Back in March 2015 there was an announcement that there would be an agreement with the big clearing banks to minimise the impact of their branch closure programme. The intention was that the post office would take on a much bigger role in providing banking services, particularly in less densely populated rural areas. It is now expected that there will be an agreement announced. A key part of this is expected to be the post office providing far more services to small business customers. Without knowing precisely what would be involved, it is hard to comment, but if the idea is to replace smaller bank branches in rural locations, then the range of services offered clearly needs to be acceptable. Dealing with even small business customers is quite different from personal banking – for example, many small businesses need to pay in quite considerable sums of cash. Business banking can be more complicated and require a higher level of staff training and each transaction on average takes longer.
In principle this makes a great deal of sense and is to be applauded. However, as always, the devil may well turn out to be in the detail. In particular, when there is an announcement that the post office has 11,500 branches, this number covers a very wide range of outlets. The number includes well over 1000 outreach services, where it could literally be somebody arriving in a private car to a village hall and setting up for just a couple of hours a week.
Then there is the issue of Post Office Local outlets. Here the post office and the shop counters are side-by-side and at least in theory one member of staff can handle transactions at both. The operator receives no fixed payment to cover overheads but merely a fee for each transaction carried out. The reality is that many Post Office Locals are paying more in terms of staff hours to operate than they receive in payments from POL, the hope being that customers attracted by the post office will spend money buying things in the shop.
If Post Office Locals are to handle business transactions, it is absolutely vital that the payments the operators receive for providing the service not only fully cover the cost of staff hours but also a sufficient allowance to make sure those staff are fully trained. Currently, the expertise among the shop assistants expected to carry out post office transactions in PO Locals various hugely. Some are fully trained and excellent, but many lack the training and experience of Post Office work to be fully efficient. Recent surveys by the organisation Citizens Advice suggests that, for example, the advice they provide to customers on even basic postage products is often wrong. Quite simply, you cannot expect the shop assistant working, dodging between the shop counter and serving post office customers for a few shifts a week on national minimum wage, to be as competent at fairly complicated business banking transactions as a bank cashier doing it all day and every day, fully trained and being paid considerably more than national minimum wage.
A business banking transaction taking several minutes in a shop is going to disrupt business at both the post office and the shop counter. Already many local post offices experience problems when the customer comes in with several parcels to post – this problem will be magnified when you get a small business owner depositing a thousand pounds or more in cash, plus 20 cheques.
At the RSA, we are all in favour of anything that brings additional business and revenue to hard pressed local post office operators. We are used to seeing additional pressure being put on them without a commensurate increase in remuneration – a recent example being the need to put a QR code onto postage labels parcels, which added to the transaction time but which attracted no additional pay to cover it.
It is vital that the practicalities of dealing with business banking in smaller outlets, particularly Post Office Locals, is fully understood before any deals are announced. It is particularly important that the banks pay a sensible fee for the services and that POL pass a high proportion of this to the operators so that they can afford the numbers of trained staff needed to deliver the service efficiently.