Page 288 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

1 Introduction

Post offices are very much associated with mail, postmen, and physical delivery. Posts are therefore not the
first thing that comes to mind when discussing digital financial services. However, postal operators have a
long tradition of offering financial services, which dates back to 1861, when the first postal savings bank was
established in the United Kingdom. Furthermore, if we go back some 20 or 30 years, we should remember that
in many countries, postal and telecommunication activities were grouped into one single entity: the Post and
Telecom (P&T) operator. A large number of those P&T operators were also providing financial services (money
orders, telegraphic money orders, savings accounts, etc.). “Traditional” postal operators could therefore be
schematically represented as follows:

Today, when we talk about the development of digital financial services (DFS), three complementary elements
are needed: a physical network, for the cash-in/cash-out and to act as a front office to engage clients, a
digital network, to transport the flow of digital messages (mobile, cards, electronic, etc.), and a financial
services provider (which in some cases will be the same as one of the two previous elements), which will
ensure regulatory compliance, take care of the back-office, design the products, etc. Such an operator can be
represented schematically in the following way:

Figure 1 – Traditional Postal Operator (until 80s-90s)

Figure 2 – DFS Operator

This is where we can see the similarities between the model of the “traditional” postal operator and a DFS
operator. Postal operators boast one of the largest physical networks in the world, with a total of more than
660,000 post offices, which can all be used as agents for the provision of DFS. Most postal operators today are
also offering some sort of financial services, from domestic and international electronic money transfers to
savings, insurance and loans. It is estimated that 1.5 billion people globally access financial services through
a post office. In this context, postal operators already possess two of the three key elements necessary to
1
deploy DFS. They are therefore very well positioned to at least play a role in the development of digital financial
services.

1 Ansón & Toledano, 2010, “Between financial inclusion and postal banking: is the survival of Posts also there?”, Universal Postal
Union

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