Page 296 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Multi-channel strategies

For postal operators from high-income countries, it is now essential to be able to offer their services to their
clients at any time, in a variety of different forms. The Posts in Switzerland, Belgium, France, or Japan for
example are therefore trying to deploy multi-channel strategies. Clients can therefore bank in post offices
(full-fledged or agents), through ATMs, using credit/debit cards, on their smartphones using banking apps,
or online. This is a strategy that a number of banks are following but postal operators still rely a lot more on
their physical network, given the obligation that most of them have to maintain a presence throughout the
national territory.
What’s next?

A lot of work remains to be done to ensure a full digitization of postal financial services. As an illustration, it
should be noted that at the global level, only 46% of the world’s 660,000 post offices are online, which means
that more than half of post offices cannot provide real-time electronic services. This is changing fast as Posts
realize the importance of digitizing their network. In India, for example, the Post has 155,000 post offices, 90%
of which are located in rural areas. Three years ago, only 12,000 of these were connected. But as of early 2016,
25,000 post offices are now online. The Post has embarked on implementing a core banking system (CBS) for
its financial services – which represent 63% of India Post’s revenues – and is expected to be 100% on CBS by
the end of 2017 including deployment of rural ICT to digitise rural branch post offices.

Of course, it is essential for Posts to upgrade their network. However, the physical network of Posts is not as
strong of a competitive advantage as it was five years ago. According to the GSMA, as of end of 2015, mobile
money operators now have 271 services live in 93 countries, representing a total of 3.2 million agents. This is
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more or less five times the size of the postal network. In order to stay relevant as financial service providers,
Posts therefore need to extend their own network by developing agent partnerships, just like banks or mobile
money providers are doing. This is made easier through mobile technologies, which allow agents’ enrolment
in the Posts’ MIS at a minimum cost.

Postal operators also have to come up with innovative business models that leverage some of their unique
strengths. A few possible approaches are presented below.

4.6 The Post as a mobile virtual network operator (MVNO)
In this model, the Post buys capacity from a telecom operator to offer its own communication services,
including its own SIM cards. The Post is then able to offer all of its financial services on a digital platform.
This model was adopted by Equity Bank in Kenya, which launched its own MVNO in 2015 to offer its banking
services on a digital platform and compete with mobile money players. However, this model had already been
adopted quite successfully by Poste Italiane, the Italian postal operator, back in 2007. The Post now has 3.3
million Poste Mobile active clients, and 75% of these also use their Poste Mobile phone subscription to access
their postal financial services (payments, mobile top-ups, account management, etc.).

4.7 The Post as an interoperability platform

In various countries, different mobile financial services providers are offering their services but are not
interoperable. Clients cannot send money from one operator to the other in the same country.

The Postal Corporation of Kenya (PCK) set up PostaPesa, a national payment switch through which it processes
all public sector payments by connecting various banks (Co-operative Bank, National Bank of Kenya, Kenya
Commercial Bank and Credit Bank Ltd). Mobile network operators offering digital financial services are not on
the platform, but in the future, PostaPesa could be used as an interoperability tool to connect the different
mobile money providers. In this case, the post could use its status as a trusted public entity to connect different
financial services actors.

9 2015 State of the Industry Report, Mobile Money, GSMA, 2016

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