In most of the developed world today, as well as a fair swath of middle-income and developing countries, you can walk into any government post office and after posting a letter or buying stamps, also deposit money into a savings account that is safe, secure, fully insured, and most of all, free.
“Postal banking” is a phenomenon that most Americans today don’t recognize, but in much of the world, it’s almost the definition of mundane. In the UK, Germany, Japan, South Africa, Korea, India, the Netherlands, China and France, just to name a few, the national postal system also offers basic financial services. Depending on the country, these range from no-frills savings accounts to checking and bill-paying services, to more sophisticated stuff like small loans, money transfer and forms of insurance.
Postal banking is an old idea whose utility for America has returned. We should bring it back, updated for the 21st century. It represents a big solution to two major problems Americans face today: first, and most importantly, low-income communities are seriously “underbanked.” The FDIC finds that over a quarter of Americans either have no access to the banking system or must obtain financial products outside of it (ex. payday loans). Second, the U.S. Postal Service has been teetering on the edge of crisis for years, as legal strictures imposed by Congress starve it of funds and the overall volume of mail decreases. Postal banking would go a long way to restoring its stability.
With large swaths of low-income Americans feeling shut out of the economic growth story happening in much of the country, reviving postal banking should be one part of any progressive agenda to build greater economic resilience and strengthen the social safety net.