

  • 0.4 billion users of agency services

  • N.D. as regards clients with accounts

24

PFIs in transformation with

untapped potential

  • 100 million clients with accounts

  • 100 million users of agency services

>30

Postal networks with a potential to be leveraged in agency banking to expand access

6

Corporatized, licensed PFIs fully digitized, not using post offices anymore

mission to financial inclusion and cashless money completed: DK, EST, FIN, N, NL, S


6

PFIs terminated; market potential perished in view of competition and digitalization

5

Postal networks sharply reduced -no specific potential to add to financial inclusion

 


Table 2:  List of 51 countries where postal banking is operated by a “Postbank” or PFI

 

CountryPFIClient AccountsPost officesPostal Agents postal network
1AngolaBanco Postal63669
2ArmeniaConverse Bank/Haypost0880880
3AustriaPostsparkasse3,500,0004541,3381,792
4AzerbaijanAzerpost35,6001,4851,485
5BelgiumBpostbank1,000,0006646801,344
6Bosnia and HerzegovinaNova Banka616212828
7BotswanaBotswana Savings Bank125103228
8BrazilBanco Postal10,000,0006,4955,59612,091
9CambodiaPostbank 542983
10ChinaPostal Savings Bank China1,273,350,15438,25015,62153,871
11CongoBanque Postale3636
12Côte d'IvoireBanque d' Abidjan1991200
13CroatiaPostanska Banka610,0001,0171,017
14Czech RepublicPostovni Sporitela2,100,0003,0553273,382
15FranceBanque Postale11,500,0008,8358,29817,133
16GabonPostefinance MFI200,0000
17GermanyPostbank14,000,000224,00024,002
18GreeceTT Postbank1,000,0007357201,455
19Guinea-CPosteFinances 2626
20IndiaIndia Postal Payments Bank 340,000,000154,910154,910
21IranPostbank1,200,0001,24314,35215,595
22IrelandAn Post1,700,000511,0841,135
23IsraelPostbank215507722
24ItalyBancoPosta29,900,00012,845712,852
25JapanPostbank110,000,00020,1584,26824,426
26KazakhstanKazPost1,100,0002,918512,969
27LesothoPostbank80,00046105151
28LuxembourgPTT - CCP155,000623496
29MaltaLombard Bank383068
30MauritiusMauritius Post and Cooperative Bank1151116
31MoroccoAl Barid Bank6,500,000114625739
32MozambiqueCPPM 5,000126126
33New ZealandKiwi Bank900,000117765882
34PolandBank Pocztowy2,000,0004,6752,8157,490
35PortugalCTT Bank75,0006121,7242,336
36RussiaPochta Bank6,000,00041,30141,301
37SenegalPosteFinance200,0001911,1061,297
38SerbiaBanka Postanska Stedionica2,000,0001,2872991,586
39SingaporePOSB1,000,000582381
40Slovak RepublicPostova Banka1,200,0001,539401,579
41SloveniaPostna Banka175,000355146501
42South AfricaPostbank5,700,0001,5187002,218
43SwitzerlandPostFinance4,850,0001,3238522,175
44TanzaniaPostal Bank/ TPB Bank1,000,00017291263
45TurkeyPTT Bank 7,600,0003,3599724,331
46United Arab EmiratesWall Street Exchange Center120194314
47United KingdomPost Office Bank2,500,00011,70011,700
48UzbekistanAloqa Bank 2,5692,569
49VietnamLV Postbank655,0002,6733493,022
50ZambiaPostbank MFI50,000146146
51ZimbabwePOSB500,00018145226
0
Total 1,844,340,754318,02899,816417,844
Sources:  UPU Postal statistics 2016, PFIs' annual reports and PFIs' corporate websites, and PFID research


Table 3: Account ownership​ based on Findex data

 

Findex data: account ownershipTotalPFIsShare of PFIs
Account ownership 201155%15%27%
Account ownership 201769%20%29%
Growth rate25%33%

Source: Global Findex database 2011-2017, UPU postal statistics and annual reports of PFIs.

N.B.: Findex data concern 158 countries, only for 69 countries data on accounts at PFIs are available in reports of PFIs and UPU.



Table 4: Investments made by the private sector in the equity of the PFIs in recent years 




Rank Bank Country Total assets US$ BGoing 'postal' with:Relation
7HSBC Holdings UK2,492.44UK Post OfficeAgency
8BNP Paribas France 2,447.84Bpostbank, BelgiumJV Partner
13Japan Post Bank Japan 1,875.43Japan PostbankBank
16Deutsche Bank Germany 1,791.92Postbank, GermanySubsidiary
20Barclays PLC UK 1,476.10 Posta Kenya, India PostAgency
23Postal Savings Bank of China China 1,260.53Postal Savings Bank of China Bank
24Lloyds Banking Group UK 1,059.53 UK Post OfficeAgency
25Royal Bank of Scotland Group UK 1,017.58 UK Post OfficeAgency
44Commonwealth Bank of Australia Australia 750.392 AusPostAgency
46Rabobank Group Netherlands 711.859 ZamPost, Tanzania PostAgency
48Australia & New Zealand Banking Group Australia 689.014 AusPostAgency
49Standard Chartered Plc UK657.638UK Post OfficeAgency
51Westpac Banking Corp Australia 645.577AusPostAgency
52National Australia Bank Australia 607.329AusPostAgency
62Cassa Depositi e Prestiti (CDP)Italy474.042 BancoPosta,/ Posta ItalianeAsset Mgr
67Banco de Brasil SABrazil 437.059Banco PostalPartner
81DBS Group Holdings Singapore 353.323 POSB, SingaporeSubsidiary
84KBC Group NVBelgium 338.659Postovni Sporitelna, Czech R.Subsidiary
85DNB Norway 324.948PostbankenSubsidiary
89Nationwide Building Society UK297.609UK Post OfficeAgency
95La Banque Postale France 266.114La Banque Postale Bank
112VTB Bank Russia212.843Pochtabank, RussiaSubsidiary as JV partner



Source: The Banker's Top 100 World Banks; 30 June 2017​ and Research PFID​

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Table 5:​ Main differences between classic but antiquated governance model of a PFI bundled with a mail operation in a government department or state enterprise; and a PFI as a separate legal entity cooperating with a corporatized postal operator or postal network.


 

Postal Mail Service

and the PFI

Bundling up

PFI as part of a state postal service

Sorting out

 PFI as separate legal entity in cooperation with a corporatized Postal operator

Legal framework for postal financial services

In most cases it concerns specific legislation for the PFI or Post, and with additional decrees, often issued several decades ago, and referring to international postal treaties.

 

The legal framework positions the PFI outside the financial sector with separate legislation per product operation, i.e. a postal money order service, a postal checking account service and a postal savings operation

Financial sector laws and regulations applicable, similar as for other financial institutions.

In principle operating in a fair level playing field.

 

State-owned PFIs are typically obliged to accept any customer for its basic financial services (e.g. payments account), regardless of income, or address, and are regarded as an accessible alternative for private, commercial banks.

Sector policyIn several cases there is no medium-term sector policy; more frequently it is annual plan for the State Postal Service, including the PFI, as part of the State Budget submitted via the Minister of Finance to the parliament

The role of the PFI and usage of post offices can be part of the National Financial Inclusion Strategy and other financial sector policy documents.

The inclusion of PFI reforms in such policy documents also support the eligibility for support by Development Finance Institutions.

OwnershipOwnership is 100% state, and usually represented by the Minister also in charged of tasks for sector policy and regulation and supervision of the management of the Post. If Ownership is 100% state, it tends to be allocated to a specific Fund or Agency responsible for State Owned Property, or alternatively a Sovereign Wealth Fund.  In other cases, the Postal Savings are owned by a separate National Deposit Fund or a National Investment Bank, as an entity independent from the Postal Ministry or related to the State Treasury. 
RegulatorVaries, often in combination with an agency responsible for regulation of the telecommunications operators and other ICT, and not seldom closely related to the Postal Ministry or part of the Ministry. In some cases, part of a Utilities regulatory agency. Regulator is in principle only the Country's financial regulator, e.g. the Financial Markets Authority, Central Bank or Reserve Bank. For the PFI's involvement in mobile money, it may have to deal with regulation of the ICT regulator in a similar way as other financial institutions active in mobile money services
Management

In general, governed by one executive with focus on postal operations, and with some political affiliation to the Minister. The selection of the PFI management may also be impacted by political preferences while public servant pay scales pose often severe limitations in recruitment of management with the required professional skills, knowledge, experience, and independence. Conflicts of interest may exist.  With the State as ultimate owner, risk governance, a comprehensive and robust system of risk management of a sound internal control system are often considered as low priority.

The appropriate dialogue within the organization is not a typical part of the corporate culture which is more often dominated by executive orders, nor, or rarely, with other key stakeholders such as the financial regulators, interbank payment system and major clients.

Management is structured with a (Supervisory) Board made up of independent minded professionals representing the shareholders' interests.

The executive management is selected by the Board on the basis of objective criteria regarding professional skills, knowledge, experience, and independence. Potential conflicts of interest need to be disclosed and managed. The management is day-to-day responsible for the PFI's information, information technology and information security. The board, committees and individual directors is usually supplied with information in a timely manner and in an appropriate form and quality in order to perform to required standards. The board, committees and individual directors have their performance evaluated and are held accountable to appropriate stakeholders. The board should be transparent, fair and consistent in determining the remuneration policy for directors and senior executives, proportionate to the PFI's condition and performance.

 

 

Accountability

In general, with management being part of the civil service, there are often no contracts setting performance targets, nor reporting on their contribution to the actual financial and market performance is common practice.

In some more advanced cases, there is a “social contract" that sets the annual goals of the entity to be achieved by the management

Management is held accountable and periodically evaluated on achieving the performance targets agreed. Often a part of remuneration is directly related to the achievements.
Audit

Internal audit is typically limited to some internal, operational checks or control.

External audit is most often limited to the Auditor-General's office or a National Accounting Chamber.

 

 

Internal audit is a relatively independent, professional unit directly reporting to the (Supervisory) Board of Directors.

The independent external audit is done by certified professionals to reveal a proper, fair and transparent insight in the financial condition and performance of the PFI. The audited Financial Statements are instrumental for oversight and an enabling condition to do business with potential partners in the private and financial sector.

AssetsPosts and PFIs tend to be asset-rich, i.e. a large portfolio of property, plant and land for post offices as well as vehicles and technical equipment. The asset turnover ratio is often below 1 or even below 0.3 pointing to very low usage of public goods. This is also defined as 'dead capital' or 'sunk cost'. Depreciation cost are typically based on historic book value and inadequate to fund basic modernization.

Corporatized PFIs and Posts tend to reduce fixed assets and related fixed cost (depreciation, maintenance) and to focus on operations of which the cost can be flexibly adjusted to the business and revenues generated.

Non-current assets are typically valued at market prices and accordingly depreciated.

Human Resources

Staff is often employed on conditions as, or similar to civil servant, all on a full-time basis, with job security, and low but fixed pay scales. No incentives.  Average age is often above 50. Recruitment for vacancies is first from within. possibly high degree of unionization, and social employment.

This can be further analyzed in KPIs as e.g. revenues per FTE, transactions per FTE or mail items per FTE.

HR Management is mainly administrative, and for payroll accounting.  Limited facilities for training.

HR Management tends to consider the PFI employees as “capital". It includes talent scouting, career planning and management development and other wasy developing employees so that they become more valuable to the PFI

Human Resource Management includes conducting job analyses, planning personnel needs, recruitment, orienting and training, managing wages and salaries, providing benefits and incentives, evaluating performance, resolving disputes, and communicating with all employees at all levels, and support to creating a corporate culture.

 

 

TaxationIn several cases exempted from tax liabilities, e.g. corporate income tax, added-value tax, property tax, or certain tax contributions payable as employer. These exemptions intend to accommodate a reduced need on direct subsidies. Same tax regime as applicable to other corporate, legal entities
Finance

In general, the access to medium-term or long-term finance is very constrained. In a few cases Bonds or Debentures with a similar status as Treasury Bills can be issued upon the Ministry of Finance's approval.

 

If short-term finance resources are made available it tends to in the framework of the Annual State Budget, as a fiscal intervention or subsidy.

Option to arrange asset-backed finance (using postal properties) is in general not available.

 

Not seldom the PFI is obliged to provide working capital or other types of financing to the Post on preferential terms. The PFI sources this with money from clients.

In general, the PFI is eligible to forms of corporate finance, project finance, trade finance and other sources, subject to the purpose and terms of finance having been approved by the (Supervisory) Board and the risk profile of the institution providing the finance has been analyzed, including a due diligence.
Partnerships

A significant part of  PFIs in the early stage of reform tend to focus on organic growth of the entity, not via partnerships, for which several enabling conditions are absent. Depending on the exact form of the state PFI entity, partnerships tend to be relatively loose relationships which can be terminated at short notice.

Partnerships typically do not or cannot engage commitment to invest in the PFI.

The number and profile of the business partners provides usually an indication of the PFI's management capacity and commitment to develop the business.

 

An exception to the above regards Public-Private Partnerships (PPPs), which are usually structured with extensive preparation and with external or professional transaction advisers. Such PPPs can include Concession agreements, or e.g. Build-Operate-Transfer contracts or Outsourcing of some of the functions of the PFI.

Many of the corporatized PFIs seek building partnerships with e.g. specialized Financial Institutions to complete their product range, to accelerate their business development, or to outsource a part of the non-core operations in which economies of scale are not achievable.

The partnerships are arranged through contracts, or joint-ventures or new company structures.

Competitiveness

Competitiveness is not warranted. In some cases, the PFI can be considered as a government initiative where market initiative fails.  These cases are relatively easy to identify on the basis of a relatively large number of small clients which they serve. The proximity of the post offices, and the low threshold to access the services play a significant role.

This is opposite to the cases where the PFI turned into a government failure with a declining or small market share.

Competitiveness can be considered as a prerequisite for business continuity of the PFI and is most typically found in the branding and positioning of the PFI with a strong focus on the un(der)banked mass market with post offices as entry points to a set of relatively simple digital financial services and as such somewhat different from other retail banks.

 




Postal savings banks; Financial inclusion