An Post takes aim at Revolut with new €18m banking app
An Post Money targeting a million customers within five years in digital plan
AN Post is to launch a new current account app next month following an €18m investment in its own digital banking platform.
An Post Money has 250,000 customers across its current accounts, credit cards, loans and foreign exchanges business. Under its five-year plan, it is seeking to increase this to one million active customers by 2025.
Debbie Byrne, managing director of An Post Retail, said that the new app benchmarks itself against banking app Revolut.
“A lot of people use Revolut as a second account. We want to be the primary account, you’re paying your salary in and then you’re getting all the bells and whistles with it. You’ll have the trust of the An Post brand, the user experience of Revolut. And we have the retail network of 950 post offices.”
She said the new app will have Apple Pay, Google Pay and FitBit Pay. It will use ‘jars’, which will allow users to allocate money into different pots. Locks can be put on various jars to make the money less easily accessed.
Initially people will manage this themselves but in phase two, due in the first quarter of 2021, intelligent budgeting will be introduced.
“We will have smart, intelligent functionality that will do an analysis of your spend, give it back to you and create that budget for you. It will also be able to flag upcoming expenses such as insurances premiums, etc.”
Peer-to-peer payments, a very popular function on Revolut, will also be introduced in the first quarter of next year.
A new youth account called Money Mate aimed at 10- to 16-years-olds will also be launched which will see young customer get a debit card controlled by the parent via an app.
An Post has 65,000 current account customers and expects that to rise to 100,000 next year, ramping up after that.
“Where we want to position ourselves is as a new force in financial services and we see ourselves sitting between the pillar banks, because we have got the trust and scale, with the user experience of the Revoluts and digital banks.
“It’s a five-year plan,” said Byrne. “Open banking is key for us and that really only kicks in in Q1 next year,” she added.
“Switching in the current account market is very low and banks have made it deliberately very hard to switch. Open banking will now make it much easier to switch their accounts. It will take time and people don’t move fast.”
She said the An Post credit card in partnership with Avantcard and launched last year had been very successful. It now has 12,000 credit card customers relating to €80m in credit.
Byrne also said its loans were gaining traction and were at 92pc of their forecasts, despite a fall in demand for credit during Covid-19.
She said that An Post sees its current account offering sitting in between the traditional banks and the digital banking apps, which some people have reservations about.
“A lot of people don’t want to go to Revolut. Who is Revolut? Who is behind them? And are you going to pay your salary into Revolut?”
Byrne said that An Post still has ambitions to enter the mortgage market and that there had been advanced talks with two parties last year.
While an agreement was not reached, An Post is confident it will find a partner and offer better value in the market, despite scepticism from industry analysts that this can be achieved.
“There is opportunity for consumers to be offered better value and there is no point in us going into this space unless we can offer better value,” she said.
Byrne also said that An Post plans to move into SME lending next year. Last week it launched the Green Hub concept, which will see An Post offer competitive green loans.
Users of the new app will also have to ability to avail of carbon offsetting and this can be linked to purchases and expenditure also recorded on the app.
DUBLIN city centre isn’t back to its pre-Covid bustle, but the ultra-modern ‘new concept’ post office on Merrion Row is doing a brisk trade on a midweek afternoon. It is one of half a dozen revamped post offices in key locations around the country which Debbie Byrne, managing director of An Post Retail, sees as a statement of intent by the semi-state. There is a high-tech, self-service kiosk, a tablet and phone for customers to check on their current accounts, as well as a parcel locker to facilitate the growing number of online shopping packages.
Byrne is particularly proud of the signage outside which carries the description “post, parcels and banking services”, reflecting her determination that An Post can play an important role in Irish financial services.
“There are 500 post office which don’t have a bank within 5km. We want to be the community bank — we can’t call ourselves a bank [because An Post doesn’t have a banking licence], but we offer community banking services. The banks are leaving communities,” she says.
Having rebranded its financial services arm, including current accounts and foreign exchange business, as An Post Money last year, Byrne believes An Post is already proving itself in the space.
“Credit cards have been a massive success. We’re getting about 20pc of new cards issued in the market, based on the Consumer Credit Bureau. So we are a really strong number three in credit cards and next year we will be number two,” she says.
An Post’s credit card, which is issued by Avantcard, was launched last year. It currently appeals to people transferring their balance with an interest-free period for 12 months, but will introduce a new product with a broader appeal next year.
An Post also launched loans last year, although she admits this part of the business got off to a slower start. Byrne, a marketer by background, is a believer in offering something different to consumers, so An Post Money brought out loan rates which can claim to be the best in the market.
“More recently we’ve had the best rate on loans for over €20,000 with a 5.9pc rate and that has really gained traction. Even during Covid, when appetite for credit is down, we are actually at around 92pc of budget (target) for our loans.”
The newest initiative is a so-called Green Hub concept — according to An Post’s marketing, it sees itself as becoming ‘a one-stop shop for greener living’.
In an effort to position itself apart from credit unions, An Post decided to focus on the green loan space, tying in with the Government’s objectives on deep retrofitting 500,000 homes by 2030. An ad campaign for the green loans will launch this week, with a headline rate of 4.9pc for loans over €20,000.
It has partnered with SSE Airtricity for project management and will announce two more partners in the coming weeks. The goal will be to link up people with local contractors and it will be providing finance locally through post offices.
Byrne herself is from Mullingar, Co Westmeath and studied international marketing and languages in DCU in the 1980s, during which time she became fluent in French and German.
She went to the UK, taking her first job with Grand Metropolitan, working in its dairy division. While still in her 20s, she launched Ski Yogurt and Munch Bunch Yogurt into Europe but left when the division, Express Dairy, was acquired by Northern Foods.
Her next job was in Pizza Hut, which “she loved”.
“I really did the whole relaunch of Pizza Hut in the UK. It had gone very downmarket and we really moved it premium and did a rebrand with new products and services, like the salad bars. And that is when I really developed a love for innovation. It was really about understanding the customers,” she says.
She was then approached by beauty giant L’Oréal, which she worked with for five years in the UK and four years as general manager for the company in Ireland, overseeing brands such as Maybelline and Granier as well as L’Oréal’s hair salon business. She says she grew the business by 70pc in four years.
Byrne loved the international dimension to the company, as well as its focus on understanding its customer. But she says it was a “really tough” company to work for.
Her next job was what she describes as a very commercial marketing role with telecommunications company Eir. She joined before Eir shops were in existence and there was, she says, a lack of focus on consumers. “I remember looking at this VoIP product at the time and saying seriously, you would want a degree to set it up,” she says.
So her mission was to drive a “consumer centric approach, bringing in product development under marketing”.
She left under a voluntary redundancy scheme, going on to carry out consulting work at TV3, then led by An Post CEO David McRedmond, and worked on DAA’s Terminal 2 project.
Next, she took a role with Life Style Sports, joining the board and focusing on marketing and strategy where she says she learned a huge amount about e-commerce and social media.
In 2018, McRedmond reorganised An Post into two divisions — parcels and retail — with Byrne joining An Post to head up the retail arm. One of her key tasks was to strike a landmark deal with the postmasters for the transformation of the network.
There was also an exit package for postmasters, which led to the closure of around 160 post offices. There are now 950 post offices, 45 of which are operated by An Post with the remainder operated by postmasters.
The Irish Postmasters’ Union claimed earlier this year that up to 400 post offices would close in the next 18 months without more Government support — and that was before Covid.
All post offices have seen a reduction of around 20pc in footfall due to the pandemic restrictions and the move to issue social welfare payments fortnightly instead of weekly.
This has hit sales of other products. However, co-located post offices — which are post offices which share the premises with convenience stores — had an 11pc uplift compared with standalone premises.
“When I started out, the post office network was in a bad position,” says Byrne.
“The pie is only so big, so you’ve got to either shrink the number of slices in the pie or grow the pie. We’re trying to do both.”
“The first thing I had to do when I came into the job was cut the slices so you had fewer people getting a slice of the pie. And what we have been doing since is growing the pie, with new products and services which creates new income, but you need income.
“What drives me nuts is local TDs and councillors electioneering on the back of this. What they should be doing is lobbying Government by saying ‘Why can’t you pay for your motor tax in your post office?’,” she adds.
Byrne gives a local example of the post office in Monkstown where she lives. The postmistress is an older woman who has decided to resign. “So we’ve advertised that contract, but there is nobody to take the contract in Monkstown village.” The local Spar has a coffee shop, so there is no room there for a post office. Byrne says that An Post will be blamed if it closes, however.
Byrne also praises postmasters for playing a vital role during the Covid lockdown, as well as other postal staff who supported the elderly during lockdown.
In terms of the future of the network, her focus has been on new products and services, “because that drives people into post offices, gives postmasters new income and gets you a new customer base. Co-location is absolutely key because that creates stability for postmasters”, she says.
“We have put in place a €10m capital investment fund for postmasters so we will co-fund the relocation. A lot of the postmasters are of an older breed. We’re investing very heavily in commercial training, treating it like an SME, how to manage a P&L, upselling techniques.”
A key strand of the plan is to get more Government services delivered from post offices, such as motor tax renewal. But Byrne says this has been slow.
A bold plan to get into the mortgage market by shaking up the market with lower interest rates has also been slower than planned.
There has been scepticism among financial analysts about An Post’s ability to deliver on this goal, even if An Post managed to secure a European partner bank.
“That is still very much our objective, but we just have not found the right partner,” says Byrne. “We have done the dance fairly down the line with two partners and then for various reasons it hasn’t come off. But that is completely on our
Debbie Byrne, MD of An Post Retail, at one of their new concept post offices on Dublin’s Merrion Row. Photo: Steve Humphreys
horizons to do it. We could have done a deal last year but we didn’t and the reason for that is that there is no point in coming to the market unless you are really bringing something different to the consumer.
“One party pulled out as they had conflicting priorities. Then with another party we just couldn’t get the proposition that we wanted.”
As to scepticism in the market about An Post’s ability to be a serious player, she says: “I think two years ago people would have said — will they, won’t they — and Goodbodys and others would have written about that. I think we have proven ourselves in credit cards. To get 20pc of new credit cards issued in the market, we’re getting serious traction in loans. And in terms of mortgages we have proved we can get large partners to talk to us, just the timing hasn’t been right.
“And we’ve put our money where our mouth is now by investing €18m in a digital banking platform,” she says.
The big push for now will be on its current account app, which is owned and developed by An Post.
“The reason we are investing in our own digital platform is we need to knit together that patchwork quilt of suppliers. So the consumer has a seamless experience, it was important that we invested in that infrastructure ourselves so we are controlling the user experience.”
She thinks there is an opportunity to become the primary account for people who want the convenience and extra functions of the best digital banking apps but are unsure of some of the platforms.
“I think younger people have been quick to adopt Revolut, but we want to be more mass market. And that is our benchmark, our user experience is benchmarked against Revolut and Monzo.”
She says that An Post plans to be a main player in the market, not a niche one.
“I have a profit and loss account projected five years out where I can say all these product lines will decline whatever way you look at it. Fr Ted stamps and everything was great, but stamps will decline, social welfare will decline, Billpay will decline, and the growth in terms of plugging that gap is financial services,” she says.
“We see ourselves as being a main player, we have got to drive significant revenue out of this.”