Post office banking? Could be

The U.S. Postal Service continues to examine the prospect of offering banking services. The USPS Office of the Inspector General released a white paper in January 2014 that raised the topic, and now is considering how it might approach implementation.

According to an article by HousingWire.com, the newest report from the OIG describes five possible pathways to the provision of financial services:

  1. expand existing services;
  2. establish a key partner to provide services;
  3. engage with several partners;
  4. become a financial services marketplace — essentially a distribution point for existing providers; or
  5. become a licensed bank.

According to the USPS-OIG report:

The potential revenue from [the fifth] approach could be significant. However, if the Postal Service were to succeed in becoming a bank, the risks, costs, and regulatory burdens that would come with it would pose tremendous challenges.

For starters, the Postal Service may have to retrofit offices, hire significant financial expertise, build internal systems on a massive branch network, raise billions of dollars in capital, and bring in a staff of compliance managers.

The other four options offer much lower returns, but the complexity of setting up as a bank makes the fifth option “less viable” at this point, the report said.

Read the full USPS-OIG report.

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