Of the 5.4 billion adults worldwide, 1.5 billion access financial services through post offices. Postal services have large networks of branch locations that give them the potential to reach even more underserved populations. The extent of these branch networks is so wide because most postal operators have a “universal service obligation,” whereby they must offer “affordable and inclusive postal logistics services to every citizen.” Many postal services have used this network to offer financial services for decades, although many find they need to “push for recognition of their role in financial inclusion.”
In the last twenty years, private companies offering digital financial services (DFS) also have contributed to advances in financial inclusion. Thus some postal services are chasing market share taken by mobile network operators, financial technology firms (fintechs), microfinance institutions and banks. Alternatively, some postal services have partnered with these firms to reach more underserved people. For example, many postal services acting as agents for DFS firms by providing cash-in and cash-out services. The authors suggest more postal services replicate these ideas to expand the availability of DFS such as cash-in and cash-out services, savings, loans, domestic and international payments, microinsurance, and microinvestment opportunities.
To build sustainable business plans for providing DFS, the authors suggest postal services “strengthen technology, internal processes and human capital; innovate processes to cater to the unique needs of customers; focus on the delivery of a secure and seamless experience for end users; and support the provision of financial and digital literacy.” As for the role of policymakers, many countries could benefit from: (1) engaging with postal services to enhance the “role of posts in the formulation and implementation of national development policies”; (2) promoting regulatory environments that allow for new and innovative DFS offerings, including by supporting partnerships between postal services and fintechs; and (3) strengthening regulations regarding consumer protection.
This is a summary of a paper published by the Universal Postal Union, November 2021, 72 pages, available at https://www.findevgateway.org/paper/2021/11/innovating-digital-financial-services-posts
By Arin Atluri, Research Associate
Additional Resources
Universal Postal Union homepage
https://www.upu.int/
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