The cash-strapped U.S. Postal Service, looking for new sources of revenue to make up for declining mail volume, is considering banking services — already a common line of business for postal services in Europe.
It’s a distant possibility. The Postal Service, which estimates it will be $6 billion in the red this fiscal year, would need congressional approval. And Postmaster General John Potter said the Postal Service hasn’t decided whether getting into banking is a good idea.
“I’m not saying that’s going to work in America, but we need to be open-minded about what else might be out there,” Potter told Federal Times in a recent interview. “It’s something we’re looking at, and have been looking at over the years.”
This isn’t the first time Potter has floated the idea. He mentioned it last month, at a hearing of the House Oversight and Government Reform subcommittee on the federal work force, the Postal Service and the District of Columbia.
“In some places, posts are banks, and that’s how posts are earning money,” Potter said at the March 25 hearing.
Many European countries have postal banks. In some countries, the postal services allow commercial banks to operate in their retail facilities; in others, including France and Italy, the postal services actually own the banks.
Postal banks are also becoming common in developing countries because post offices are far more common than commercial banks, particularly in impoverished areas. A 2006 study by the World Bank found post offices outnumbered banks in developing countries by a 2-to-1 ratio.
Developing countries “typically don’t have the kinds of universal access to banking that people … need,” said Gene Del Polito, president of the Association for Postal Commerce.
There’s even a precedent for postal banking in the United States: the Postal Savings System, which ran from 1911 to 1967. It offered depositors a 2 percent annual interest rate, and by the program’s peak, in 1947, it held more than $3.4 billion in deposits.
But it’s unclear whether a postal bank would succeed in 21st-century America. Observers say it would likely meet strong opposition from the financial industry, which wouldn’t welcome a competitor with a nationwide network of retail outlets. And the market is already saturated: The U.S. has more than 4,000 banks, and most Americans already have bank accounts.
“Banks are ubiquitous in the U.S.,” Del Polito said.
And not all countries have had positive experiences with postal banking. The German postal service operated Deutsche Postbank for decades. But it sold most of its stake to Deutsche Bank last year; analysts said the bank wasn’t making money for the postal service, and German postal officials were eager to get out of the banking business.
