THE INTERNATIONAL ELECTRONIC PAYMENT NETWORK FOR POSTAL ORGANISATIONS EUROGIRO News Contents 1999 2 / May Can Posts and Postbanks meet the challenges? 2 ING succeeds in selling cross- border payments as a single Postal financial services have been one of the golden eggs in the postal product sector. Due to demands for privatisation, increased profitability and increased competition postal financial services are under pressure. ING Bank managed to increase sales of cross-border payments by 10% within a n The European experience shows us that In some countries the division of the post year. Postbanks can easily survive and be impor- and the Postbank has lead to 100% privately tant market players on cross-border transacti- owned postbanks. ons and Postal Financial services by serving the market where they are already holding a This development has been necessary to 3 Eurogiro offer global reach of key position: Retail payments and payments secure the survival of these organisations in USD payments for Small and Medium sized enterprises. a highly competitive European financial market. It could be argued that this trend is Global reach of Eurogiro will be the effect of The European case shows that it is really likely to be duplicated in most regions new agreements with Bankers Trust and possible to have success in this area. This outside Europe. Chase. success has first of all been built on common projects with a real benefit to all involved Within the area of cross-border payments the organisations. experience is that it is important for postal organisations to be able to move quickly and 4 A large post in a small In most countries Postal organisations or also to be prepared to take up the challenges country Postbanks combined have the widest of new payment channels emerging rapidly distribution network and customer reach of on the market. P & T Luxembourg has a large volume of any financial service institution. transactions via Eurogiro. A position which constitutes a large Building regional payment systems is the potential for product sale. way forward 4 Target of 98% reached in Postal organisations or Postbanks can not In other parts of the world where the distri- Quality Test in March expect to duplicate the role of the global bution of bank accounts still is limited, the banks and large domestic corporate banks, Postal organisations stand a unique chance Early results of the March quality test shows who will dominate the market , but there is of utilising this market with the enormous fine quality ratios. definitely an enormous potential of volu-me network of post offices and access to custo- if Postbanks decide to move as niche players mers, especially private individuals but also and effectively decide to be active on the pension companies, governments etc. 5 Postgirot Bank a dominant market for international payments. player in the Swedish pay- Following the experiences from the forming ment market. European Posts and Postbanks have faced of Eurogiro, success depends very much on increased pressure to change keeping the tasks simple and business orien- Postgirot Bank focuses on new services and ted. Electronic cross border payments are fully automated processing. During recent decades Postal organisations particularly suited for a regional project. The have changed from being Post & Tele orga- needs are similar in all countries, it is simple, nisations into autonomous Tele and Postal and costs can be shared between par- units and in almost all European countries ticipants. Furthermore approximately 75% of 6 A strong co-operation the Postal Financial Services have been cross-border payments are within regions enables Eurogiro to function separated from the Post and organised as and only about 25% transregional. with only 8 people either Postbank divisions or separate Continues... companies within the post in order to secure Outsourcing and extensive use of member increased independence, responsibility and resources are the key to Eurogiro’s success. autonomy. All this has secured more market orientated postal financial services utilising the 7 Eurogiro is facing up to the strengths of the postal organisations regar- Henrik Oksholm, EU Cross Border Directive ding distribution and generally good image. Eurogiro Network Just as important, the role of the Post/Post- A/S: Building Eurogiro partners are well placed to face banks to serve the lower end of the market regional payment the challenges from new EU directive. has been maintained. systems is the way forward for postal organisations NEWS Continued from front page Eurogiro News is the newsletter for the promotion of information, ideas and knowledge in Eurogiro. To be competitive towards other providers The very reason for the high degree of of international payment services, harmonisation within Eurogiro is the close Eurogiro News is published quarterly by: experience indicates that important factors co-operation which enables Eurogiro to for the clients are transparency in pricing standardise procedures. As an example the Eurogiro Network A/S and time scales, competitive pricing, Straight Through Ratio in Eurogiro on Girostrøget 1 security and speed. Giro to Giro transfers is nearly 96%. That DK- 0800 Høje Taastrup means that the cross border payments Denmark In order to actually create these elements actually reach the recipient at the promised tel: + 45 43 71 27 72 and be able to offer them to the clients, the time without manual handling, thereby also fax: + 45 43 71 26 62 e-mail: [email protected] element of co-operation between the minimising cost in the back office partners of the regional system is essential. investigating queries from clients etc. Subscription enquiries: An effective co-operation is more likely to Kristian Blicher Andersen / Birgit Østergaard be reached with a limited number of Tel + 45 43 71 27 72 participants. No part of this publication may be Cross border payments triple in 10 years photocopied or otherwise reproduced without the written consent of Eurogiro Network A/S 1995 Americas Europe/Africa Asia/Pac. Total Volume (m) 303 853 232 1.386 Editorial Committee: Value ($trn) 28.3 82.8 18.9 130 Henrik Oksholm, Editor-in-chief, Eurogiro Revenue ($bn) 4.9 14.0 3.9 22.8 Network A/S Nicole Walker, Swiss Post Postfinance Susann von Gunten, Deutsche Postbank AG Interregional transactions are approximately 25%. Cecile Koops, ING Bank Intraregional transactions are 75% Alan Nicholson, Postbanken BA Stefan Sjösten, Postgirot Bank 2005 Kristian Blicher Andersen, Eurogiro Network Americas Europe/Africa Asia/Pac. Total A/S Volume (m) 594 2.265 1.193 4.052 Value ($trn) 57 173 106 336 Printed by: Saloprint A/S Revenue ($bn) 4.6 17.8 7.9 30.2 Although Eurogiro Network A/S has made every effort to ensure the accuracy of this Intraregional transactions will still account for 75% of the transactions. publication, neither it nor any contributor can (Source: The Boston Consulting Group: Global Payments 1998) accept any legal responsibility whatsoever for consequences that may arise from errors or omissions or any opinions or advice given. ING succeeds in selling cross-border Final editing: 26 April 1999 payments as a single product The Eurogiro network is an international By maintaining a close dialogue with regional offices serving middle sized electronic payment network for the postal corporate clients and through frequent visits by the product marketing financial institutions. department for international payments to the regional offices, ING Bank The Eurogiro network is the only electronic managed to increase number of cross-border payments by 10% within a cross-border payment system which covers year. both postal and bank products. Eurogiro has 23 member institutions. n The challenges of selling and marketing The communication was extensive with adds Although Western Europe is the core-area, cross border payments. Why is this so in newspapers, direct marketing and training Eurogiro now spans four continents. The electronic payment system of Eurogiro is difficult? of the staff in regional branches to approach administered by Eurogiro Network A/S in clients with these products. Due to these Copenhagen, which also provides the It is difficult, because a payment is a dis- efforts sales were increased and this resulted organisational framework for the further satisfier in marketing terms: Clients tend to in an increase in amounts transferred of development of the co-operation. The forget correctly executed payment orders, 20%. company is owned by 17 European but they do complain if something goes shareholders. wrong. A payment is a product that you can Also the awareness level of Eurogiro and not really make attractive and is as such Worldgiro payments in Netherlands has Eurogiro Member institutions: difficult to market. Therefore you do not raised significantly. Now almost every Austria: P.S.K. AG Belgium: really see banks putting a lot of effort into corporate small, medium and large ones POSTCHEQUE Denmark: BG Bank A/S marketing and communication of internatio- knows the products. Finland: Leonia Bank Plc. France: La Poste nal payments. Germany: Deutsche Postbank AG Iceland: Consequently it should be possible for the Iceland Post Ireland: AN-Post Italy: Poste Italiane S.p.A. Japan: Postal Savings Bureau However, ING Bank did against the trend sales staff to agree with customers with a Luxembourg: P & T Morocco: Office try to market international payments more big turnover that a fixed monthly service fee Nationale de Poste Netherlands: ING Bank than is common. The payments in question is applied irrespective of the number of N.V. /Postbank N.V. Norway: POST- were labelled in the name of the Dutch transactions actually passed. This off BANKEN Portugal: CTT Correios Postbank. The target group was corporate course gives new accounting challenges to Slovakia: Postova Banka Spain: Argentaria customers. The products were made as the product department, but the increase in Sweden: Postgirot Bank Switzerland: Swiss simple as possible and fixed low fees were sales has been worth the extra effort in our Post Postfinance Turkey: General introduced.