It has been no secret that the U.S. Postal Service has been facing severe financial woes. Even after a recent increase in stamp prices and strong growth in its package shipping business, the USPS continue to lose money as it seeks to deliver a dwindling volume of mail to a growing number of addresses.
There have been many suggestions for ways in which the USPS can right its ship, but a recent one seems particularly outside the box. This idea calls for the Postal Service to partner with banks and offer basic financial services to those who currently don't have access to them.
In a recent op-ed published on the Huffington Post, U.S. Senator Elizabeth Warren (D-MA) supported this idea, arguing that it would help many unbanked individuals take steps toward getting the financial services that they may need.
"With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don't have basic banking services because there are almost no banks or bank branches in their neighborhoods," she wrote.
As an article on Bloomberg Businessweek pointed out, this is not as farfetched as it seems. The idea even has precedent: In 1911, the news source wrote, as many as 4 million people had savings accounts with the Postal Service. Many were recent immigrants. The service lasted for more then 50 years before it was finally shut down due to lack of interest.
The Postal Service argues that it could make a significant amount of money—as much as $9.5 billion—through fees and interest.
Whether such a plan ever becomes a reality is up to the USPS and Congress. But the agency is not the only institution that is interested in serving the unbanked. The problem is that, due to their limited credit histories, it can be difficult to make loans to these individuals with any degree of certainty that the money will be repaid.
All lenders have a need to manage risk. No effort to loan to unbanked individuals should go forward without the proper tools for conducting credit risk assessments.