Strategic directions for competitive postal financial services

8/6/2019 Strategic directions for competitive postal financial services

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IBM Managed Business Process Services

2010 IBM Corporation

IBM Corporate Service Corps : Kenya Team 1, Sub Team 2

Final ReportStrategic directions for competitive postal financial services

IBM Corporate Services Corps Kenya 2 Subteam 1 Twiga

Eva Aaboe Jensen, John Fredette, Francesco Papetti, William M Ramsden


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IBM CSC Team Kenya 2 Subteam 1 TwigaFebruary - March 2011

2

Agenda

Introduction

Summary of projectIssues

Recommendation

Our ApproachInterviews

Global best practices

Analysis & Recommendations

OrganizationMarketing

Partnerships

IT Infrastructure

Skills assessment and improvement

Action Plan


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3

Introducing the Team

JohnFredette

United States

of America

Marketing Manager Marketing, Go-to-market planning,Advertising and Media

Eva Aaboe

JensenDenmark

Manager, Payment

Systems,

Project Management, Payment services

Francesco

Papetti

Italy

Software Account

Manager

Software sales, Public Sector, Services,

Management

William

Ramsden

United States

of America

Financial Analyst WW Signings & Backlog Consolidation

and Measurements


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4

IBMs Corporate Service Corps

China

Egypt India

Nigeria

Ghana

Philippines

Romania

S. Africa

Tanzania

Turkey

Vietnam

Malaysia

Brazil

Indonesia

Sri

Lanka

Morocco

Kenya

Russia

Part of IBMs Corporate SocialResponsibility Program

Employee leadership developmentprogram

Launched July, 2008 Global IBM initiative designed to

provide government, smallbusiness, educational institutions,and non-profit organizations ingrowth markets with pro bonoconsulting work to help improvelocal conditions and foster jobcreation

+1000 IBM employees deployed

from 50 countries on 100 teams to18 countries since inception


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5

Agenda

Introduction


Recommendation



Analysis & RecommendationsOrganization

Marketing

Partnerships

IT Infrastructure


Action Plan


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Align the PCKorganization to new strategic business priorities

Establish executive level sales management

Update the brand perception to highlight innovation and new services

Build upon the reliability and trust characteristics

Maximize use of partnerships to reach strategic objectives

Financial institutions

Couriers

IT partners

Infuse young and energetic talentto the PCK organization

Maximize current and future IT Infrastructure

Use IT to communicate with all employees

Executive Summary: The Big Five Recommendations:


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What is at stake?

Change is happening in Kenya with or withoutPCK.

Citizens will have improved access to financial and

government services lives will be improved and

technology will play a key role. IfPCKdoes not embrace

change and become part of the newKenya, people will

turn elsewhere andPCKwill fail to be relevant.


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Agenda

Introduction


Recommendation




Marketing

Partnerships

IT Infrastructure


Action Plan


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Our approach

Our assessment is based on interviews and data gathering, realized

in February and March 2011:

Visits to the following Post Offices:

Nyeri

Karatina

Mweiga

Nairobi

Meetings with:

Head Postmaster of Nyeri Post office: Mr Mulundi

Central Region manager: Mr Gathura

Postmaster of Karatina Post office: Mr. Gakuba

Postmaster of Mweiga Post office: Mrs. Kagunyi

Deputy Managing Director ofG4S: Mr. John Muchira

Interviews:

75+ citizens, from Nyeri, Nairobi and surrounding areas

Discussions with PCK Management

Review and analysis of materials from PCK


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Quotes

The post office is slow

Make the post office just like in yourcountry

The Post office is old fashioned

I can rely on the staff at the

Post office

They are reliable forwhat they

do

They havent changed in many years

I trust my post office

The environment is notservice minded

I didnt know that they hadanything beyond mail services

I wish I could do more at thepost office


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12

Survey Results: Current use of Posta Kenya services

Customers are using traditional mail services, with limited use of financial and

other services. There was strong usage and positive sentiment about payment of utility bills at

branches

People appreciate the ability to do more at the branch locations.

When visiting the post office, what do you generally do? Sample size (N) = 50

44

38

12

30

16

7 6

31

0

510

15

20

25

30

35

40

45

Pick up

m il f m

x

tt Parcels

Buy

Stamps

Get Money

Orders

Use EMS EFT Funds

Transfer

Pay Utility

Bills

Services used


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Survey Results: Consumer awareness of current value-add offerings

Interviews show a generally high awareness of money order, bill payment

and EMS service offerings.

Generally low awareness of Electronic Funds Transfer and ZAP mobile

payment capabilities.

Were you aware that you could do the following at the post pffice? Sample size (N) = 50

33

29

12

41

7

0

5

10

1520

25

30

35

40

45

oney Orders F tility ill

ayment

ZA

Awarenessof urrent Offerings


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14

Focus Areas

Current state of Postal Corporation of Kenya


Organization

Marketing

Partnerships

IT infrastructure



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Worldwide Due to continued decline in mail volumes, post offices

have provided add-on services like letter/package tracking, parcel

insurance and registered mail

UK - Offers tailored and targeted direct mail to 99.9% of UK residents

Focus Area: Global Best Practices

Traditional

Postal Services

Financial

Services

Italy Posta based accounts with credit card, online banking, ATM

(PostaMat) service. Utility and telco bills can be automatically charged

on the account and paid on regular basis. Access is multi-channel

(phone, web, email, post office)

Provide insurance products from the Health,

pension program, and Life Insurance.


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Global Best Practices

Additional Services

Brazil Guaranteed the circulation of a new exam, meeting

stringent requirements for security, confidentiality and quality of

service

Australia and others - Provide online and on-site stationary and

office supplies

Switzerland Citizen transportation through Posta Bus

Italy Platform for e-commerce solution

France Proximity services from delivery of medicines to

installation of equipment

Government

Services

Italy/Lebanon - Passports, birth and death certificates, land

registration documents, and tax collection

South Africa Motor vehicle license renewals


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17

Agenda

Introduction


Recommendation




MarketingPartnerships

IT Infrastructure


Action Plan


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Recommendation forOrganization & Structure

Appointsales executiveresponsible across business

units

Appointstrategic alliancesexecutive responsible for

retaining and growing new

partnerships

Appoint dedicatedbusinessdevelopmentexecutive

Implementprocesses forcollecting ideas and

recommendations from the field

and the business units

Continuous improvements ofthe organization

Make room in the organization

fornew talent

Align reporting metrics for

profit business

Ensure employee

accountabilityfor their ownresponsibilities and that of the

organization

recovery plans for missedtargets

Quick Wins Mid Term Long Term

Restructure PCKorganizationDivide into verticals and staff

functions

New vertical for sales

Establish business developmentwithin the organization


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Very strong awareness of the PCK brand

and local presence throughout Kenya

PCK viewed as reliable for what they do,

Some viewed as outdated

Low awareness and utility of financial

services and other value-add offerings

Focus Area: Marketing

Conclusions

Brand

Perception

and Customer

Awareness

Current

Marketing

Efforts

Competitive

Marketing and advertising led by PCK

corporate team some flexibility for local

offices

Tactics include branch posters, print ads,

billboards some digital and social

Some conflicting brand messages

Mobile banking represents both a huge

threat and opportunity for PCK

Strong presence of competitive

branding/advertising in local markets

Safaricom and M-Pesa are the clear

market leaders both in perception and

reality

Summary of Current Status Analysis

Need to address the out-of-date

perception of PCK in the marketplace

both from a branding and customer

experience perspective

Opportunity to leverage reliable brand

trait to promote other offerings

Need to focus marketing efforts on

value-added offerings

Opportunity to leverage partnerships for

additional marketing coverage

Need for consistent brand messages

across all tactics

Opportunity to maximize PCKs

greatest asset the local branches

using them as platforms for marketing.

PCK cannot compete with Safaricom

and M-Pesa for mindshare of mobile

payments but may be able to explore

other options


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Recommendations for Marketing

Explore expandedco-marketingefforts with existingpartners

ZAP

Posta Bank

Ensure marketing resourcesare aligned to value added

offerings

Updatedad campaignImplement new integratedmarketing campaign with

updated brand messages across

all tactics

Documentary video

showcasing PCKs newofferings and actual customerscan be very effective across

multiple mediums.Branches, TV, Web,

Events

Social media marketingIncreased use of social media

as an additional method ofreaching target audience

- Targeting the next generation

ofPCK constituents


Update local branches toimprove customer experience

Leverage partnerships tofacilitate branch enhancement

Implement updates to

marketing messages-Ensure consistency in brand

messages

-Focus messages on new era


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Limited growth for financial servicesopportunities as customers/businesses

have established relationships with private

banks

High customer awareness and good

relationship with World Bank and KPLC

Extremely low customer awareness of

Zap services.

Partnerships with some, but not all banks

Focus Area: Partnerships

Conclusions

Current

Partnerships

Potential

Partnerships

Competitive

Pressures

Decision by Kenya Power and Light to

transfer to Easypay system will affect

current partnership and revenue stream


Opportunity for more promotion of ZAPoffering as lower cost option to M-Pesa

Potential to expand World Bank and

KPLC relationships

Opportunity to expand financial services

and strengthen customer relationships

through Posta Bank, while partnering with

regional banks

Potential reengagement of Safaricom to

drive competitiveness in mobile banking.

Great Citizen/Market demand for

governmental service offerings

Potential to partner with other

courier/mail services to deliver integrated

services more efficiently

Need to maintain Utility Payment service

while new entrants try and gain market

share.

Lack of a sustainable/profitable

relationship with the mobile market leader

Safaricom.

Limited governmental services offered

through PCK

Low postal involvement in

e-government expansion of Pasha shops.

Limited partnerships with other

courier/parcel providers


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Recommendations for Partnership

Revisit discussions with

Safaricom on market-leading M-Pesa Services

OfferDirect marketingservices

Based on PO box datacollection

Protectexisting relationship tomaintain current business

KPLC

World bank

Zap

ExpandGovernmental servicesto offer processing of certification

applications

Report

Emergency

Fault

Complaint

Register

Birth

Land

Company

Pay

Fees

Taxes

Fines

Receive

Certificates ID cards

License

passports


Buildfinancial services throughPosta Bank and future banking

partnerships

Partner with Governmental

institutions to offer efficientsubmissions and delivery of

certification applications

Partner with 3rd party to provide

CybercafeOffice andstationary suppliesboth on-line and through offices

Office services such asprinting, binding, fax

Online shop

Partner with couriers to

increase delivery speed and

lower cost

Optimization of use of network

Courier delivery to PO

Secure mail


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HW, SW, Applications supporting:

HR

Procurement

General Ledger

Intranet

Focus Area: IT Infrastructure

Conclusions

Current ICT

supporting

internal

services

Current ICT

supporting

e ternal

services

ICT

enhancements

HW, SW, Applications supporting:EFT

Money Orders

Internet

Track & Trace

Cash accounts

DB for Post boxes

Mobile payments

380 automated POs out of 700

T&T limited to Nairobi for international

shipments

Missing direct connections to banks

E-mail not widely spread across PCK

Lack of credit card payments


Need for ERP system to support all

internal processes on one platform

Need for Disaster Recovery and

Business Continuity systems

Need for basic ICT skills

Opportunity to build a DB with citizeninformation and connect it with Gov

entities

Opportunity for Direct Mail business

using Post boxes info

Opportunity for adding services

leveraging on to fiber optics links

Need ZAP service extended to all POs

Need for extend use of e-mail to each

PCK employee

Need for a connection to banks

Need for extension PO automation to

all offices and get them connected

Opportunity to enable T&T across the

country


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Recommendation for ICT

E-mailfor all employees alreadyconnected to HQ

ReinstallPCs in the localPostoffices for the citizens to use

Enhancement of the existing

database for post boxregistration

Credit card terminalfor Majorcities (Nairobi and Mombassa)

Investigate possibilities for

outsourcingPCK internal IT

Or use cloud computing services

ERPsystem to consolidateprocurement, HR, legder, assest

management ect

Track and trace system for all

mayor cities within the regions of

Kenya with plans to expand to

districts

GPS system to enable door-to-

door delivery

Disaster recovery and businesscontinuitity


Internet access for allPostoffices

dependent on roll out of fiberoptics and availability of

electricity

Switch to connect to banks via

Posta Bankdependent on stakeholderapprovals


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Traditional teller transaction based

Business development is up to personal

initiatives at local POs

Focus Area: Skills assessment and improvement

Conclusions

Customer

Services

ICT Skills

Skills for the

new era

Basic skills to run PCK applications are

in place

Poor ICT general culture

Organizational structure is not aligned to

business priorities

Sales people in business units are in a

low organization level and siloed

Business Development department not

fully established


Need for service-oriented mindset

Need for branch employees to be more

engaging and proactive in

communicating and selling new offerings

Need for sales coaching and education

Opportunity to enable e-learning

education

Opportunity to sell ICT skills

Need for sales management at a high

level

Need for a Business Development org

to address new opportunities


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Recommendation for Skills and e pertise

Communicate to all employeesthat PCK is changing and youhave to be prepared for thatchange

ICT training for employees

Use of e-mailUse of internet

On the job learning making ITa natural part of the daily job.


Explore internship offeringsTo bring in the new ICT skillsTeach employees the use ofICT

Employee self assessment

Manager evaluation ofemployees on all levels

Carrierdevelopment plans foremployeesICT skills


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Agenda

IntroductionSummary of project

Issues

Recommendation

Our ApproachInterviewsGlobal best practices


MarketingPartnerships

IT Infrastructure


Action Plan


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Asante sana!

We would like to thankPCK

management and employees for all theirhelp and support in this project.


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Backup slides


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Background and Scope of Work

What

The Postal Corporation of

Kenya (PCK) is one of the

largest organizations in the

country, with a nation-wide

infrastructure of over 500

outlets and 380 post offices.

One of the overall strategic

objectives for PCK is to

facilitate better and efficient

delivery of financial services

to all citizens, especially

those in the rural areas

where PCK has acompetitive advantage with

a widest physical reach.

Legislation requires PCK to

provide Universal Service

Obligation

WhyWith declining market share

on the core business of mail,

it is imperative for the PCK to

explore opportunities to

diversify business and

maximize the utilization of the

nationwide reach to offerfinancial services to grow

revenue.

HowReview current state

Look at best practices around

the world

Evaluate current financial

services as offered by PCKagainst best international best

practice, implications of the

vision 2030 and opportunities for

e-commerce

Propose a framework to support

a fast growing financial services

sector and to improve keybusiness processes.

Explore other opportunities for

growth


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Interview Findings

Value added services currently provided by PCK:Mail delivery

Payment of world bank money

Utility bills

School fees

Electronic funds transfer

Expedited mail service (EMS)

Government services payment of salaries foremployees of the government

Current PCK Service Limitations:

Delivery of mail to mail boxes because houses are

unnumbered

No payment with credit cards only cash

Largest payment method M-Pesa is not offered at PCKNo same day delivery

Competition stealing profitable business:

Matatus carrying both letters and parcels

Services like M-Pesa and Easypay allow fast and

efficient transfer of cash


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Current State Analysis

The global postal environment continues to

change dramatically and postal corporations

must adapt to rapid economic and social

changes.

Technology, deregulation, and globalization

have increased competition and altered the

postal landscape.

The new technology driven information

society has brought a host of new ways to

communicate and do business, such as

e-mail and e-commerce.

Global postal corporations are weighing

entry into the financial services arena as a

tactic for diversifying their revenues.

PCK is the official universal service provider

for Kenya and must provide the "consistent

supply of basic quality postal services.

Current services provided by PCK include

delivery of letters, parcels, EMS, money

orders, third-party payments and agency

services and EFT services.

EFT represents important opportunity, yet

competitive landscape presents challenges

Core parcel business also suffering due to

licensed and unlicensed competition

Global Market Situation Kenya/ PCK


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SWOT analysis for Postal Cooperation of Kenya

Strengths

Extensive geografical network

Well known and good reputation

Affiliation to UPU: a specialized organ of the UN which opens the

corporation to global network

Experienced and commited workforce

Long historical postal experience expanding over 100 years

Buildings and cars are available as courier or alternate uses

Opportunities

Growth potential for parcels and express courier business

worldwide

New business potential through utilization of technological

advancements

Public Private partnership

Increased activities in the capital market operations

Highly skilled populace

Kenyan population in the diaspora for enhanced financial services

Utilize the existing relationship between government and

government agencies

E-government

New offerings in existing buildings

Weakness

Inadequate IT infrastructure

Lack of Universal Services Obligation funding leading to high

operational costs

Historical high financial pension liability

Many layers of management; lack of stragegic aliiance focus

Older facilities and overall image

Limited financial services currently offered no CC payment

Large corperation with complex structure; tied to govt oversight

Failure to partner with M-pesa

Failure to quickly respond to competitive pressures

Threats

Liberalization and deregulation leading to market infiltration and

price reduction

Licensing framework that has brought on board many players

Increasing commercial banks network

Declining mail services

Mobile Billpay gaining momentum, and PCK is not positioned to

maximise opportunity


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Frequency and use of post office services

3

32

9 6

0

5

10

15

20

25

30

35

Very Rarely/Ne er 1-2 imes er th 4 imes er th

( eekly)

re tha 4 imes

er th

req e cy f is its t st ffice


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Documents

Strategic directions for competitive postal financial services