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Executive Insight – Booz & Co.

Proving there’s still a place for snail mail in the digital age

by Ulrich Koegler

ULRICH KÖGLER is a partner and IVAN JAKOVLJEVIC a senior associate at Booz & Company

In an age when email and digital social media dominate the present and future of communications, traditional postal systems are losing their role as the primary means of communication.

Yet, postal systems remain a vital way to reach people, even in the age of instant communication. What postal systems lack in speed they make up for in other benefits. They offer a way for citizens, especially those in rural areas, to better communicate with each other and their communities; a way for companies and merchants to reach their target audiences with direct mail, e-commerce deliveries and, perhaps most important to governments, a way to locate citizens in an emergency, get them essential services and documents and help them transfer money safely.

These benefits, while balanced among citizens, businesses and governments, nevertheless will not be available in emerging markets in general — and in the Middle East and North Africa (MENA) region in particular — without significant new investment and efforts by government leaders. Therefore it is critical for the benefits to be significant enough to justify investment and activity.

Because the region has only in recent decades witnessed stable population patterns common to Organization for Economic Cooperation and Development nations, postal systems in the MENA region are significantly smaller, less utilized and more costly than their counterparts in developed markets. Unfortunately, this has limited their potential and that of MENA countries to serve citizens, local and international businesses and governments.

Reaping the Benefits

There are numerous advantages to a strong postal system — one being the introduction of standardized addresses. An address system that makes the best possible use of modern Global Positioning Systems/geo-mapping technologies allows for both the unique identification of citizens as well as the ability to reach a destination in the shortest possible time. As such, an address system also offers important benefits for emergency responders, such as medical, police and fire services.

Meanwhile, governments seeking to interact more closely with their citizens can use postal addresses to locate and engage them regularly. When a government is able to reach its people it can efficiently deliver income support, information on public health and other essential services. This ability is vital to the success of many government services, especially in rural areas.

Those populations least likely to access government services in person or through electronic channels — the low income, sick, elderly or rural groups — are most in need of such access; therefore, a modern postal system is a valuable way to close any service gaps. Illustratively, the local post office is becoming a place where one can renew a driver’s license, pay utility bills, apply for various government documents or collect a pension check. 

A game plan for postal systems

Regional governments looking to further strengthen their postal systems have focused on four major areas for improvement: an address system to support national emergency and security services; data warehousing to provide governments and businesses access to essential socio-demographic information; a “last mile” delivery system to complement e-government services and e-commerce; and a system for postal money remittances to provide an inexpensive and traceable means to transfer money.

In addition to letting emergency responders — such as medical, police and fire services —  reach homes and businesses more easily, the unique identification of individuals through their mailing address can be part of a more comprehensive citizen and resident database that captures critical information. For instance, such a database might link addresses to medical history to allow ambulance attendants to respond more quickly and knowledgeably, note a history of domestic violence complaints that can prepare police for what they might face, or enable security forces to screen for potential security threats.

 

Last-mile delivery systems are another essential element in e-government and e-commerce services. For example, while e-government services can permit routine applications and renewals of key government licenses and documents, such as passports and birth certificates, citizens still need to take delivery. A postal system allows the government to ship those documents directly to people’s homes, rather than to make citizens stand in line in government offices that may be difficult to reach.

Globally leading postal operators have also deployed digital documents, such as secure letters, digital marketing and digital secure identification — a service that gives postal operators a strong footing to operate in the digital age.

Finally, postal systems can be a conduit for money transfers. Such use is not uncommon: in many markets, the post office is the primary place to conduct such transactions.

Moving more aggressively toward such a system would allow governments to track money transfers more efficiently, help security agencies tackle terrorism and reduce narcotics trafficking, money laundering and tax evasion. Postal remittances can be a more secure alternative to informal money transfer schemes (such as hawala), which have been linked to the financing used in the 9/11 terrorist attacks.

Other nations that have sought to improve national postal systems have developed some sophisticated capabilities. For example, Singapore introduced a postal address system that enables sequential sorting of mail items based on the shortest delivery route.

Many nations have developed postal banking systems that provide basic financial services to customers far from national banking centers. Development of all those service capabilities will require initial investments well beyond the capacity of national postal operators. Their current small scale and low revenue base will simply not allow for a comprehensive overhaul of postal infrastructure.

But due to the fact that these services have significant mid-term revenue potential, and the potential for a profound socio-economic impact, governments should take the lead in making sure that the MENA region has a full spectrum of opportunities for citizens to receive information and services.  

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Ulrich Koegler


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Ivan Jakovljevic


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