Page 289 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

2 The Current State of Play

Based on data from a questionnaire launched by the Universal Postal Union (UPU) in 2015, 91% of designated
postal operators in UPU member countries and territories (183 out of 201) provide financial services. Almost
2
all of these provide remittance services, either on their own or in partnership with banks and/or money transfer
companies. A large proportion of postal operators also provide bill payments or government payments. In terms
of account-based services (current accounts or savings accounts), 87 postal operators are offering them, on
their own (in 52 countries or territories), or in partnership with other financial institutions (in 36 countries).
3
This represents a total of 1.96 billion accounts belonging to approximately 1 billion clients.

The UPU established a business model (BM) typology for the provision of financial services by postal operators.
4
In all models, there is a varying level of operational complexity and involvement of the postal operator in the
provision of financial services. Five main families of business models have been identified:

• BM 1: cash merchant. The Post acts as a cash-in/cash-out agent for one or various partners (money
transfer operators – MTO, mobile money operator, utility companies etc.). The services facilitated by the
Post are transactional financial services such as remittances, bill payments, government payments, etc.
• BM 2: proprietary domestic and cross-border payments. The Post operates its own domestic payments or
international remittances (for the latter, in partnership with other Posts). This can be done in post offices
using paper-based money orders (a model that is progressively disappearing) or electronic transfers,
which are now the norm. 88% of the 150 Posts that are operating under this model are offering electronic
services. In some countries such as Morocco, such services are also available through mobile phones,
for P2P payments.
• BM 3: partnership with a financial services provider. The Post partners with a financial services provider
such as a bank, an insurance company, a FinTech, a technology provider, a mobile network operator, or
a microfinance institution to offer the financial services of the partner. The main difference with BM 1 is
that the Post is not merely providing cash-in/cash-out services but is much more involved in the provision
of the services. Products can be developed jointly by the partners and adapted to the postal clientele. The
Post is involved in all front-office aspects and postal staff has an important role to play in the promotion
of the service. Both partners collaborate to develop the necessary ecosystem.
• BM 4: postal savings bank. The Post offers its own account-based services (savings or current accounts),
under a regulatory framework that is specific to the Post. This is the traditional postal savings model,
which usually does not allow the Post to offer loan services. Usually in BM 4, the Post is not allowed to
offer loan services or any other sophisticated financial product, which is often one of the main reasons
why Posts are willing to transition to BM 5.

• BM 5: full-fledged postal bank. The Post offers its own account-based services, but under the supervision
of the central bank or financial services regulatory authority. In some cases, postal banks still have some
limitations either on the type of products that they can offer (not all types of loans for example) or have
limitations on the clientele they can target (for example in Morocco, the Postal Bank has to focus on
middle- and low-income clients).
All these business models are not mutually exclusive. For example, a postal operator can offer its own savings
accounts (BM4) but also its own domestic payment services (BM2) and the remittance services of an MTO
(BM1). Of course, the business model(s) adopted by a postal operator will depend on multiple criteria:
regulatory framework, capacity, financial resources, level of competition in the market, etc. Most Posts are

2 « Designated postal operator » (DPO) refers to postal operators that are officially designated by their government to provide a
number of postal services and ensure the implementation at national level of various international treaties’ obligations referring
to postal affairs. DPOs can be State-owned institutions or private entities. Countries can also designate one or various DPOs on
their territory.
3 One postal operator (POST Luxembourg) is part of both categories as it offers both its own account-based services and the bank-
ing services of a partner.
4 Berthaud & Davico, 2013, “Global panorama on financial inclusion: key issues and business models”. Uni-
versal Postal Union (http:// www. upu. int/ fileadmin/ documentsFiles/ activities/ financialInclusion/
globalPanoramaPostalFinancialInclusionFullEn. pdf)

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