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Innovating Financial Inclusion: Postal Savings System Revisited

Publication | August 2016
Innovating Financial Inclusion: Postal Savings System Revisited

With the many challenges facing the traditional banking system—from limited infrastructure to increasing complexity of banking operations—it is about time that postal finance take a more prominent role.

Mobilizing domestic financial resources like savings is crucial for Asia’s developing economies. Savings are important because they permit investment, which in turn increases the productive capacity of an economy. They also play a significant role in financial intermediation in a sense that savings funds intermediated by the banking system can be used as credit to finance development activities. Unfortunately, due to different levels of financial sector development, access to financial services such as credit, savings, and payment services remain limited in developing Asia. For example, only 36% of adults in East Asia and the Pacific have formal savings accounts and 11% have access to formal credit, as of 2014.

Key points

  • The postal savings system in Asia has gone a long way from being a traditional vehicle for mobilizing savings to becoming a potent new tool for financial inclusion.
  • While postal financial inclusion has much to offer, its success depends much on best practices and sustainable business models of postal finance.
  • To maximize the benefits of postal finance, key challenges on regulations, technological innovation, implementation capacity, and cooperation need to be effectively addressed.
Policy Brief No: 2016-3