The New Zealand government decided to launch a state-owned bank that would compete with the Aussies. They called their new bank Kiwibank after their national symbol, the kiwi bird. But the government team planning the new bank faced major challenges. How could they keep costs low while still providing services in communities throughout New Zealand?
Their solution was to open bank branches in post offices. Kiwibank was established as a subsidiary of the government-owned New Zealand Post. The Kiwibank website states:
Back in 2002, we launched with a thought: New Zealand needs a better banking alternative--a bank that provides real value for money, that has Kiwi values at heart, and that keeps Kiwi money where it belongs--right here, in New Zealand.
So we set up shop in PostShops throughout the country, putting us in more locations than any other bank in New Zealand literally overnight (without wasting millions on new premises!).
Suddenly, New Zealanders had a choice in banking. In an early "move your money" campaign, they voted with their feet. In an island nation of only 4 million people, in its first five years Kiwibank attracted 500,000 customers away from the big banks. It consistently earns the nation's highest customer satisfaction ratings, forcing the Australia-owned banks to improve their service in order to compete.
Postal Banking Japan-style: Funding the Government's Debt with Its Own Bank
Another interesting model is Japan Post Bank, now the largest publicly-owned bank in the world. Japan Post is also the largest holder of personal savings, making it the world's largest credit engine. Most money today originates as bank loans, and deposits are the magic pool from which this credit-money is generated. Japan Post uses its excess credit power to buy government bonds. By 2007, it was the holder of one-fifth of the nation's debt. As noted by Joe Weisenthal, writing in Business Insider in February 2010:
Because Japan's enormous public debt is largely held by its own citizens, the country doesn't have to worry about foreign investors losing confidence.
If the U.S. Postal Service were to add commercial banking to its product line, it too could use its own bank-generated credit to help relieve its debt problems. The USPS is being forced to fund the health care costs of its employees for 75 years into the future, and a large portion of this unreasonable burden is composed of interest charges. According to German researcher Margrit Kennedy, interest composes on average about 40% of the cost of all goods and services. That suggests that eliminating interest could reduce the USPS debt by about 40%. If the USPS became a bank, it could use the credit generated from customer deposits either to service its own debt directly--something that would effectively be interest-free, since it would own the bank and would get the profits back--or by buying interest-bearing government bonds. The interest earned on the bonds could then be used to pay the interest on the USPS debt.
Other government agencies and local governments could improve their balance sheets in the same way. Public institutions with sizeable capital and revenues can cut their infrastructure costs by about 40% by establishing their own banks, allowing them to avoid a massive toll in interest to private banker middlemen.
The Post Office Deserves to Be Preserved
The U.S. Postal Service is a venerable institution that is older than the Constitution. It should be saved, and it can be saved. One way is to support HR 1351, a bill introduced by Rep. Stephen Lynch of Massachusetts to repeal the Postal Accountability Enhancement Act.
Another way is for the post office to combine mail services with teller services, restoring the Postal Savings System of an earlier era. The result could be not only to save the Post Office but to establish a competitive alternative to a runaway Wall Street banking monopoly that even Congress seems unable to control.