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USPS pushes 'collaboration' with FIs

A Pew study showed that most consumers are indifferent to the idea, but 64 percent of those in the target market (i.e., the un- and underbanked) favor it.

March 2, 2015 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

The United States Postal Service Office of Inspector General first made the case for expanding into financial services in early 2014, calling itself "well positioned" to meet the needs of underserved Americans.

At that time, a USPS white paper suggested that the organization was looking to offer nonbank financial services to consumers who don't have access to affordable, mainstream financial products. The report also made the assertion the USPS wasn't trying to step on traditional financial institutions' toes.

"The Office of Inspector General is not suggesting that the postal service become a bank or openly compete with banks," the report said. "To the contrary, we are suggesting that the postal service could greatly complement banks' offerings. The postal service could help FIs fill the gaps in their efforts to reach the underserved."

Understandably, FIs and banking organizations widely met the proposal with resistance (which it still faces today). However, during a recent conference, the North Carolina Bankers Association expressed some interest in at least learning more about a possible collaboration between FIs and the USPS. They also expressed a willingness to be involved in testing the concept.

"Not understanding what the impact at this point might be upon our banks, we're more than willing to volunteer as the laboratory testing facility at least to get to the point of developing that with the U.S. Postal Service, so that we could work together to find out if there's value for both the industry and the Postal Service," Thad Woodard, former NCBA President and CEO, told American Banker in November.

For its part, the general public is largely indifferent to idea, according to a survey by The Pew Charitable Trusts, Just as we've seen with the migration away from the bank branch and toward digital banking, more consumers also are using pickup services and online postage to avoid trips to the USPS. Perhaps that's why most consumers — about 63 percent — in the Pew survey said that the addition of services at the post office, such as bill paying, check cashing and small-dollar loans, would not matter to them. Twenty-seven percent were in favor of the idea, and 10 percent were against it.

Interestingly though, 64 percent of consumers who identify as using alternative financial services (those who might fit the profile of underbanked or unbanked) believe the expansion of safe financial services would be beneficial to both consumers and the USPS.

As we all know, desperate times call for desperate measures, and this appears to be exactly that: a somewhat frantic attempt by the USPS to establish a new revenue stream. But at what cost to traditional FIs?

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