Postal banking: building solidarity in the financial sector
December 1, 2021
Particularly well suited for consumers who do not have access to commercial banks, postal banks offer free or low-fee bank accounts that can be used to receive money, make payments and withdraw cash.[1] Designed to cover an entire population, including those with modest or irregular income, postal banking often translates into greater banking inclusion for recent graduates, retirees, seasonal workers and those working in the informal economy.
One successful example of postal banking in the developing world is that of Al Barid Bank in Morocco. Created as the financial arm of Le Groupe Barid Al-Maghrib (BAM), Al Barid Bank offers various banking services, including checking accounts, real estate loans, consumer loans and advances through internal and international transfers, cash and exchange services, as well as the distribution of insurance products.
Its strategy has focused on proximity, digitalization and financial literacy. Its network of 1,900 agencies and 920 ATMs cover even the most remote rural areas of the country. In addition, it supports 1.4 million users by its Barid mobile banking application and 3.7 million users of debit cards. The Bank also launched a comprehensive banking literary program focused on youth and reinforcing the benefits of budgeting and saving. Additional initiatives were undertaken during the COVID-19 pandemic to distribute funds to the country’s most vulnerable. The Bank’s revenues have increased by 79% since its inception, with an average annual growth rate of 6.7%, and it has received a number of awards, including from the Universal Postal Union.
It would appear that postal banks have tremendous potential to increase well-being of the most vulnerable in both mature and developing economies. Another notable example in this respect is France’s La Banque Postale, which announced in 2021 that it would be adopting a “mission-led” purpose in order to “enable everyone to fulfil their potential and to contribute, through their investment, savings, insurance and consumption choices, to building a society that is more attentive to the planet and all who live on it.”[2]
For postal banks, it is clear that profitability is not the main driver of strategy. We have much to learn from their solidarity-driven approach, particularly with respect to commercial banks in more mature economies. How can the postal banking model be replicated? And what can commercial banks learn from postal banks, particularly with respect to their mission-led purpose to serve their communities?
CPM & BB
[1] Baradaran, M. (2013). How the poor got cut out of banking. Emory Law Journal, 62(3), 483–548.
