Banking Review

Banking goes postal

Sure, Australia Post has more than 3,300 outlets, but that alone
is not enough to attract and retain banking customers

BY CHARIS PALMER

Australia Post should focus on niche banking segments and direct channels if it is to offer a real banking alternative, say leading financial services consultants.

In May, Banking Review Media revealed Australia Post chief Ahmed Fahour had hired his former NAB colleagues Andrew Maitland and Michelle Tredenick to investigate the opportunity for Post to offer new financial services.

Australia Post already offers agency services to Australian financial institutions and their customers, but has recently restructured its business and is looking for new revenue opportunities to help offset declining physical mail revenue.

“Their business is suffering because of physical change and people using other channels for communication,” says financial services consultant and author Brett King. “Banking is a business that is also under the same pressure. So looking to banking won’t necessarily provide a solution to their business suffering.”

Others, including Rismark International managing director Christopher Joye and Mortgage Choice chief executive officer Michael Russell have welcomed the notion of Australia Post adding competition to the Australian financial services landscape.

Australia Post has a network of 3,300 stores, but King argues this will not be enough for Post to differentiate itself. “I don’t think the value proposition is that they’ve got lots of outlets where people can do banking, because people can already do that.
“They need to look at who will continue to use the post office beyond the next couple of years,” says King.

Chris Wilson, partner in the financial services consulting division of Deloitte agrees, but says Fahour and his team are not likely to be thinking of offering a “me too” play. “They will be thinking how to use channels and find the right partners to get products out there.”

One market Post is well suited to, argue both King and Wilson, is the small to medium enterprise sector, which is already served by the group. Aggregating a range of products is also an opportunity, says King: “The aggregation of products wouldn’t require them to have a banking licence.”

A stamp on partnerships
King says Australia Post should focus on partnering with the right groups. “Their best angle is partnerships – for example strategic partnerships where they become the physical distribution partner.”

Wilson says the fact Australia Post has its own switch could also enable it to offer some back end payments services, or new offerings to the small business market.

As for channels, King says Australia Post branches would be best placed to play a support role, with direct channels critical for acquisition and servicing. “They have to do something different, and I believe the big opportunity in Australia is still for direct plays.” King argues the Australian market is two to three generations behind some other markets that are more heavily focused on the direct channel.

Wilson says, “If I was going to start a bank tomorrow and I had a trusted brand, I’d think the direct channel was a no-brainer.
“The technology is out of the box these days, and they’ve already got customers.”

Wilson says the major challenge facing innovation at Australia Post is its internal culture. He says while some staff may welcome a move by Australia Post into broader financial services, others will be wondering why the group wants to become a bank, when banks are largely despised. “You also have Australia Post customers that may not want to be online banking customers.”

Wilson says while using the Australia Post brand for an online play might seem obvious, it’s not a fait accompli that it will succeed. “The cultural challenge is not something they should underestimate.”