Do the post offices provide a good set of savings and investments products? If you go through the list of what they have on offer, then it certainly looks like it.
The vanilla savings account offers 4% interest and a cheque-writing facility, like most banks. Other products like the Recurring Deposit, Time Deposits (FDs) and Monthly Income Schemes are also quite competitive with equivalent products from banks.
Moreover, they have additional advantages of less onerous KYC requirements for small accounts, much small minimum deposit levels and best of all, zero tendency to pick customers’ pockets with hidden charges. And of course, unlike banks, a deposit in the post office has a sovereign guarantee.
So why don’t people actually prefer post offices to banks? Clearly, because of service quality. A few days ago, a friend told me how getting his retired father’s monthly income payout often needs two, sometimes three visits to the post office.
I checked with a few other people who had dabbled in using the post office’s savings products and the story is pretty much the same. Post office financial services are stuck in a time-warp — the entire experience is identical to that of public sector banks in the ’80s.
India Post has apparently commenced upon a large IT project to modernise its entire operations.
This includes implementing a modern banking system, whereby financial services users will be able to operate their accounts from any post office and get ATM cards and the rest of it. On the face of it, this sound like it should make post offices a first-rate provider of savings products.
However, a usable customer experience consists of a lot more than just the machinery. Will post offices reach a stage of utility where customers prefer them as financial service deliverers? On paper, they could be.