New UPU report guides sector on innovation in digital financial services
The Universal Postal Union (UPU) has released a new report setting out approaches designated postal operators should adopt when looking to improve their digital financial services (DFS) offering.
The Innovating Digital Financial Services for Posts report, which was developed by the UPU’s Financial Services team, examines the current position of posts in DFS and offers key recommendations for both postal operators and regulators and policymakers on how they can innovate in this area.
“In postal financial inclusion and financial services we are continuously looking at how posts can innovate their products and services to meet the needs and demands of our clients around the world and how people who are unbanked and underbanked can be served better by postal operators. This study draws upon the views of experts in the sector, postal experiences and the voice of the customer to see how posts can innovate their products and services to meet the needs in the years to come,” said Saleh Khan, manager of the UPU Financial Inclusion Programme.
The study has five clear objectives: to identify DFS innovation levers; to identify pathways for postal DFS innovation; to create a postal DFS innovation framework; identify use cases of innovative DFS; and to recommend pathways for policy makers and posts.
According to the Financial Services team, posts are well-positioned to offer financial services and improve financial inclusion due to their reach, customer trust and experience. The report notes that of the approximately 5.4 billion adults worldwide, 1.5 billion or 28% access formal financial services through the post office. Globally, over 90% of posts currently provide financial services.
However, rapid innovations in the financial inclusion space, due to digitalization, have left many posts at a crossroads: either seek to transform or risk being edged out of business by the competition. With this report, the UPU and its financial services team hopes to serve as a forum for sharing financial inclusion strategies and knowledge on best practices and lessons among its 192 member countries.
The report notes that today most posts already offer payment and savings products, but they are missing out on the largest and most lucrative segments: digital credit, insurance products, and personal financial investment and wealth management products.
In the area of insurance, the report highlights how the Zambia Postal Services Corporation (ZamPost) has entered a partnership with Professional Life Assurance to add value to its Swift cash transfer services. ZamPost now offers Swift customers, as a loyalty incentive, Professional Life’s Bantu Bonse – a life insurance product.
The report also highlights how important an enabling policy and regulatory environment is for posts to be able to innovate in DFS, and how policymakers and regulators can engage and enhance the role of posts in the formulation and implementation of national development goals.
For posts, the report outlines five key recommendations to improve their DFS offering in the future: define a sustainable, compelling business plan for postal digital financial services; strengthen technology, internal processes, and human capital; innovate processes to cater to the unique needs of customers; focus on the delivery of a first-class, secure, and seamless experience for end users; and support in the delivery of non-financial services to customers, such as financial and digital literacy.
“The nature of the postal business is changing, and the time has come for postal operators to realign themselves to serve society’s evolving needs,” the report concludes.
To read the Innovativating Digital Financial Services for Posts report in full, click here.
Watch a video about the report here