Posting changes

Just as Girobank disappears from the high street, the Post Office announces a deal to offer loans and savings accounts from its counters. Unlike Harold Wilson's "people's bank", rooted in a project that promoted social equity, the Royal Mail is going into the money-lending business for more materialistic reasons. It is hoped that its 17,000 branches - a bigger network than all the other banks and building societies put together - will see the Post Office become a financial force to be reckoned with. These latest moves are either the last gasps of a dying, but loved, institution, or they signal the rebirth of a 300-year-old essential part of the state.

To its detractors, the Post Office is already showing signs of being overwhelmed by its problems. Having lost more than £600m last year, it faces damaging strikes in the capital. The PO also has lumbered into the lucrative finance market - where the running is made by slick internet banks, big supermarkets and multinationals with apparently bottomless pockets. But there are reasons for optimism. The public flock to change their pounds at the post office before going on holiday - so much so that it has become Britain's second largest foreign exchange merchant. It also managed to sell 1 million travel policies last year. Both success stories suggest the post office plan might work.

What is happening here is the consumerisation of one of the few big industries in state hands. Competition in parcels and the inevitable opening up of the letters market makes it harder for the Royal Mail to make money from what it does best: handling the post. The result is the Royal Mail entering new markets - and updating how it treats its staff and its customers. This is a good thing in the sense that the world has changed and so must the post office. No one will want to wait in a long Post Office queue to discuss a mortgage. The pace of change in business is much faster than ever before. However, if Marks & Spencer or an entrepreneur such as Richard Branson can offer the public financial services, then why cannot the Post Office?