The ambitious Postbank was treading water. Then Covid-19 came to the rescue.
- For the first half of 2020, the Postbank recorded account growth of just 0.5%.
- Three years later, it still does not have a full banking licence, which prevents it from offering credit services.
- Then came Covid-19 – and special unemployment grants.
- The Postbank opened more than three million accounts for recipients, and still had well over R600 million in unclaimed cash on deposit in July.
- Pushes to turn the coronavirus grants into a basic income grant could help in the argument to turn the Postbank into a fully-fledged state bank.
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Like many other businesses, the Postbank paid for the disruption that came with the coronavirus.
So far this year, the organisation told Parliament last week, Covid-19 and the associated lockdown probably cost it around 18% of its revenue, which translates into R311 million lost. That is not counting the R2 million it had to spend – much of that on laptops – because of the pandemic.
But for the Postbank the coronavirus also brought a tide of customers and money.
Without a full banking licence, and the ability to offer credit services that comes with it, the Postbank has been treading water. (It applied for such a licence three years ago, but has been unable to satisfy all requirements yet.) In July it recorded a total of 6.3 million accounts, just 0.5% up from the count in January. That is even as newcomers Discovery Bank and TymeBank recorded big growth, while the more established Capitec racked up high customer satisfaction numbers on a customers base well over twice that of Postbank.
Then the state decided to offer grants of R350 per month to those who are unemployed and receive no other government assistance during the coronavirus disaster.
The special Social Relief of Distress (SRD) grants are tiny on an individual level, but add up quickly. By July it had opened nearly 3.4 million accounts for such payments, the Postbank said. Even with R2.6 billion paid out to recipients, it still had R621 million in "residual" funds on deposit.
That made for a nice boost to its asset base – and one that will not necessarily disappear along with the state of disaster declared around the coronavirus.
There are widespread calls for the unemployment grant to be turned into a basic income grant, making it a permanent fixture of South Africa's grant system – and bringing millions more people into the social security system.
The small rand value of the payments mean recipients need very cost-effective banking, and the rural distribution of the recipients requires the kind of reach the Postbank has, and to which its low-cost private rivals can not aspire, while bigger rivals physically shrink as their businesses go more digital.
The Postbank's ambition is to serve as the nexus around which a "fully-fledged state bank" can be built. Before the coronavirus, the logic of such a move seemed dubious to many.
Now it is, perhaps, just a little less so.
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