Postbank readies to start commercial banking operations
Regulatory issues that were holding back the post office-based bank from offering routine banking services are now finalised, says CEO Mark Barnes
Post Office SA CEO Mark Barnes says regulatory issues that held up the launch of Postbank have now been finalised.
Postbank was expected to launch a fullyfledged bank that offers both credit facilities and transactional products around the same time as other new players including Discovery Bank, Bank Zero and Tyme Bank which launched earlier in 2019. The existing Postbank only offers transactional and savings accounts as its status as a state-owned company precludes it from engaging in the full spread of banking activities.
Barnes said the issues that prevented Postbank from obtaining a full licence, including differences in licensing provisions between the Companies Act and Banks Act, have now been ironed out.
“The restructuring of Postbank is now going ahead and it’s only a matter of time before we start solving a lot of the issues we want to solve,” said Barnes.
The restructuring, which entails adding credit facilities to its current bank licence, will bring the idea of a state-owned bank closer to life. In January finance minister Tito Mboweni tabled the Financial Matters Amendment Bill in parliament. The bill, which proposes amendments to the Banks Act, seeks to allow state-owned entities to establish a bank.
Barnes said Postbank wanted to extend credit to informal businesses which do not qualify at traditional banks. It also wants to reduce the cost of credit by adopting a different method to lending than traditional banks. To this end, Barnes said Postbank will not be seeking to compete with other commercial banks.
“We’d rather have a very specific enabled state bank mandate that has a proper risk-adjusted solution to address economic inequality.”
Creating township economies and extending funding to SMEs without asking for surety are some of the things on the bank’s radar. Barnes said they wanted to use data mining and technology to monitor small businesses’ growth.
For instance, if Postbank is successful in its ambition to roll out payment systems that enable SA Social Security Agency beneficiaries to use their cards at spaza shops, it can technologically oversee those payments to gauge if the business is growing and then incrementally fund their growth plans.
Barnes said through these methods, the bank could be able to lend to township businesses and other SMEs by looking at their cash flow instead of looking at whether they have surety or not.
“The state has an obligation to address financial inequality — something that can only manifest inside a state organisation, at the right cost of capital. If we create township economies instead of destroying SMEs, [and have] an inappropriate cost of credit, then we start creating a tax base.”
He said extending developmental credit, inclusion of people not served by traditional banks and reducing the cost of credit to low-income earners was on Postbank’s priority list.
“You find a lot of gogos in Soweto who have been renting out rooms for 10 years or more. That’s a bankable proposition because it’s a predictable income flow to a trustworthy person. We don’t want an asset. We want behaviour; someone who is behaving in a way that is creating value in a predictable sense.”
Another ambition of the bank is to reduce the percentage of profit generated through postal services to 20% by 2030. Since the post office already has a fully-fledged payment system, Barnes said the idea was to offer multiple services at every counter, which can include e-commerce services such as the delivery of chronic medication.
“Why can’t we have our own SIM-cards? Why can’t we have our own electronic wallets? We have 11-million social grant beneficiaries. We have 6-million people who deposit money at Post Bank. We have people that do motor vehicle licensing, people who use postal services. We probably have one of the largest client bases in the country and a commercially irreplaceable footprint.”