The transformation of rural life in the past few decades has taken its toll on the rural post office. Many have closed as older postmasters and mistresses retired without anyone to take over their business. Rural emigration in the ‘80s seemed to accelerate the process.
Fast forward 20 years and the circle has turned again with an increasing number of local post offices filling gaps left by the contraction of other financial services like banks and building societies that have opted to close down rural branches in favour of on-line services or the amalgamation of branches in nearby towns.
Today, not only can you buy stamps and send packages, you can also purchase savings bonds and certificates from your local post office, pay your bills, drop in your photos for processing, send money abroad and buy a range of insurance contracts. An arrangement with one of the main banks means that you could do your banking with that bank in participating post officers, or use their ATM machines.
Last year, AnPost, in association with the financial services company Fortis, decided to spend €40 million to build a branded banking service, Postbank (www.postbank.ie). Its first products were a regular savings account and a simple investment fund. Now it’s taken the next step and introduced the ‘Everyday’ account a current account that will be available in 1,000 Postbank branches and participating post offices. Full banking services are available in 250 branches and by the end of the summer the full banking service, which will include credit cards and personal loans will be available in all the branches, says Postbank. Mortgages are to follow.
The new Everyday Account offers free banking – for all services, including deposits and withdrawals setting up direct debits and standing orders, electronic transfers, ATM transactions. Fees will only apply for Government stamp duty charges on cards, overdraft interest, unpaid items additional statement and the replacement of the BankSmart security device, which is included if you open an account in order to access the on-line service.
You also get an ATM card, but no chequebook – something that my not suit everyone – though you can request individual cheques, plus an automatic overdraft facility of €250. You can also open a Solid Saver account, a demand deposit account with an interest payment currently set at 3.3% CAR.
Postbank is very happy with the reception it’s already received, says its head of marketing, John Donegan. It has attracted 100,000 customers for the savings, investment and insurance products it rolled out last year and it’s aiming to attract at least 30,000 new current account customers, many of whom it hopes will be people who were left without a local bank account when the branch of their big high street banks was closed or amalgamated with a branch in a bigger town. They also hope to attract customers who are unhappy with the costs or poor service from their existing bank.
The way Postbank is rolling out their services is quite clever, given the sort of competition there is in the market now: their products are simple, middle road really and this will undoubtedly appeal to people who feel intimidated by too much choice. The fact that it is transaction-free is a strong feature, but not unique anymore. The interest rate on the deposit account is very middle of the road, and not tax-free, as are An Post’s savings products.
The investment products are pretty unspectacular and I believe, not particularly attractive to anyone keen to construct a serious balanced portfolio of investments funds or assets. The offer is so limited that its only fund, the SureSaver (Series 20 is actually closed to investors at the moment. You’d be far better off consulting a good fee-based advisor about the right investment fund for you from the hundreds of options out there, than to just plump for this one-size-fits-all Postbank offer.
The real test for the Postbank will be the loan products, credit cards and mortgages they add. The current account will certainly appeal to many (and why not, it’s pretty competitive as it stands) but by delaying the introduction of products that can come with hefty price tags, they avoid the problem of putting out an account with a range of products and services that may not, as a whole, stand up as well to the competition.
Will the Postbank account be able to offer a credit card with an interest rate that is lower than AIBs 8.5% rate? Or a personal loan that beats the c7%-9% interest offered by First Active, Tesco or Ulster Bank or the flexibility of RaboDirect’s Revolving Credit loan? And will they be able to beat National Irish Bank’s top ranking 4.6% tracker mortgage? We’ll have to wait and see.
Many people are already unhappy with the level of service they get from the big banks who also claim to spend millions on staff training and customer satisfaction. Changing from a post office culture to a banking one will be challenging, especially for smaller participating branches. The company says it has trained 1,600 post office staff to cope with the new services and they are joined by 250 Postbank staff who will also be working in certain branches. Another 35 large branches will have designated Financial Zones.
One thing is certain though: where there is high street competition, evenPostbank customers will vote with their feet and move on if their expectations are not met.