Irish Postmasters’ Union Conference

However, optimism has to be grounded in reality. Since I spoke to you last year, some things have changed whereas others have remained the same – what has not changed is that the environment in which An Post operates is becoming more and more competitive. Additionally the company’s customers are no longer a homogeneous group but have become more diverse and sophisticated, have a greater range of media through which they can now conduct business. They have also become more demanding in terms of the levels of service that they expect and, as the post office is a service industry, we must work together to meet the current expectations of customers and anticipate future requirements.

Finally, the move to Electronic Fund Transfer (EFT) has not abated in the last year, I know that you have more direct experience of this than I have, we all now realise that the clock cannot be turned back on EFT, people who are paid electronically and transact most of their business on–line are not going to revert back to manual payment methods once they retire.

So what’s different? Firstly, the most recent annual accounts for An Post show an operational profit of €16 million which suggests that the company has stabilised its cost base somewhat. Nevertheless, there are still significant challenges ahead and this means that there can be no room for complacency. Secondly, since I spoke to you last year, the financial services sector has seen new market players offering new products and services. An Post has been part of this change with substantial progress on its own financial services strategy.

One of my first objectives on taking up office was to ask An Post to devise a new strategy for the post office as I quickly recognised the challenges which the network is facing. Rather than sitting back and letting events take their course, my view was that the onus was on the company’s stakeholders to be proactive in their approach to meeting the challenges the company faces. This can be achieved by working together to ensure that the company is efficient, effective and first class in terms of the quality of service it delivers to its customers. In practical terms, we should proactively work to build on the existing strengths of the network to bring in new value added business to compensate for the inevitable decline in some of the current core activities.

In realising this objective, An Post has selected Fortis, a large bank in the Benelux, as their preferred partner to develop a financial services strategy and the Government has approved their choice of partner. Fortis brings a number of strengths to the financial services business, firstly it is an established big name bank - the largest retail bank and insurance provider in Belgium - it has already done this type of deal with the Belgian post office and, as such, has a track record in this area, it is prepared to invest directly here and from what I have seen is committed to doing a deal.

To my mind, the fact that Fortis has already done a similar deal with the Belgian post office is a big plus. This arrangement has now been in place for ten years and offers the same range of services which will be offered here such as daily banking, savings and investments, lending and insurance. The Belgian postal bank has more than 1.3 million customers and its products are sold through 1,300 post offices.

Looking at our strengths, I don’t think we should forget how attractive our strongly performing economy is to outside players and clearly Fortis are satisfied that there is scope for another player in the financial services business here. Turning to An Post, I think we should also recognise what the post office network brings to the deal in terms of;

• Extensive nationwide retail network unmatched by anybody else,
• It has a brand name that is known and trusted throughout the country,
• Its premises have a high foot fall,
• It has the capacity for delivering more services.

On a more personal level, I am aware that the postmaster model is particularly attractive to Fortis. Remember that lots of European post offices still operate a model which is based on company owned offices – though this is changing. Fortis has clearly recognised the opportunity to deliver financial services though post offices with people who have a business background allied with a strong personal relationship with their customers. Using business terminology, this gives them a strong competitive advantage over other financial services providers.

For this reason, I suggest that you give a Joint Venture a chance. I understand that there is a certain degree of scepticism and concern among some of you with regard to the financial services strategy and particularly that the deal will only benefit bigger post offices and will not offset the decline in social welfare payments.

Let me re-state that the underlying objective of this exercise is to maximise the value of the network not just a select few offices. I have conveyed this message to the company from the outset and it is a message that must be reflected in any deal that the company enters.

I firmly believe that the proposed joint venture represents a real opportunity for the company to grow revenues and expand the range and the quality of the sources of income for the entire company. I also believe that this venture could also present real income opportunities for postmasters and postmistresses and would encourage you all to embrace the opportunities that this venture presents.

This is not just me saying this but these are the very reasons that An Post is viewed as being such an attractive partner for a large bank such as Fortis and indeed the many other companies that expressed an interest in partnering An Post.

As you know, EFT is not currently an option in post offices, but this deal will result in real investment in the post office network and in technology that should place An Post on a platform to continue to win more business and in particular, higher value financial services and ensure that An Post can compete for business on a level footing with other financial services institutions.

This deal will enable you and the company deliver the quality customer services that are now demanded by the public and that also means that social welfare recipients will have more options in relation to their preferred method of payment.

While I feel that the financial services strategy is an important element in a strategy to secure the long-term viability of the network, it is clear that other aspects of the relationship between postmasters and An Post also need to be addressed.

The successful implementation of a financial services strategy requires that the contractual arrangements between An Post and postmasters are also modernised. Having met members of your Executive during the course of the year, I think we all agree that a framework needed to be established to allow issues of concern to yourselves and to An Post to be discussed and resolved.

That is why I decided to appoint Eamonn Ryan to act as a facilitator between the IPU and An Post to identify issues of mutual concern and plot a roadmap for how they might be resolved. I know that Eamonn has been working fairly continuously over the last few months with members of your Executive and An Post on identifying issues and looking at remedies. The terms of reference for this process envisaged that it could be completed by the end of April. However, some of the issues are long standing and the reality is that solutions may not be easy. I know that one of the issues being examined is postmaster remuneration where you would like to see some changes to the current arrangements. Your Executive has made me aware of the cost pressures under which postmasters operate. However, as you will be aware An Post can only pay out what it receives and like many businesses today, its large corporate customers want more for less.

My view is that it is better to put the relationship between the postmasters and An Post on a secure long term footing rather than rushing to meet arbitrary deadlines, but I accept that the current process must deliver results within a reasonable time frame. With this in mind, in the last week, I have asked An Post to appoint accountants to work with Eamonn Ryan to allow him to ensure that whatever he proposes is grounded in financial reality as this is the only way in which a sustainable relationship can be built between yourselves and the company.

The coming year is a crucial year for the post office network. Everything going well, by early next year, the financial services venture should be up and running. This will be an exciting and challenging time for yourselves and An Post. The new financial services venture represents a new departure for us all in terms of what the post office will offer in this consumer driven age.

At the same time, this Government continues to recognise the strong social function that the post office plays across the country and that for many people it represents a link between the citizen and the State and we share the belief that these links should be maintained and strengthened.

With your track record of public service and eagerness to develop new business channels, I know that you will take the opportunity offered by the availability of new products to enhance the existing high levels of customer service. This, in turn, will introduce new income streams which will help to improve the viability of each individual post office which is the best way of securing a long term viable future for a nationwide network of offices.

I am a realist, I know that the next year will not be without difficulty – change is never easy, especially the on the scale envisaged. However, I can assure you of my support and that of the Government in the year ahead as a strong viable An Post is the best guarantee you as postmasters and postmistresses can have for the future.

I want to finish, as I started, on a note of optimism. I believe that there can be a clear competitive advantage for the post office network arising from the extensive network advantages over its banking competitors. This means that there are real market opportunities for An Post. You are a critical component to shaping the future and with your assistance and business acumen you can help strengthen this advantage.

It is now up to the company management, in partnership with you the postmasters and postmistresses of Ireland, to go out and develop your business to ensure that this view of the future is realised.

Thank you

ENDS