Financial inclusion: The post office has become one of the nation’s largest banks

With an average banking penetration rate of only 18% in the MENA region, according to figures from the World Bank, much ado has been made in recent years as to the potential role of postal systems in boosting financial inclusion. As existing and trusted entities with extensive networks that reach into rural areas where banks are largely absent, post offices are an obvious under-tapped resource to bridging this gap. Moreover, the same World Bank’s Global Findex dataset found that people with a postal bank account tend to be older, poorer, less educated and less likely to be employed than those who hold a bank account. In other words, post offices appear to be succeeding in accessing parts of the population that have traditionally eluded banks, whether this be due to lack of a bank nearby, excessive minimum account balances or simply because this population segment does not trust banks.

There are more than 18,000 post offices in the Arab region, according to Universal Postal Union (UPU), with each one serving just under 20,000 inhabitants. Only around 30% of postal customers in the Arab world use postal finance services, with these services accounting for around 25% of the turnover for post offices in the region, although this figure increases to nearer 50% in the Maghreb. UPU notes that given the high number of expatriate workers in many Arab countries, the Arab region offers more postal financial services than any other UPU region. For example, in 2009 outbound money transfers totalled more than $8bn, while almost $34bn was transferred into the region.

MODEL STUDENT: Morocco, which is recognised as having one of the more developed banking sectors in the region, has married financial services with the country’s postal network in an effort to expand access. Al Barid Banque (ABB) is fully owned by Poste Maroc, and following authorisation from the minister of finance and a three-year preparation process, it was officially launched as a bank in 2010.

The bank’s primary mandate was to improve financial inclusion, particularly in rural areas. Starting from a base of some 4m clients in 2010, ABB has opened around 500,000 new accounts per annum and is now estimated to have nearly 6m accounts, meaning that around 18% of the population banks with ABB. With its more than 1800 branches at the end of 2012, it compares favourably with the country’s two largest banks, Banque Populaire (1145 branches) and Attijariwafa Bank (2269 branches) in terms of access.

POSTAL PRODUCTS: As with most postal services in the region, savings and current accounts had already been available through the Poste Maroc prior to the launch of ABB, although the agency could not issue loans. Following the launch of ABB, however, the new bank partnered with Société de Financement d’Achats à Crédit to assist in extending credit to clients. A large proportion of the bank’s activity is – perhaps unsurprisingly, given the extended branch network and the large number of first-time banking clients – in remittances and transfers. The bank is responsible for almost 80% of all domestic transfers and joined forces with Eurogiro, a payment network that connects different payment systems and focuses on high-volume, low-value payments, to tap into international remittances, which represent up to 5% of Morocco’s GDP. According to Kamal Mokdad, the managing partner at Mazars in Morocco, such services are crucial in boosting financial inclusion among the unbanked, since the post office is easily able to propose accounts to recipients of cash transfers who might otherwise not enter a bank.

In a similar vein, ABB also signed a convention with the social security fund, allowing for direct payment of social security benefits, such as pensions, family allocations or health reimbursements into the recipients account. Cards are issued allowing the account holder to withdraw the cash from any ATM or pay for purchases electronically, similar to a standard bank card. As highlighted by Hassan El Basri, the director-general in charge of risks at BCP, where a similar scheme exists, this programme is working extremely well in terms of encouraging people to open bank accounts.