Revive the Postal Service by making it a bank(newrepublic.com)
newrepublic.com
Revive the Postal Service by making it a bank
http://www.newrepublic.com/article/116374/postal-service-banking-how-usps-can-save-itself-and-help-poor?utm_content=bufferca014&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
11 comments
The UK Post Office used to operate a bank - http://en.wikipedia.org/wiki/Girobank - it was reasonably good to start with (apparently, it was estabilished well before I was born) but a lack of investment and a terrible brand image sank it eventually and it was sold.
As with most policies...sounds great on paper. Let's think about implementation....
1. Who runs this bank? Ever deal with USPS workers? Yea...not great. What about the senior USPS leadership's management abilities? Oh yea that track record is borderline criminal. So we give them more responsibility and budget?
2. Loans for reasonable amounts to high risk people. Why dont larger banks or startups setup operations to serve loans to the folks who rely on payday loans. Do you really think that smart entrepreneurs have not thought about the $89B dollar payday loan industry? Of course they have and guess what -- they cant beat payday loan rates. Why are they so high? It's not gouging as much as it is matching the risk of non-payment to the loan. Low income folks already taking loans on their current paycheck are not the most reliable to repay the loan (for a larger amount) at a later date.
Overall, I am not against banking services to under served. I just have no confidence that the government can effectively become a (rather large) bank. Other government banking forays have not done too well (Fannie Mae/Freddie Mac anyone?)
Comparing other countries is hard as well...different cultures, scale, and needs muddy the water to do a real apples to apples comparison
1. Who runs this bank? Ever deal with USPS workers? Yea...not great. What about the senior USPS leadership's management abilities? Oh yea that track record is borderline criminal. So we give them more responsibility and budget?
2. Loans for reasonable amounts to high risk people. Why dont larger banks or startups setup operations to serve loans to the folks who rely on payday loans. Do you really think that smart entrepreneurs have not thought about the $89B dollar payday loan industry? Of course they have and guess what -- they cant beat payday loan rates. Why are they so high? It's not gouging as much as it is matching the risk of non-payment to the loan. Low income folks already taking loans on their current paycheck are not the most reliable to repay the loan (for a larger amount) at a later date.
Overall, I am not against banking services to under served. I just have no confidence that the government can effectively become a (rather large) bank. Other government banking forays have not done too well (Fannie Mae/Freddie Mac anyone?)
Comparing other countries is hard as well...different cultures, scale, and needs muddy the water to do a real apples to apples comparison
I'd rather we turn some banks into postal services, personally.
This is working quite well for the swiss postal system. Amongst other services (notably: public transport and a business solutions division), PostFinance provides financial services. Out of 6 divisions, the financial one accounts for about a tenth of manpower, a quarter of revenue and 60 percent of profit.
Such a combination opens up awesome opportunities for supply chain and working capital management: merchants in e-commerce can offload great parts of their business: Goods are received and shipped by mail anways. If you throw payment in the mix, as a merchant, all you have to do is guide customers to your electronic checkout. Let the postal service worry about payment, storage and fullfillment.
Such a combination opens up awesome opportunities for supply chain and working capital management: merchants in e-commerce can offload great parts of their business: Goods are received and shipped by mail anways. If you throw payment in the mix, as a merchant, all you have to do is guide customers to your electronic checkout. Let the postal service worry about payment, storage and fullfillment.
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Same thing happened to the French postal service in 2006, with high hopes for "a bank with the ethics of public service", but it quickly became exactly like any other bank: profit, profit, profit.
Completely disagree with nmc. They offer only basic (useful) services, don't touch investment banking at all, and in terms of success already contribute to a fair share of La Poste's overall revenues. Which doesn't mean they don't have room for improvement, to the contrary.
To me, pegging a bank to postal services is a no brainer given synergies etc.
> They [...] don't touch investment banking at all
Disagree all you want, but please get your facts right. Yes, La Banque Postale is technically forbidden from directly speculating on the open market. However:
- they can buy and own banks which are, in turn, allowed to speculate (cf. the Dexia bailout)
- they offer revolving credits at extremely high rates (more than 15%), which is known to push people further into poverty
- they can speculate on markets like the covered bond market (and actually need to, because the deposits are currently not enough to provide all services)
- they can speculate on side-effects (eg shift by one day the payment date for social benefits)
(This list is not exhaustive. If you are too clumsy to find references by yourself, just ask, I will add some.)
Disagree all you want, but please get your facts right. Yes, La Banque Postale is technically forbidden from directly speculating on the open market. However:
- they can buy and own banks which are, in turn, allowed to speculate (cf. the Dexia bailout)
- they offer revolving credits at extremely high rates (more than 15%), which is known to push people further into poverty
- they can speculate on markets like the covered bond market (and actually need to, because the deposits are currently not enough to provide all services)
- they can speculate on side-effects (eg shift by one day the payment date for social benefits)
(This list is not exhaustive. If you are too clumsy to find references by yourself, just ask, I will add some.)
No investment banking? Good bank! Modern "investment banking" is just playing around with numbers, nothing which provides real value to the world economies.
And now, instead of 4 persons dedicated to postal services, we have 3 for banking and 1 for posting. So. Great.
Well, current postal services revenues (and outlook) mean that anyway you'd have to fire the 4th person eventually given high cost base etc. There's not enough work nor revenues for 4 people.
So diversifying is actually a good thing...
I definitely do not have that impression, at least compared to BNP or Societe Generale.
Italy has also slowly morphed its Postal Service into a financial institution. The Italian Postal Service allows to open accounts and issues credit and debit cards.
I can't judge the quality of the service as I do not live in Italy any longer, but I know that they have an advantage over 'normal banks': they stay open on Saturdays!
I can't judge the quality of the service as I do not live in Italy any longer, but I know that they have an advantage over 'normal banks': they stay open on Saturdays!
I live in Italy, and I would avoid anything and everything to do with Le Poste Italiane. I don't think their financial services are all that great either - the same long lines and unmotivated employees from what I can tell.
There used to be Postbanken in Norway too, absorbed into DnB with all operations shut down just a few years ago. Started in the times when it made sense, but rendered obsolete in online banking era.
The Belgian Postal Bank is like that too: http://www.bpost.be/en/index.html
We have a Postal Bank here in Israel. It's generally considered the most honest, but simplistic, bank in the entire country.
European postal services also have their own payment system - post giro. In some countries, post giro is or have been (being gradually supplanted by electronic payments) one of the most common ways of paying bills.