Post Office called to accounts

Called to accounts
Called to accounts

As the Post Office looks to push its high-street banking offer, what are its prospects?

In an effort to justify the continuing existence of a network of 12,000 Post Office branches, politicians have long been nudging the brand toward a fuller financial-services offering.

The chain has proved a drain on the public coffers, posting recent losses of up to £4m each week, and in 2008, Royal Mail opted to start a programme to close 2500 of its least commercially viable branches to arrest the decline.

In late 2008, business secretary Lord Mandelson openly called for the Post Office to take on the mantle of the 'people's bank', enhancing its existing range of financial-services products to improve footfall.

In addition, last week, energy secretary Ed Miliband confirmed that the development of the Post Office into a 'people's bank' will be central to the Labour Party's general election campaign.

The Post Office already offers savings accounts, mortgages, credit cards and insurance, and will launch a current account when market conditions 'are ready', according to marketing director Gary Hockey-Morley.

Question of trust

Now the brand has commenced a review of its design agency arrangements, stating it is looking for agencies with 'proven experience' of working with major high-street finance brands, to create a more authentic retail banking environment at its branches.

Hockey-Morley says the brand is in the middle of a 'transformational journey', but is confident it could make the transition to banking.

'The trust people have in the Post Office allows us to go into new areas. Our vision is to offer a genuine alternative to the high-street banks, and we need to do it in a way that is relevant to those who already use the Post Office, but also attracts new customers,' he says.

However, Hockey-Morley does add a proviso. 'We are a universal brand, so the offer will be mass-market and aimed at consumers looking for good value. But if your priority is financial expertise then you might decide another bank is better.'

In addition, the ever-changing nature of the Post Office brand may cause it a few difficulties. As well as its traditional business of handling mail, it offers fixed-line and broadband internet packages. It has also made moves toward a general retail proposition, stocking everything from kettles to Mills & Boon novels.

A former Royal Mail marketer agrees consumers might be sceptical about a Post Office bank. He says: 'Royal Mail has flip-flopped on financial services. There have been inconsistencies about National Savings & Investment products, and it has sold off its savings unit to Alliance & Leicester.'

Tom Knox, chief executive of ad agency DLKW, which handles the Halifax account, says the Post Office has a good opportunity to target largely under-served elderly consumers, but believes it will be a challenge to attract younger people.

'The Post Office is a pretty off-putting place to transact, and retail banks have made huge strides to become more inviting. It will be coming from a long way behind,' he argues.

Its best chance of success, according to Lucy Unger, managing partner at branding agency Fitch, is to rely on the sense of trust most UK consumers still have for the brand.

'Banking brands have done well to strike a balance between empathy and authority, while the Post Office, although it has become increasingly efficient, has also become quite cold and industrial,' she says.

'But there is no doubt it has the stature of an iconic brand. It should be looking to keep those qualities of trust, fairness and integrity and make that relevant to a forward-looking industry such as banking.'

In its levels of consumer brand awareness and trust, underpinned by its huge branch network, the Post Office possesses strengths that will be the envy of entrants to the UK banking sector. If it can find a way of shedding some of its fustier aspects, it could deliver a shock to some of the biggest banking players.

2.3m the number of financial-services customers at the Post Office
12,000 Post Office branches across the UK
34m weekly visits by customers to Post Office branches
63m transactions made each week at the Post Office
Source: Royal Mail


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