NAIROBI, Kenya, Dec 10 – It is one of the oldest financial institutions in the country having been established in 1910.
Kenya Post Office Savings Bank which operates under the brand name ‘Postbank’ was formed to mobilise savings for national development.
But after nearly 100 years, the bank wants its mandate reviewed to enable it compete effectively in the financial sector.
Capital Business recently had a chat with the Postbank Managing Director Nyambura Koigi to explain what plans the bank have in a bid to increase the access of the formal financial services to all Kenyans.
Q: You have been on record asking the government to expand your mandate. Please tell us more about that?
A: Postbank is 100 percent owned by the government but we are saying that in the normal course of business, our mandate needs to be re-looked at. Discussions are on going. I’m sure the owner of the asset, who is the Minister of Finance, would be able to give further details of when this can happen.
Q: How far have the discussions gone?
A: Discussions are on the table and once they are completed, we will be happy to announce to our customers what has happened and we will be able to let everyone know what we have agreed on.
Q: When and if that happens, can we expect a transition in Postbank in terms of naming, branding etc.
A: I know in our name we have Post Office Savings Bank but Postbank is our brand name and it encompasses what we do.
The many post banks that we have around the world do offer all sorts of financial services; savings, they offer credit and remittances.
Q: You have in the past also hinted that Postbank will start trading in foreign exchange business. How’s that coming along?
A: In the 2009/2010 Finance Bill the Minister also announced that Postbank would be able to deal in forex and we are already in discussions with the relevant government departments to give us the license to do this and we see this happening in the New Year.
Q: What has changed in the bank as you gear towards enhancing your competitiveness?
A: There has been a lot of automation in the recent past. We have migrated the pass book customers to the post bank ‘cash x-press card’ which is issued on the spot when you bring your pass book and it allows you to have access to your balances at any of our branches.
The automation can also be achieved through our new service delivery model the ‘teller post’ that we have installed in 91 branches and through the agents.
There’s been a lot of automation and in deed; there will be a lot of that going forward.
Q: The financial sector has increasingly become very competitive. How has this impacted your business and how do you hope to increase penetration in rural areas?
A: The mandate of Postbank is to mobilise savings and encourage thrift among Kenyans. To fulfil this mandate, we have opened branches across the country. Currently we have 91 branches spread in all parts of Kenya and our target market is mainly the low end of the market but we have products that cater for all segment of the population.
We have savings products for the young ones, we call it ‘bidii’ junior, we also have ‘bidii salary’ accounts, for the employed persons and for those who have a regular income we have Save As You Earn (SAYE) where you bring in a certain amount for a certain period and we give you interest plus bonus at the end of the contract period.
Q: Which product is more popular with Kenyans and why?
A: ‘Bidii’ is very popular and I suppose it’s also from the name. ‘Watu wa bidii ndio wanaweka akiba na Bidii savings account’, (Hard working people save with our Bidii Savings Account).
Recently we also launched the ‘Pamoja account’ for groups and its getting good response.
We also have ‘Premium Plus’ with a minimum balance of Sh300,000 catering for a different clientele and we also have remittance services that allows people to get money from the Diaspora through the Western Union and MoneyGram. We also are agents for M-Pesa (Safaricom’s Money Transfer Service).
We also do a lot of collection and disbursement for other corporates and this gives us a lot of people that we serve. Currently our clientele base is 1.2 million who are in both the urban and rural areas.