Postbank, mobilizing a saving culture since 1910

Understanding the role Postbank plays in inculcating a saving culture in our lives is a priority for both young and the folk. With support, providing the needed resources, innovations, and communication as witnessed during its centennial existence has been key to success for many who started with a Passbook to currently an automated and the first branchless banking institution in Kenya.

Indeed as its centennial theme, “A Century of Wealth Creation through Savings”, is not only appropriate but also timely as profound changes in saving and banking has taken place in the past 100 years. What has remained constant is the fundamental connection between Postbank and Kenyans in pursuit of promoting saving culture and the road to endless possibilities.

Post bank’s journey started in 1910, as the then Savings Bank. That journey was reviewed in 1978 when the pioneer financial institution became Kenya Post Office Savings Bank. The key mandate of The Kenya Post Office Savings Bank as post Bank was then known is savings mobilization. Over the years and with the support of the Government, Postbank has successfully executed this mandate and helped Kenyans from all social strata create wealth.

“This remains a major responsibility for us to contribute towards the realization of our national development objectives and Vision 2030. But we are also keenly aware that the financial needs of our people have over time evolved due to changing economic environment.

Our potential to provide sustainable financial services for the un-banked low income individuals remains vast. We believe we have the capacity and ability to do more intermediation given an enabling environment. In the meantime, we continue to offer Kenyans innovative products and services. We are also committed to operate within the tenets of good corporate governance and management practice for the benefit of our customers and all our stakeholders,” said Wilson kinyua Post banks chairperson during the banks centennial celebrations.

As Nyambura Koigi, the banks Chief Executive Officer explains, when The Savings Bank opened, the only other financial service provider was the National Bank of India based in Zanzibar that had opened two branches, one in Mombasa and another one in “a newly established village called Nairobi”.

This therefore means the Savings Bank, the predecessor of today’s Postbank was the first locally established and government owned bank in Kenya. This bank opened its doors to Africans who didn’t have any other avenues to bank then and by the end of its first year of operations in March 1911 there were 1,231 accounts, 684 of which were held by Africans mainly from the disciplined forces. In 1917, and 1931 similar services were established in Uganda and in Tanganyika respectively.

In 1931, the Home Safes were established to help Kenyans accumulate savings and when it got full, it would be taken to the bank where it would be opened and these would be deposited into the savings account. By 1941, there were 34,000 accounts and by 1950, the number had more than doubled and 75% of these accounts were held by Africans. By this time similar services were being offered within East Africa and one could use their account from anywhere in Kenya, Tanzania and Uganda. This arrangement continued till the break up of the East Africa Community in 1977.

"Since 1910, the product range has been diversified from the one product through the passbook to an array of savings products and remittance and payment services. Deposits have equally grown from the first Rupee deposited to billions of shillings currently held in deposits in over 1.3 million accounts," says Nyambura.

The branch network has equally expanded over time to over 1,000 touch points using ATMs and Point of Sale [POS] Terminals , own branches and agent locations. Postbank has been a profitable business. More importantly, over 15 million accounts have been opened over the years by Kenyans who had their first account in Postbank,. " We have served many Kenyans and thus contributed to the fulfillment of our mandate of providing affordable savings services and inculcating a savings culture," she says.

Postbank has recently introduced a New Business Model using ATMs, Point of Sale [POS] terminals and debit cards and mobile phone banking through services like

PataCash among others. Processes have been re-engineered, the bank has been ISO 9001:2000 certified over the years and has Service Charter on customer service for efficiency and rapid results. Postbank benchmarks her service quality internationally and has won several service quality awards.

Postbank has over the years entered into strategic alliances and business partnerships with local and international enterprises in remittances and payment systems leveraging on our wide-spread footprints and automation. One of these partnership is with World Savings Bank Institute [WSBI] and Bill and Melinda Gates Foundation to expand access to financial services in the rural areas through agents. Through this project, Postbank will contribute toward the realization of Vision 2030 by providing access to financial services. explains the CEO adding that Postbank has also been appointed to provide technical assistance to another savings bank in Africa under a grant from the WSBI and Bill and Melinda Gates Foundation. Lesotho is a key example.

Although Postbank cannot currently lend or engage in foreign exchange business, the bank has been eyeing the foreign exchange business as well as lending to its customers since the Treasury made amendments in the Banking Act, a move that would enable it to become a major player in the sector.

For this to happen however, Parliament has to pass the 2009/2010 Finance Bill to give them the go-ahead. Currently, the law restricts the bank to offer savings products only. Recognizing that account holders with Postbank needed a full range of financial services, while speaking at the banks centennial celebrations, President Mwai Kibakit said, “the Minister of Finance and the Minister of Information and communications are already looking into ways on how Postbank can provide more universal postal and financial services in partnership with Postal Corporation of Kenya.”

In its quest to restructure their products and services in 2009 the bank embarked on a network expansion programme using the Agency banking model. This development has been closely followed by the bank implementing a Voluntary Early Retirement exercise, in line with its restructuring programme.

This year Postbank launched Patacash Mobile banking, this is an SMS system that allows an account holder to deposit or withdraw money to or from a Postbank account through M-Pesa.