New Research Shows Potential of Postal Banking

(This article first appeared in the July/August 2021 issue of the American Postal Worker magazine)

In the last edition of The American Postal Worker, we noted that the growing momentum for expanded postal banking was meeting increased opposition. Most of this comes from the financial establishment and their allies in Congress that see expanded postal financial services as a threat. Among those who have attempted to pan postal banking are the groups representing credit unions and community banks.

New research from the University of Michigan shows what this campaign has long argued – that post offices may, in fact, “be better positioned than community banks or credit unions to expand access to financial services.” The report, entitled “Postal Banking: How the United States Postal Service Can Partner on Public Options” seeks to answer whether the locations of credit unions and community banks is sufficient to reach the unbanked and underbanked populations, and how the postal network stacks up compared to the private sector.

The post office network of more than 30,000 post offices is spread across the country, with post offices located in approximately 30 percent of all census tracts. The research found “that 69 percent of census tracts that have a post office lack a community bank – defined as having less than $10 billion in assets – while 75 percent don’t have a credit union branch. And 24 percent have neither, affecting nearly 21 million people.”

This data shows that the postal network is uniquely positioned to provide services to the unbanked and underbanked. Sixty million people live in an area with no community bank, but have a nearby post office. Nearly 65 million people do not have a credit union nearby, but have a post office in their community. The data also suggest that post office locations are disproportionately located in areas where the underbanked and unbanked are likely to live – like poorer urban areas and more remote rural areas.

The report notes growing support in Congress for expanded postal financial services. It particularly highlights one piece of legislation, the Banking for All Act, introduced in the last Congress by Sen. Sherrod Brown (D-OH), which would create a public option in banking through personal Federal Reserve Accounts (FedAccounts) that could be accessed either at post offices, community banks or credit unions. The research seems to suggest that many people interested in opening a FedAccount would be well served by a visit to their local post office.

Click here for more information on this new research or to access the full report.