Banking Review

Coulda been a contender..

Australia Post’s hopes of becoming a serious contender
in banking seem to be lost in the mail…

BY CHARIS PALMER

Any hopes the industry and consumer advocates had of seeing Australia Post emerge as a viable competitor to the major banks appears to have evaporated, with Post’s submission to the Senate inquiry into banking competition making it clear there are no plans for the group to take on the banks.

Privately, sources close to Post say some within the team of bankers appointed last year by former NAB chief Ahmed Fahour are disappointed they haven’t been given a mandate by the government and, more importantly, funding, to become a serious contender in banking.

But Australia Post is a large business requiring a major cultural shift to deliver money-earning alternatives to its declining physical mail business, an issue likely to keep Fahour busy at least in the medium term.

And there are signs Australia Post will be stepping up its services for banking clients, and even taking on the highly political issue of account portability.

In its submission to the Senate inquiry, Post calls itself a “neutral aggregator of financial services”.

The submission focuses heavily on Post’s infrastructure capability, arguing: “Whilst not a competitor in banking, Australia Post’s services seek to reduce the overall cost of servicing customers for the industry through leveraging our shared infrastructure and building on our position as a trusted services provider”.

Yet Post is preparing to close 27 outlets around the country as it seeks to cut costs.

This makes Post’s arguments of its presence in rural areas where banks have long since shut up shop seem hollow, since it too may soon be forced to make similar decisions as consumers move away from services requiring a physical presence.

Post points out in its submission that it’s been providing agency services for the banks for one hundred years. Ironically, the fact few banks have used Post for anything other than minor services in that time, suggests they are not willing to hand over servicing for more complex products to a third-party.

This has only become more of an issue in recent years, as banks have improved service delivery in branches, while Post has failed to reduce queue lengths, or invest in platforms to better understand customer behaviour.

Online payments go postal
In fact, Post’s over-reliance on its physical distribution network is clear in a number of other areas where it could take on the banks if it was better at online distribution.

In its submission, Post points to the Postbillpay service that facilitates over-the-counter payments, yet physical bill payment is a declining market, and Post’s attempt to take on BPAY’s electronic bill presentment service BPAY View failed dismally and was eventually shut down.

Post’s recent acquisition of online payment gateway SecurePay suggests it may have stronger ambitions for online merchant payments.

There are also signs Post may be looking to improve its agency offering for banking clients. In its submission to the Senate, Post says it is working on a new point-of-sale offering to refresh its capabilities. “This is being built with web-enabled multi-channel design principles that will enable extensions of our agency service, allowing us to provide a greater range of cost-effective services on behalf of financial institutions,” Post says.

Post has also flagged more consumer-facing services that would no doubt be facilitated with banking partnerships, including what it calls in its submission “savings related initiatives and superannuation”.

It also makes a reference to account portability in its submission, including it in a list of things it believes it could use to help Australians competitively access banking services.

International developments
Elsewhere in the world, postal services have emerged from the global financial crisis in better shape to take on the banks, particularly in markets where competition has been diminished. South Africa’s Postbank was recently granted a licence to become a full retail bank. The bank now plans to invest R750 million on infrastructure, including IT systems, and employ and retrain staff to run an efficient retail bank.

In New Zealand, state-owned Kiwibank, which uses the country’s post office outlets to distribute products, recently undercut the home loan rate of all of the country’s major Australian-owned banks.