28 March 2017
visit nextgenbanking.co.uk

Watchdog tells US postal service to consider move into financial services

28 January 2014  |  4427 views  |  1 US flag

The US Postal Service should consider offering financial products such as pre-paid cards to the underbanked as a way of shoring up its own balance sheet, a watchdog has said. Meanwhile, the service's Indian counterpart has already begun its assault on the banking market.

In a white paper, the US Postal Service Office of Inspector General says that the post office should think about targeting the quarter of American households - 68 million adults - that are underserved by the banking industry.

With its huge physical network, the postal service is well placed to move into this area, picking up the slack left by banks shutting down their branches. However, the white paper stresses that this should not be done by becoming a bank but rather through partnerships with traditional lenders.

The paper says that payment products would be the easiest way for the postal service to get into financial services, thanks to their low costs and the chance to partner banks.

It suggests an open-loop pre-paid card that could be loaded with cash from pay cheques and then used to withdraw money from ATMs, pay bills and send remittances. By working with government it could also be used to send and receive tax payments and refunds.

The postal service should also look into online and mobile technology, letting customers check balances, transfer funds, pay bills, and deposit cheques from their computers and phones.

With underbanked Americans spending $89 billion just on interest and fees for alternative financial service in 2012, the watchdog argues that by capturing 10% of the market, the postal service could reverse the losses it has made in recent years.

Last week telco T-Mobile made its pitch for a slice of the pie with its pre-paid card and app-based product.

Several postal services around the world, including in the UK and New Zealand, have already entered the banking market and India is set to follow suit.

Having already applied to the Reserve Bank for a banking license, this week India Post began a pilot in Delhi. The organisation is rolling out ATMs at post offices that will offer core services and hopes to have 300 machines installed around the country within 18 months.

Comments: (1)

Colin Weir
Colin Weir - Moroku - Sydney | 30 January, 2014, 11:33

With half of the planet unbanked or underbanked there is certainly work to be done; work that must be different to the work that has been done to bank the first 50%.

When did the CEO of your bank last ask the "Addressable Market" question and reply to the answer with another question

"Really?" 

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

T-Mobile takes on US banking market

T-Mobile takes on US banking market

22 January 2014  |  10060 views  |  7 comments | 24 tweets | 21 linkedin
Italian post office to distribute payleven mPOS kit

Italian post office to distribute payleven mPOS kit

20 September 2013  |  6598 views  |  0 comments | 6 tweets | 8 linkedin
UK Post Office launches current account

UK Post Office launches current account

11 April 2013  |  5074 views  |  2 comments | 4 tweets | 3 linkedin
UN urges central banks to allow postal services to issue e-money

UN urges central banks to allow postal services to issue e-money

05 October 2012  |  6601 views  |  0 comments | 2 tweets | 3 linkedin
UK government outlines plans for Post Office 'people's bank'

UK government outlines plans for Post Office 'people's bank'

29 March 2010  |  9166 views  |  3 comments
Société Générale and La Banque Postale form e-payments venture

Société Générale and La Banque Postale form e-payments venture

10 January 2008  |  12464 views  |  0 comments
Fortis and Irish Post Office launch community banking JV

Fortis and Irish Post Office launch community banking JV

04 May 2007  |  6292 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
Visit capgemini.comvisit abe-eba.eu

Top topics

Most viewed Most shared
European Commission opens public consultation on fintechEuropean Commission opens public consultat...
11758 views comments | 47 tweets | 30 linkedin
MAS to roll out national KYC utility for SingaporeMAS to roll out national KYC utility for S...
11546 views comments | 33 tweets | 45 linkedin
hands typing furiouslyTwo key technologies driving Machine Learn...
8156 views 0 | 15 tweets | 3 linkedin
UK to roll out image-based cheque clearing systemUK to roll out image-based cheque clearing...
6799 views comments | 20 tweets | 43 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job