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Technical Assistance Facility supports digitization of financial services offered through postal networks worldwide
The Universal Postal Union (UPU) has recently established a Financial Inclusion Technical Assistance Facility (FITAF), which will receive significant support from Visa. As Stephen Kehoe, Head of Global Financial Inclusion at Visa Inc., explains, “Visa’s partnership with the UPU will make a significant contribution to financial inclusion. This systematic effort to leverage Posts’ services, size and reach will help build the comprehensive digital network needed to benefit whole societies, and especially help reach two priority groups of unbanked people: rural poor and women.” FITAF was created by the UPU to advance financial inclusion, by accelerating the digitization of postal financial services and increasing their uptake, to reach last-mile customers and businesses.
In order to increase the number of postal accounts by 250 million by 2020 and support the launch of digital financial service projects for financial inclusion from 20 Posts, FITAF will champion postal action on inclusive digital financial services, conduct research to identify key actions and provide qualifying Posts with technical assistance to improve and expand their capabilities. “This partnership is a key milestone in our efforts to position the postal network as a critical tool for delivering economic and social development to all,” emphasizes Bishar A. Hussein, UPU Director General. “Thanks to its universal coverage, to its long history as a financial actor and to the trust it holds amongst the citizens of the world, the postal sector is in a unique position to provide access to financial services to all and especially the underserved. We need to leverage that unique position.”
The situation
Over 2 billion adults worldwide were unbanked in 2014. Of those that are banked, 19% have an account at a Post, making the postal sector the second largest contributor to financial inclusion after banks. Postal networks are well positioned to meet the financial needs of some of the world’s hardest-to-reach populations. “Governments and international development stakeholders increasingly see the postal network, with its ability to deliver to everyone, everywhere and at all times, as critical infrastructure to achieving a whole range of public services and policies, including their financial inclusion objectives,” explains Siva Somasundram, UPU Director of Markets Development and Regulation.
Indeed Posts have extensive, government-backed networks that reach across countries into both urban and remote rural areas. They provide numerous services – including financial services – to customers of all income levels; they often distribute government payments, such as pensions or social support; and their public, egalitarian mission makes their services affordable and accessible to all segments of society. However, significant investment and transformation is required to improve postal capacities and services, so as to be able to deliver digital financial services and reap their many benefits.
The FITAF approach
FITAF will provide technical assistance to help Posts launch new digital financial services at a national level. Assistance will be offered according to need, based on requests from post offices, local levels of digital delivery, and the type of issue – such as product, network (e.g. back office) and systems (e.g. postal network, IT infrastructure). The criteria for selection include: commitment from the Post’s management and from government leaders; the existence of a legal and regulatory framework to enable the Post to deliver financial services; evidence of innovation; and willingness to co-fund 20% of costs. Support will also include designing mobile-based strategies for the Post, expanding Post-owned services, and capacity building.
The Facility carries out research to inform and advance Post-based financial inclusion. This includes developing case studies and best practices, identifying service and quality gaps, and creating a readiness guide to help Posts prepare to offer digital financial service. The Facility will also examine the role of Posts in supporting the financial inclusion of micro and small merchants near their branches. A crucial aspect of this work is sharing new insights and resources with UPU members and other stakeholders through regional and leadership meetings, as well as at partner events. For example, UPU organized four regional workshops for members in 2017 to explain the importance of digitization and to present effective business models and services.
Partner coordination
Visa joins the Bill & Melinda Gates Foundation and the UPU in funding the Financial Inclusion Technical Assistance Facility. Visa will provide financial support for three years through a charitable grant. The UPU has collaborated with a number of Visa’s global financial inclusion partners, including the Alliance for Financial Inclusion and Better than Cash Alliance, which the UPU joined in 2015. It has also issued joint research publications on financial inclusion with the World Bank, UN Women and the International Labor Organization, and collaborated with diverse service providers at the country level – policy makers, academics and social-welfare organizations. This inter-connectedness exemplifies the type of collaborative, coordinated approaches needed to achieve financial inclusion.
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