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Metamorphosis of postal organizations into new payment providers

Juanita Woodward, Executive Director Eurogiro A/S, Singapore Branch Global Payment Summit, Singapore 6 June 2013

Who created the first postal system ?

In the 1220s, Genghis Khan devised a system of relay messengers comprised of more than 250,000 ponies and some 10,000 stations.

Genghis Khan, 13th century founder and

emperor of the Mongol Empire.

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The postal world today

Postal organizations today comprise over 662,000 contact points across the globe, twice as large as the agent network of the world’s largest money transfer company. Which country or city/state has the

smallest number of post office branches ?

One postal branch

Vatican City Post

Which country has the largest number of

post office branches ?

Over 155,000 postal branches

India Post

3 Source: IFAD, The World Bank – Sending Money Home to Asia

The transformation of postal organisations

Across 192 countries, postal organisations have the universal obligation to deliver mail to every citizen.

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Letter volumes continue to decline.

How are postal organisations reinventing themselves to build a sustainable business model ?

Expanding payment services is a key trend across

many Asian countries.

Who is Eurogiro ?

• Celebrating our 20th anniversary in 2013, Eurogiro was created by 12 Western European postal organisations for the exchange of cross-border payments.

• Eurogiro is the only international payments community linking postal organisations, banks and other financial service providers for the electronic exchange of low-value international payments and remittances.

• The community of members and partners provide reach in over 50 countries across the globe; coverage in 11 major countries in the Asia Pacific region.

• Eurogiro provides for multiple currency payments and a host of payment types: account transfers, cash receipt and disbursements, bulk payments, remittances and we are expanding into new channels – mobile and card.

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Who is Eurogiro ?

• Eurogiro’s IT and business infrastructure is based on international banking standards, with a view of postal members’ needs to evolve and connect to banks and other payment providers.

• Eurogiro is a SWIFT member, and through a Closed User Group enables the connection between SWIFT and non-SWIFT members, and designed to be a low-cost payment processing network.

• The Eurogiro network has the physical reach into the rural areas to provide ‘last mile’ cash disbursement or collection services in many developing countries.

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The postal world in Asia

Asia accounts for more than half of the world’s post offices, having over 350,000 branches, of which more than 200,000 are located in rural areas.

Data Source: IFAD, The World Bank – Sending Money Home to Asia, Photo Source: Pos Indonesia 2011 Annual Report 7

The postal world in Asia

• With the aim to find new sources of revenue, posts in Asia continue to expand their domestic and international payments offering.

• The role of the post office delivery of financial services varies widely in each country.

• Posts in developing countries are poised to be a main player for financial inclusion initiatives.

• Many posts in Asia already derive 50% or more of their revenues from financial services.

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Post offices as payment providers: strengths and challenges

• Posts have a strong brand reputation and broad demographic base

• Posts provide a welcoming environment for low-income individuals and can play a role in access to financial inclusion

• With a large physical distribution network, posts have the most extensive reach into the rural areas

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To capitalise on these strengths and grow financial services, posts in developing countries need to: • strengthen management and marketing • develop partnerships with banks and other financial

institutions • further build technology capabilities • ensure adequately trained staff

A look inside postal Annual Reports

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. . . In a landmark partnership with DBS, SingPost started offering basic banking services at all its post offices from January 2012.

. . . CASHOME, our remittance business, expanded in the year.

. . . SingPost continues its drive towards establishing a significant global e-marketplace, building on vPOST and Clout Shoppe to expand its suite of e-commerce services. SingPost

Besides providing purely postal services, post offices perform agency functions like Savings Bank, payment of pension, sale of Cash Certificates etc. on behalf of other Ministries/ Departments of the Government of India/Other Organizations. India Post

Source: SingPost 2012 Annual Report, India Post 2011-12 Annual Report

A look inside postal Annual Reports

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Revenue generated by our retail services business increased, mainly through an extended range of identity, payment and money services. New initiatives include our Load&Go reloadable Visa Prepaid card and in-store distribution partnership with American Express, which provides currency exchange. Australia Post

. . . Achieved shared Banking Services in collaboration with Maybank and RHB Bank offered at 350 and 319 outlets countrywide respectively. . . . Continue to strengthen our market share with the booming E-Commerce. Pos Malaysia

We continue to install 365 ATM Corners for customers to enjoy diverse

financial services with greater convenience at lower prices.

Korea Post

Source: Australia Post 2012 Annual Report, Pos Malaysia 2011-12 Annual Report, Korea Post 2011 Annual Report

Mobile payments: Bangladesh Post

Many posts in Asia are investing and upgrading their domestic IT infrastructure and branch connectivity to provide domestic transactions, which is an essential foundation for the delivery of international payments.

Bangladesh Post: In 2010 the Post launched a mobile and web-based application for domestic money transfer services across 2,000 postal branches.

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The Post has now launched e-Pay in partnership with Bangla Phone, a mobile wallet to transfer funds, pay bills, check transaction and balance information and conduct cash deposits and withdrawals.

Posts are launching more e-commerce initiatives

More posts are launching e-commerce initiatives to combine online shopping, parcel delivery and payment.

Pay it @ Post®

Payment on delivery with PostPay

SecurePay payment solutions – helping your online business

Cash Rewards

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Singapore Post: Financial Services

Remittance services are offered through its CASHOME branded service. • Transfer to banks in India, Indonesia, Philippines and

Myanmar. • Visa Money Transfer • Telegraphic Transfer • Western Union Urgent Money Transfer • International Bank Draft

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Singapore Post offers a broad array of financial services.

Channels for Remittances and Payments: • Postal branches • SAM (Self Automated Machines) • vPOST: SingPost’s online payment service

Singapore Post: Financial Services

SingPost Care for Life: financial planning provided by Prudential and Eastspring Investments ezyCash: personal loan in partnership with Standard Chartered Bank ezyShield: personal insurance in partnership with Standard Chartered Bank and Ace insurance Postline: line of credit in partnership with ANZ SingPost Platinum Visa card in partnership with Standard Chartered Bank

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Other payment services are available: • Basic Banking Transactions (POSB) • Government services • A host of payment relationships including conservancy,

donations, education, financial services and insurance, healthcare, IT/electronics, magazines and books, security, ticketing, transport and utilities.

The evolution of post banks across the Asia Pacific region

• Japan: In 2007 the restructuring of Japan Post created Japan Post Bank as the world’s largest bank by deposit size.

• China: In 2007 the Postal Savings Bank of China was created as a retail commercial bank, PSBC is the 4th largest bank in terms of deposits in China and serves more than 400 million customers.

• Post Office Savings Bank of India: Established in 1882, the bank has over 250 million account holders. India Post is currently in the process of applying to Rerserve Bank of India to establish a commercial bank called the Post Bank of India.

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The evolution of post banks across the Asia Pacific region

• Vietnam: In late 2011 LienVietPostBank was created through a merger of Vietnam Post Corporation and LienVietBank.

• Philippines: Philippine Postal Savings Bank is in the 2nd year of a 5 year Strategic Plan to position itself as the government's countryside development bank.

• Posts that provide financial services in partnership with banks and other payment providers:

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- Australia Post - Pos Malaysia - Singapore Post - Thailand Post

- Hong Kong Post - Pos Indonesia - Sri Lanka Post

Remittances to Asia Pacific

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69

60

24 23 21 21 14 14

10 7

6 of the top 10 inbound countries for remittances are in Asia USD in billion, 2012e

Source: World Bank: Outlook for Migration and Remittances 2013-15, Presentation by Christian Eigen-Zucchi, Eurogiro Community Meeting on 16 May 2013 and IFAD, World Bank: Sending Money Home to Asia

- Asia is the source of nearly 60 million migrant workers who sent US $260 billion to their families in 2012, which represents 63% of global flows to developing countries. - An estimated 70 million households benefit from these flows. - Most Asian remittance-receiving households live outside of the financial system.

Financial inclusion in Asia Pacific

10%

20% 21% 25% 27%

35% 40% 40%

64% 66% 69%

73% 78%

87% 89%

96% 98% 99% 99%

Basic financial services delivered through posts can contribute significantly to global economic and social development.

With their reach into the rural areas, posts can play a critical role in creating greater financial inclusion: access to accounts, payments, credit and insurance.

19 Source: The World Bank – Policy Research Working Paper 6025 – Measuring Financial Inclusion – April 2012

According to a Universal Postal Union study, postal operators provide 1.5 billion people worldwide with access to basic financial services

(payments, money transfers, savings).

The majority of Asia’s population lives in rural areas, 65% of the payment locations are in urban areas.

The Eurogiro community represents some of the largest

Sending and Receiving countries to support shaping a low cost, efficient and convenient solution

for remittances by bridging the postal and banking world.

Remittances create global well-being and growth

20 Source: IFAD, The World Bank – Sending Money Home to Asia

Payments via posts: What is the future?

• Post offices will continue to expand international and domestic remittances, payments and other financial services, especially in the rural areas of developing countries in Asia.

• Post offices will continue to expand

in areas that merge digital

communication, parcels and payments.

• Increased use of mobile and

card channels for payments.

• Increased handling of government payments through post office network.

• Many opportunities for banks and

other financial service organisations

to collaborate with posts.

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Payments

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Thank you

Juanita Woodward Executive Director, Asia Pacific Singapore Branch Telephone: +65 6823 1223 Direct line: +65 6468 3050 Mobile: +65 9170 8224 Fax: +65 6823 1377 juanita.woodward@eurogiro.com

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