Any institution that
works to establish financial inclusion takes on the role of becoming a emissary
of trust - trust in the economy . To establish the first level of trust for the
unbanked is one of the biggest challenges across third world economies.
Postal networks have often been the most effective tools of establishing
inclusion and yet remain the least accredited and overlooked.
The Global Findex mentions
that 67 percent of bank regulators across 143 jurisdictions, have a mandate to
promote financial inclusion. 4 International organizations, including the G-20
and the World Bank, have either formulated strategies or are in the process of
doing so to promote financial inclusion. In recent years more than 50 countries
have set formal targets and ambitious goals for inclusion. A study by the
Universal Postal Union (UPU) states that 1.4 million postmen go door-to-door
daily establishing a daily 2 million odd contact points across the world.
Postal networks therefore become the strongest channels of inclusion globally
and India has one of the most ambitious projects at hand.
India's Financial
Inclusion Agenda
On the 15th Of August
2014 , Prime Minister Narendra Modi announced a large scheme for inclusion
under the Pradhan Mantri Jan Dhan
Yojna . The number of accounts opened under the scheme reached
255 million (including 57 million zero balance accounts) by November 2016 and
15 million more accounts were opened post the Demonetization announcement. The
amount of deposits rose to about 665 billion Indian Rupees (10 billion USD) and
over 19 lakh householders availed the overdraft facility of 2.56 billion (US$38
million) by May 2016.
Banking with the Post
Office
Globally , 50 percent of
adults have an account at either at a financial institution , post office or
both institutions, 12 percent have an account at the post office as well as a
bank, and 3 percent (6 percent of all account holders) have an account at the
post office only.
Roughly 28% of the
world's adults use postal services for payments (for example, invoice payments
and social benefits) and remittances. According to UPU research 1.5
billion people worldwide currently go to post offices for these types of
transactions, but only 1 billion have accounts. One strategy, adopted by posts
in a number of countries, is to use cash-based services as an introductory
product to account-based services and savings. Following that model, people who
use posts to access certain financial services without an account could
potentially move from informal to formal savings.
In the mobile financial
services ecosystem, we can identify three groups of actors: users (individuals,
businesses, governments), providers (banks, post offices, MNOs, MFIs, etc.),
and support services for providers (FinTech, agent networks, switch, etc.).41
Postal operators across the world have been playing a role both as direct
providers of mobile financial services and as support services for other
providers .
Below is an adaptation from
a comprehensive SWOT Analysis done by the Universal Postal Union as part
of the Global Panorama on
Postal Financial Inclusion 2016 to assess the role
of Postal networks in digital financial services -
Strengths
- Ubiquitous physical network
- Cash management experience
- Experience in managing agents
- Trust and proximity to customers
- Experience in financial
transactions
- Experience in distributing large volume/low
margin products and services
- Regulatory approval to offer
mobile financial services
Threats
- Declining traditional postal
market
- Exponential growth of mobile money
operators/card networks/digital financial service providers
- Current price structure of postal
financial products
Weaknesses
- Lack of technological innovation
- Lacl of consumer orientation
- In some cases liquidity management
challenges in rural areas
- Insufficient connectivity
- Lack of resources needed to invest
in development of digital financial services
Opportunities
Experience in financial
transactions which can be a building block to expand activities in the field of
digital financial services
- Agents for Cash In/Cash Out
- Super-Agent
- Strategic partnerships/joint
ventures
- As a trusted public actor ,
interconnection tool /switch for mobile money providers
- Launch own digital services
A Mammoth Challenge for
the World's Largest Postal Service
Established in 1854
,India Post today has about 150,000 post offices in the country today ,
almost growing to seven times its size since the Indian Independence in
1947.India Post has been battling a number of challenges to establish its
inclusion programs - shortage of trained staff , cost of implementation and a
credit hungry rural India. With no lending programs as part of its road-map ,
the post office has fallen behind in its customer acquisition to a number of
rural regional banks who grew in the light of the PMJDY .
India Post has undergone
multiple makeovers since its formation. Apart from mail delivery , India Post
has been servicing India as a business logistics service provider and a trusted
financial advisor . Its services range from basic financial services such
as provision of savings bank accounts , recurring and time deposit schemes as
well as saving schemes for senior citizens. There are short and long term
investment options through the NSC schemes . It plays a key role for the
thousands of migrant workers who send home money through a tie up with Western
Union for its International Money Transfer Scheme and also with MoneyGram for
payments from the US into India. Money Orders , Instant Money Orders help money
to be wired across the country. India Post takes on the support role for small
businesses and infrastructure service providers in the form on a collection
agent and its logistics arm.Yes , India Post enables payment collection
from the remotest of areas through its many-to-one solution which allows
collection of money (telephone bills, electricity bills, examination fee,
taxes, university fee, school fee etc.) on behalf of the subscribing biller .
The collection is consolidated electronically using India Post's web based
e-Payments solution and the payout is made centrally through cheque from a
specified Post Office of the biller's choice. Since demonetization, India Post
has helped hundreds of thousands deposit up to Rs. 32621 crore ($4.75 billion)
in the two weeks since 500 and 1000 rupee notes were withdrawn.
A Game plan to Scale
A 4,909
crore (US$730 million) project for computerization and networking of
1.55 lakh post offices across the country is being currently implemented by the
Indian government which is aimed at providing better tracking , more relief to
staff and digitization of operations. It also involves core banking and
insurance solution implementation and upgrades . Project Arrow aimed at
upgrading technology and service was initiated in 2008 and since then garnered
lot of appreciation and investment from the government. Further investments
have poured in ever since .
The current government
has plans to use the digitization exercise for data registration services via
its postal network to enhance digital reach and establish phase 2 of financial
inclusion. Prime Minister Narendra Modi has set up a Task Force to
leverage the postal network in India to enhance the role of India Post in
financial inclusion, among other services and is expected to submit its report
by year-end.
India Post Payments
Bank (IPPB) has rolled out its pilot services in the end of January
2017 in Ranchi and Raipur. The bank targets to have 300,000 postmen trained to
take on the additional role of payment bank correspondents .By September
2017, 650 bank branches will sprout across the country and 1000 existing ATMs
of India Post will be transferred to IPPB . The paid up equity of the new bank
is Rs 800 crore, of
which the government has already infused Rs 275 crore.
The stereotypical image
of a postman riding down a dusty lane on a rickety old bicycle carrying letters
delayed by weeks if not months has changed . Over the last 15 years of India's
economic uprising , the red post boxes across the country which eventually
turned into spittoons and disappeared mark the end of traditional post. India
Post has held on strong through the years of transition continuing to
make a deep impact in India's financial inclusion journey and is now
ready with an army of digital-savvy banking and mail correspondents who are
poised to take it to the next level .
Source : (copy) Finextra (24-03-17)