THE HISTORY OF POSTBANK AND HOW IT IS GROWING
The first savings bank in South Africa was founded in 1822 in the CapeColony. It was followed by a number of other institutions, most of which were privately owned. It was not until 1875 that a state-owned savings bank was created.
The objective at that time was clearly to use the savings of private households to finance public budget deficits. In order to take advantage of an existing branch network, the state run savings banks system was integrated into the Post Office in 1894.
This move was followed by a process of rapid growth. With the space of only a few years, savings bank business was being conducted in more than one hundred Post Offices. Eventually, basic banking services became available at every Post Office counter in the Colony.
Having proved itself in the CapeColony, the Post Office Savings Bank model was also adopted in other Colonies. In 1910, when independence from Britain was declared, the Post Office Savings Banks of the Colonies were amalgamated to form the Post Office Bank of the Union of South Africa.
CAPITAL GROWTH
The growth of the Savings Bank during the first 20 years after the establishment of the Union of South Africa was comparatively slow due, no doubt, to the results of the First World War (1914 – 1918) and the subsequent economic depression. However, the next 20 years brought about an astonishing transformation in prosperity and development as will be seen in the following statistics. The peak of the Bank’s activities was reached in 1947 when transactions by depositors totaled 5,805,088.
INVESTMENTS IN UNION LOAN AND NATIONAL SAVINGS CERTIFICATES
- UNION LOAN CERTIFICATE
The Union Loan Certificates were offered from 23 September 1919. The last maturity date was 31 July 1966, when the product was discontinued.
- NATIONAL SAVINGS CERTIFICATE
The National Savings Certificates were offered from 1 September 1961. The last maturity date was 31 July 1987, when the product was discontinued.
It was not until 1974 that the Post Office assumed full responsibility for the Post Office Savings Bank. According to the 1974 amendment to the 1958 Post Office Act, liability shifted from the Minister of Finance’s Treasury department to the Post Office.
In the early eighties Post Office Savings Bank started to extend its services to include Autoteller machines (ATM) linked services, through the Telebank service. The product was subsequently refined, and in 1999 it was changed to Flexi Card.
As of 1 October 1991 the Post Office was transformed from a public sector entity into a commercial company. The Post Office Savings Bank shifted from being a funds provider for the Telecommunication projects to a new composition of its assets. At the same time tax concessions which were available on the Savings Bank Certificates were withdrawn.
In 1994 the Post Office Savings Bank was renamed “Postbank”. It continued to operate as a division of the South African Post Office.
POSTBANK PRODUCTS/SERVICES AND PERFORMANCE
Book based savings accounts (Smart Save)
The book-based savings account is the main service offered by Postbank. The accumulated savings account balance has shown a positive trend with the number of accounts steadily increasing.
As ordinary savings accounts are being the most important source of funds and form the basis for Postbanks’ core business, the experienced growth rates over the past 3 years were satisfactorily.
Telebank Account (Flexi Card)
Telebank was a card based savings account, which may be compared to a transmission account because of the frequency of transactions, and the low balances kept in this account. Employees mainly from Telkom, the Post Office and Government departments use a Telebank facility as a convenient medium in order to receive and withdraw their salaries. The use of the Telebank facility was limited to just under a 400 online Post Offices, mainly in the urban areas. Telebank transactions were made over the Post Office counter terminals and at over 7 200 ATM’s in the Saswitch system. It was subsequently refined and renamed Flexi Card. Today the Flexi Card can be used at more than 1 200 online Post Offices and all Saswitch ATM’s countrywide.
Savings Certificates
The Post Office Savings Certificate is an established product of Postbank, which has been offered to investors since 1890. Savings Certificates deposits are held for a minimum period of six months, after which the funds are available on demand. From 1974 this product became particularly attractive to investors because of tax concessions which were granted to account holders. Interest on savings certificates is payable half yearly.
The tax concessions on the interest payable has since been phased out starting in 1991 and with effect from 1995 has been completely removed.
In 1999, the product was renamed Maxi Save with the same features and benefits.
NEW PRODUCTS INTRODUCED
As Postbank deposit base was likely to decrease in the near future because of its narrow product range which offered no differentiation, a review was conducted on the products on offer. To exploit the existing potential that exist in the lower and of the market, it became crucial to reposition the products with a view of expanding the product range unlimited to financial services.
In the 2003, three more new banking products and one insurance product were introduced.
THERE NEW PRODUCTS ON OFFER
1. TERM SAVE
The product is intended for investors who would like to earn a better return on investment. It offers a term choice of 1 month to 12 months at tiered interest rates.
2. BONUS SAVE
It is a monthly regular savings plan for individuals and groups. Term of investment is from 12 to 60 months.
3. TERM SAVE PLUS
In July 2004 the Term Save Plus investment over a fixed period of 24 months was launched. This product gave investors the option of earning higher interest by investing their money for a longer period.
INSURANCE PRODUCT ON OFFER
THUSO PRODUCT
The Thuso Life and Funeral Plan is presented by Postbank and underwritten by Safrican, a subsidiary of Thebe. It offers life insurance of up to R100 000 and a funeral cover of up to R10 000 per member at affordable premiums.