Development of Postal Financial Services St. Petersburg July 2009 International Bureau Serguei Nanba, Coordinator, Postal Financial Services© UPU 2009 – All rights reserved

24th UPU Congress Decisions Development of postal payment services Development of postal financial services

Key strategic actions to implement the PPS strategy 2009– Development of the UPU worldwide electronic payments network 2. Development of the UPU multilateral framework 3. Optimizing financial relations between designated operators and between designated operators and users 4. Development of the communication and marketing policy 5. Development of a universal, collective brand image 6. Management of the UPU worldwide electronic payment network and financing of activities

Additional actions Increase governments’ awareness and obtaining their support Connect the last mile Support the Posts of developing countries Diversification of the financial services offered to customers Definition of sound service quality standards Development of strategic partnerships Development of account-based services

Development of postal payment services Provide all citizens with access to efficient, reliable, secure and affordable electronic postal payment services Expand and develop a worldwide electronic postal payments network (WEPN) that facilitates electronic postal connections between all UPU member countries Focus on migrants’ remittances corridors UPU offers multilateral framework, common principles, technological neutrality, worldwide secure postal network, interface with other networks, …

International Financial System (IFS)‏: Advantages Secure, reliable and available to all UPU members Money order services: domestic and international Four products: cash, accounts, ordinary, urgent Adapted to needs of countries Track and trace Affordability Full control over service Interoperability

IFS domestic Domestic module available Pilot starts in July/August 2009 Generally available in September Operational processes: –purchase, payment, reimbursement, cancellation, reporting & accounting All money order types: –cash2cash, cash2account, account2cash, account2account Mechanisms to combat fraud and money laundering

Regions RCC (Armenia, Azerbaijan, Belarus, Kazakhstan, Moldova, Russian Federation, Tajikistan, Ukraine, Uzbekistan) Africa (Benin, Burkina Faso, Cameroon, Chad, Congo (Rep.), Côte d’Ivoire (Rep.), Gabon, Kenya, Madagascar, Mali, Niger, Senegal, Tanzania (United Rep.), Togo, Uganda Americas (Chile, Uruguay) Arab countries (Algeria, Djibouti, Morocco, Tunisia, United Arab Emirates) Asia & Oceania (Australia, China (People’s Rep.), French Polynesia, India, New Caledonia) Europe (Estonia, France, Lithuania, Spain ) Corridors RCC Gulf – Asia Spain – Americas France – Africa etc.

POST*Net financial network availability Average network availability: 100% (including maintenance periods)

Almost 2.8 million money orders transferred in 2008 Almost 400 million USD transferred in 2008 POST*Net financial network statistics

Cooperation with international organisations - Creation of remittance services in developing countries UPU-IFAD African regional project Number of countries: 6 Budget: 394,000 EUR UPU-IOM African regional project Number of countries: 2 Budget: 100,000 USD

Postal Financial Services In more than 160 countries postal operators offer basic financial services including money orders, transfers, giro, savings services, etc. Postal financial services are an important source of income for many Posts, generating a significant contribution to their total revenue:

Promote social inclusion/citizenship through a financial inclusion process Raise savings levels Increase profitability for the post office network Improve the use of available resource Postal payment services and counter infrastructure give people access to basic financial services Under the institutional umbrella of the postal organization, or through cooperation between the Post and another financial institution Objectives

Baku conference on development of postal financial services (June 2009) Opening of access to all postal and non-postal financial services in all post offices Experience: Azerbaijan, Belarus, Brazil, Italy, Kazakhstan, Latvia, Russian Federation, Ukraine, UPU Results will be analyzed and the resolution and final proposals will be presented to the heads of postal administrations for approval in August 2009 in Kyrgyzstan

Italian BancoPosta’s revenue breakdown Total revenue FY 08(e): 4.8 bln € Current accounts Postal savings Bill payments Investment products Pension payments Others Money transfer 1.7% 28.5% 12.8% 10.4% 4.0% 0.6% 40.5% - “Banking” products account for >50 % of total postal financial service revenues - PFS products account for >50% of total postal revenue - Total number of postal accounts > 5.5 M (10% of Italian population as a whole and % of banked population) Lending 1.5%

Kazakhstan Post Bank revenue breakdown Social payments (pension, etc.) Bill payments Salary payments Lending Opening & management of accounts Others (currency excange, credit cards, investment products) Money orders 7% 24% 10% 3,0% 1% 42% - “Banking” products account for >15 % of total PFS revenue - PFS products account for > 42% of total postal revenue - Total number of postal accounts > 3 M (20% of population) Cash transportation 3%

Brazilian Postal Bank revenue breakdown - “Banking” products account for > 55 % of total PFS revenue - PFS products account for > 4 % of total postal revenue Total number of postal accounts > 8.2 M (> 4.5 % of population and 19 % of unbanked population) Bills, invoices, tax payments 38.5% Loans 0.4% Withdrawals 17.2% Deposits 18.0% Others 2.4% Accounts 0.7% Social benefit payments 3.7% Account balance statements 19,2%

Market share Financial services Postal services Commercial services Pension payments Financial services structure Money orders Bill payments Banking services Russian Post revenue breakdown

Azerpost Postal financial services: postal accounts, money transfers, opening of correspondent accounts, postal savings, debit and credit cards, giro, exchange Agent and sales services: utility payments, bill payments, municipality taxes, telephone charges, various fees, logistics, sales Key objectives ( ) -Integrated operator – access to all financial services (postal and non- postal) -Creation of a postal bank -0.5 M postal accounts in 2012 and 1 M in M annual transactions

Products/services offered in post offices in the region -Domestic and international postal money order -Pension payments -Payment accounts -Debit and credit cards -Savings -Credit -Mutual funds -Insurances -Bill payments (Permanent post offices network, mobile post offices, Internet banking, ATM, etc.)

Population: 180 M More than 40% of municipalities without banks in M newly banked people from 2002 to ,973 branches/PO Strategy: first open in communities/municipalities without banks = Geographic financial inclusion First branches opened in unbanked areas

Banco Postal: an affordable basket of basic services For only 2 dollars per month, BP offers a basket of basic financial services: 8 free withdrawals from the deposit account 4 free withdrawals from the savings account 12 free cheques 7 free transfers from current account 5 free transfers from savings account 4 free bank statements on demand

Local development effects? Without postal financial services within a municipality With postal financial services within a municipality: average treatment effect up to 163 new firms up to 1,209 new jobs up to 9 new banks for 100 municipalities up to 201 new firms (+ 23%) up to 1,381 new jobs (+ 14%) up to 14 new banks for 100 municipalities (+ 56%) Over a 4-year period

Regional postal financial services group Support development of PFS Support UPU strategic activities: development of the worldwide electronic payment network, brand, marketing development, clearing system Urgent money order service

Conclusions of Baku Conference Connection of all countries of the region to the UPU worldwide electronic payments network & opening of exchanges between all of them Creation of postal accounts - postal banks Opening of access to all postal and non-postal financial services in all post offices Adapting services to new customers’ needs Active marketing actions Extension of product lines New partners: banks, other financial institutions (microfinance, credits, payments, etc.)

Thank you for your attention Serguei Nanba Coordinator Postal Financial Services Tel: Fax: