Apparently An Post still planning to enter the Irish mortgage market

According to the Chief Executive in the Sunday Times yesterday.

Hard to see what they have to offer.

Brendan

They have gone out to tender for a new Banking IT platform, it was on etenders last month so perhaps they are looking at ramping up their banking portfolio over the next few years

It's hard to know what they would have to offer.

• An Post has little insight into customers income and spending patterns.
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• Post offices aren't suitable for in-person consultations.
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• They would have to outsource the whole underwriting process anyway.

An Post is actually a pretty good mail and parcel delivery service. Flat mail will shrink but parcel delivery is only going to grow and grow and it should position itself for this.

There is also the sideline in paying out social welfare benefits in cash and collecting TV licence fees. Theoretically these can be done by a private company but no one has the physical and geographical reach.

I don't know why An Post would distract itself with something completely extraneous like mortgage lending.

NoRegretsCoyote said:

It's hard to know what they would have to offer.

• An Post has little insight into customers income and spending patterns.
• 
  
• Post offices aren't suitable for in-person consultations.
• 
  
• They would have to outsource the whole underwriting process anyway.

An Post is actually a pretty good mail and parcel delivery service. Flat mail will shrink but parcel delivery is only going to grow and grow and it should position itself for this.

There is also the sideline in paying out social welfare benefits in cash and collecting TV licence fees. Theoretically these can be done by a private company but no one has the physical and geographical reach.

I don't know why An Post would distract itself with something completely extraneous like mortgage lending.

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Are there any stats on the percentage of parcel delivery they have? I agree that parcel delivery is going to grow driven from online purchasing but observationally I have ordered a lot on line and I'd estimate 1/10 parcels arrives via Anpost. I get a lot from DPD, Amazon and Fastway.

Theoretically with the new mortgage lending rules and deposit requirements, domestic mortgage lending should be relatively low risk. If you can set up an efficient digital offering with low overheads it should be low cost to run and not suffer from legacy issues the big bank do. From a 2016 report Irish lenders had average margins of 2.8% on mortgage lending.

I just don't know if a 2.8% margin is justification for a good business model.

Dublinbay12 said:

Theoretically with the new mortgage lending rules and deposit requirements, domestic mortgage lending should be relatively low risk. If you can set up an efficient digital offering with low overheads it should be low cost to run and not suffer from legacy issues the big bank do. From a 2016 report Irish lenders had average margins of 2.8% on mortgage lending.

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I agree.

But mortgage lending is almost totally un-related to what An Post does.

I would say the same if it was trying to sell life insurance. Where is the leverage? Where is the complementarity with other activities? I don't see much.

NoRegretsCoyote said:

I agree.

But mortgage lending is almost totally un-related to what An Post does.

I would say the same if it was trying to sell life insurance. Where is the leverage? Where is the complementarity with other activities? I don't see much.

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I would say they've experience offering retail banking products (loans, current accounts etc) so they aren't starting from scratch. This is a diversification of revenue generation and sets them aside from the competition as DPD are unlikely to start a mortgage business.

Maybe Anpost management have realised that competing in the mortgage market is going to be easier than competing in the parcel delivery business? Maybe that's the driver.

Dublinbay12 said:

I would say they've experience offering retail banking products (loans, current accounts etc) so they aren't starting from scratch. This is a diversification of revenue generation and sets them aside from the competition as DPD are unlikely to start a mortgage business.

Maybe Anpost management have realised that competing in the mortgage market is going to be easier than competing in the parcel delivery business? Maybe that's the driver.

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The parcel business is cut throat.

An Post don't own any of the customers they serve. They are just an intermediary, they are in Insurance but it is underwritten by an actual insurance company.

The mails business is fast declining but An Post have the Universal Social Obligation (USO). This is a significant loss making service and An Post are trying to reposition themselves.

Perhaps the most valuable asset An Post has is its brand which it might be trying to capitalise on.

I personally would be concerned An Post are trying to be everything to everyone. Look at Tesco mobile, Tesco insurance and other Tesco non retail services.

According to this article in the Irish Times 6 months ago, they will be partnering with MoCo




An Post is in talks with a non-bank start-up called MoCo about setting up a partnership to enter into the Irish mortgage market next year, buoyed by the planned exits of Ulster Bank and KBC Bank Ireland from the Republic, according to sources.

MoCo, the trading name of a company registered in Dublin last year as Cedar Lending Services, is led by a number of financial industry executives and is currently going through the application process with the Central Bank of Ireland to be authorised as a retail credit firm.

Their website is promising - the only slight issue is that they have no products.

Brendan Burgess said:

According to this article in the Irish Times 6 months ago, they will be partnering with MoCo

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So basically people will pick up flyers advertising An Post mortgages in post offices and will see offers on the An Post website.

But in reality a third party will do the underwriting and lending and will presumably pay An Post some kind of fee for marketing.

I'm speculating and open to correction by someone who knows the business better. But this does not look in any substantive way like a national postal provider actually issuing mortgages.

NoRegretsCoyote said:

But in reality a third party will do the underwriting and lending and will presumably pay An Post some kind of fee for marketing.

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This is kind of what An Post is doing as regards its Credit Card offering. Avant Money is the credit card service provider behind An Post Money credit cards.