FINANCIAL INCLUSION FINANCIAL INCLUSION FINANCIAL INCLUSION FINANCIAL INCLUSION

AND POSTAL BANKING AND POSTAL BANKING AND POSTAL BANKING AND POSTAL BANKING

WORKSHOPWORKSHOPWORKSHOPWORKSHOP

Presentation by Postbank South Africa ( Maureen Many ama – Matome )

09 and 10 November 2009

1. Postbank journey 1910 to 2010

2. SAPO business model 3. Postal Financial services group

4. Purpose of existence

5. Postbank vision and mission

6. Current Postbank mandate7. Products and services

8. Strategic alliances

9. Composition of deposit book10. Deposit book growth (2003 to 2009)

11. Number of customer accounts

12. Branch network vs. population (per province)

13. Revenue streams14. Focus going forward:

DISCUSSION AGENDA

POSTBANK JOURNEY 1910 TO 2010

Business UnitsBusiness UnitsMailMail LogisticsLogistics Financial Financial

ServicesServicesICTICT PropertyProperty

TransportTransport

Transactional ServicesTransactional Services

Corporate ServicesCorporate Services

THE SOUTH AFRICAN POST OFFICE BUSINESS MODEL(effective from 01 April 2008)

POSTBANKPOSTBANK

Transactor bankingTransactor banking

InvestmentsInvestments

SavingsSavings

SUPPORT SUPPORT

STRUCTURESSTRUCTURES

TreasuryTreasury

(front and Middle )(front and Middle )

NON FINANCIAL SERVICESNON FINANCIAL SERVICES

SASSA (DBM) SASSA (DBM)

INSURANCEINSURANCE

DOJDOJ

VB & CB (DBM)VB & CB (DBM)

MVLMVL

Risk and Risk and

compliancecompliance

Product Product

DevelopmentDevelopment

BANKING AND BALANCING BANKING AND BALANCING

©© Copyright SA Post Office (Pty) LTDCopyright SA Post Office (Pty) LTD

Postal

Parcel

Bank assurance

Facilitated LendingFacilitated Lending

Third party Third party

PaymentsPaymentsFinancial Services Financial Services

Fraud Fraud

Grants Proposal & Grants Proposal &

ManagementManagement

Business DevelopmentBusiness Development

Money TransfersMoney Transfers

Social Lending Social Lending

(grant funding) (grant funding)

POSTAL FINANCIAL SERVICES GROUP POSTAL FINANCIAL SERVICES GROUP -- FINSERVEFINSERVE

Other Assets

PURPOSE OF EXISTENCE

� Remain a sustainable business

� Providing a universal access

� Diverse range of financial services solutions

� Appropriate, affordable, secure, simple financial

products and services

� Strategic profitable partnership

� Vision: is to be a bank of choice for the underserved and

unserved communities offering simple, affordable and

convenient banking solutions.

� Mission : “To provide cost effective financial services to

appropriate market segments using simple yet optimised

processes and infrastructure, through profitable

partnerships using a skilled and motivated workforce with

the support of an aligned leadership team of both

Postbank and the overall Postoffice group .”

POSTBANK VISION AND MISSION

STRAUSS COMMISSION

MOU

SAPO’s STRATEGIC

FOCUS

IT INFRASTRUCTURE

Multi -Channel

MARKET LSM 1- 8

SOURCE OF MANDATE

PEOPLE AND PHYSICAL INFRASTRUCTURE

POSTBANK REGULATIONS

GOVERNMENT OBJECTIVES

Products

PPoossttaall FFiinnaanncciiaall SSeerrvviicceess

POSTAL SERVICES

ACT

WHITE PAPER

CURRENT POSTBANK MANDATE

PRODUCTS AND SERVICES

OTHER PRODUCT & SERVICES – STRATEGIC ALLIANCES

OTHER PRODUCT & SERVICES – STRATEGIC ALLIANCE

� Agreement is signed between the parties and SAPO (on behalf of Postbank)� Front-end services are provided� Minimal CAPEX investment� Bayport , we use their web based system from SAPO outlets

- Possibility of acquiring the loan book originated through SAPO outlets- rental paid for kiosk in SAPO outlets

� commission based on products sold

� Our goal for the FY2010 is R3.4 billion deposit book balance;� Deposit book grew from R1.24 billion (2003) to R3.56 billion over a period of 6.5 years (287%)� 17% average YoY growth from March 2003 to September 2009

DEPOSIT BOOK GROWTH (2003 TO 2009)

R 0.00

R 0.50

R 1.00

R 1.50

R 2.00

R 2.50

R 3.00

R 3.50

R 4.00

March 2003 March 2004 March 2005 March 2006 March 2007 March 2008 March 2009 September

2009

R 1.24

R 1.77

R 2.01

R 2.29

R 2.59

R 2.89

R 3.29

R 3.56

R'billion

R'billion

R'billion

R'billion

Period endedPeriod endedPeriod endedPeriod ended

Deposit book growth (2003 to 2009) Deposit book growth (2003 to 2009) Deposit book growth (2003 to 2009) Deposit book growth (2003 to 2009)

� our goal for the FY2010 is R3.4 billion deposit book balance;� shown a growth of 7.9% since the beginning of the 2010 financial year� YoY growth of 9%

Deposits due to customers

0%

1%

55%

18%

8%

18%

Mzansi accounts

Savings accounts

Other

Investments

Other Transactional (Flexi & pensions)

Dormant accounts/funds

COMPOSITION OF THE DEPOSIT BOOK – 30 SEPTEMBER 2009

MZANSI INITIATIVE BY SOUTH AFRICAN BANKING INDUSTRY

� Mzansi account = an entry level bank account (debit card)� Developed by the South African Banking Industry� participation: 4 largest commercial banks + Postbank� Effective from October 2004 to December 2008� Common minimum products standards were set across the issuing banks:

� debit card is issued� no monthly administration fees levied on the account� ceilings on balances� KYC – driven ceilings on transaction value� fixed fee for withdrawals on a bank’s own ATM (on-us) and another bank’s ATM (not – on –us)

� 3.5 million current mzansi users – December 2008� Financial Sector Charter became inactive in 2009� POSTBANK MZANSI ACCOUNTS (5 November 2009):

CAPITAL: R 697 MILLION AND 2.6 MILLION ACCOUNTS

� March 2006: 3.8 million accounts (36% savings and 63% transactional accounts)� September 2009: 5.6 million accounts (18% savings and 81% transactional accounts)� focusing on reviewing the investment products (35K accounts)

Number of customer accounts (March 2006 – September 2009 )

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

March 2006 March 2007 March 2008 March 2009 September

2009

Postbank Number of accounts (in thousand)

Savings Investment Transactional Total

services

� debit & stop order facilities

� Mzansi money transfer

� ATM & POS transactions ->

(VISA branded cards)

� Branch transactions (account

opening & closing; deposits;

withdrawals; statement &

balance enquiry; card re-issue)

� Internet banking -> available

to staff only

Average number of Postbank

transactions (monthly):

� Branches (P.Office outlets): 3 million

- total avg transactions (7.5 million per

month)

� ATM: 2.5

million

� POS: 274K

Marketing campaign to encourage card usage

SASSA Phase I initiative – January 2009 to date

January February March April May June July August Sept

Pension Flexi card withdrawals at branches 36,435 41,241 116,773 180,418 171,897 173,851 222,907 217,435 246,152

Pension Flexi Card account openings 18,689 100,785 200,665 137,084 61,216 34,113 41,979 37,195 41,646

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

� 673K SASSA accounts opened (January to September 2009)� 1.4 million withdrawals @ Post office outlets amounting to R1.1 billion cash disbursed.

REVENUE STREAMS AS AT 30 SEPTEMBER 2009

22%

2%

21%

1%2%

10%

42%

Revenue streams

non-interest revenue

money transfer revenue

government payments

prepaid revenue

lottery revenue

pay a bill

interest revenue

3566,778, 537

288

3,081,029

1932,332,723

3696,630,370

159

2,129,994

3624,573,083

296 3,302,677

112

818,154

279

2,288,034

31,935,400 2414

LEGEND

Existing outlet

Shortfall20

40

294

5495

34

30

50

322

Over

780

BRANCH NETWORK

FOCUS GOING FORWARDFOCUS GOING FORWARD

A three phased restructuring process was proposed for Postbank in the White Paper on Postal Policy and set the basis for the Memorandum of Understanding signed in 2004

Phase ONE

PROFIT CENTRE

Phase TWO

CORPORATISATION

Phase THREE

FULLY FLEDGED

BANK

Phase I (Profit centre):Phase I (Profit centre):

••Postbank operate as a profit Postbank operate as a profit centre within the existing Post centre within the existing Post Office divisional structure with Office divisional structure with an expanded product rangean expanded product range

••Separate Postbank Separate Postbank executive committeeexecutive committee

••Expanded product rangeExpanded product range

•• Ring fence depositors fundsRing fence depositors funds

•• Committee oversee its Committee oversee its operations operations

Phase II (Corporatisation):Phase II (Corporatisation):

••Subsidiary fully owned by Subsidiary fully owned by SAPO on behalf of SAPO on behalf of governmentgovernment

••Full range of payment and Full range of payment and fund transfer services and fund transfer services and expanding its deposit baseexpanding its deposit base

Opportunities for expansion Opportunities for expansion would include:would include:

•• Municipality DepositsMunicipality Deposits

•• Cooperative DepositsCooperative Deposits

•• SMMEsSMMEs

•• Provincial GovernmentProvincial Government

•• Village BanksVillage Banks

Phase III (FullyPhase III (Fully --fledged fledged bank):bank):

••Postbank operates as an Postbank operates as an independent company in independent company in partnership with the partnership with the Postoffice for synergiesPostoffice for synergies

•• Extending lending facilitiesExtending lending facilities

•• May engage Strategic partners for May engage Strategic partners for additional competences as overall additional competences as overall offering of Postal Financial services offering of Postal Financial services whilst acquiring skills setswhilst acquiring skills sets

(Insurance and or Lending)(Insurance and or Lending)

•• Registered bank owned by SAPO Registered bank owned by SAPO on behalf of Government on behalf of Government

MEMORANDUM OF UNDERSTANDING

POSTBANKPOSTBANK

SavingsSavings

SavingsSavings

TransactionalTransactional

InvestmentsInvestments

Facilitated Facilitated LendingLending

Government Government loansloans

Private loansPrivate loans

PaymentsPayments

Government Government paymentspayments

Private Private paymentspayments

Money Money TransfersTransfers

DomesticDomestic

InternationalInternational

WHAT WE ARE CORPORATISING UNDER THE BANK(Based on risk and regulations)

POSTBANK CORPORATISATION = CORE BANKING + PAYMENTS + MONEY TRANSFERS…….FACILITATED LENDING

CURRENT BUSINESS STRATEGIC OBJECTIVES CURRENT BUSINESS STRATEGIC OBJECTIVES

� Establish a Second Tier national bank , providing simple, affordable

products to underserved and unserved masses (beyond Umzansi)

thus…..

� Enable the bank to serve its customers effectively

� Grow customer base

� Manage financial regulatory environment

� Protect banking system

�Avoid Systemic Risks

� Protect depositors fund

� Diversification strategy of the Postoffice

STRATEGIC OBJECTIVES FOR CORPORATISATION (Phase II and II I)

� Availing a full suit of Financial Services to the poor utilising the

Postoffice infrastructure therefore enabling access

� Extend products and banking services to SMMEs

� Establish a strong supervisory structure and organization that

effectively oversees the Postbank and maintains its strength

� Assurance and reporting controls that provide transparent, complete

and comparative views on the health and returns, leading to sound

investment decisions and capital allocation

� Develop new products and services to Postbank portfolio to meet

complete financial services needs

� Create material cost savings for our clients

KEY OBJECTIVES FOR CORPORATISING FOR THE BANK

� Continue with the Financial literacy

� Strategic alliances:

� No exclusivity

� Use of Postbank systems to ensure that we own the client database

� Possibility of buying back the book originated from the Post Office

� More control on issues such as profit share

� Continue focusing on serving LSM 1 – 6 -> 8

� Continually explore opportunities in Government Financial services

� Upgrading our systems to be in line with best practice

CONCLUSIONS

� Upskill staff and recruit people with right skills (i.e. For vacancies

available)

� Implement the recommendation of the due diligence report (i.e.

Assignment was on the state of readiness for Postbank to corporatise)

� Streamline our products and expand our product offering

� Focus on the SMMEs, co-operatives

� Corporatise Postbank by December 2010!

CONCLUSIONS

Maureen Manyama – MatomeGeneral Manager: Finance & Support

Postbank divisionSouth African Post Office

Tel: +27 12 401 7130Mobile: +27 83 627 1700

Email: maureen.manyama-matome@postoffice.co.za

Thank You!