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Finland’s postal service targets new revenue streams through digitisation

Posti plans to use the new SisuID digital authentication method to accelerate business growth and opportunities

Finnish postal service Posti has embarked on an ambitious project to digitise its core mail delivery and logistics business.

The initiative is a critical element in its plan to create new commercial revenue streams to compensate for the ongoing decline in income from traditional paper mail services.

State-run Posti is looking to lift its revenues by expanding its range of digital offerings in a marketplace that has long embraced electronic mail and considers Posti’s standard postal services fare as outdated.

As a result, Posti is prioritising its digital spending to generate new revenue opportunities across the parcels, e-commerce and logistics domain, a focus that is largely driven by Finland’s ongoing surge in online shopping.

To advance its digitisation agenda, Posti has joined the Finnish SisuID identity and authentication pilot scheme to enable it to better identify customers online and offline. Posti plans to use the new SisuID digital authentication method to accelerate business growth and opportunities.

The adoption of innovative user-friendly identification methods such as SisuID have the capacity to make Posti’s digitisation targets more accessible, said Raine Westerholm, the company’s head of payment services and digital commerce.

“Right now, Posti is unable to identify persons online or in the physical service points with sufficient effectiveness or cost-efficiency,” said Westerholm. “Players in the logistics arena need a common digital authentication solution that can connect an individual to all services, rights, and the personal data of the person.”

The SisuID pilot is being run as part of the Finnish Sandbox of Trust (SoT) project. SisuID is being tested as part of an initiative to create a digital identity platform to resolve authentication issues. Led by cyber security firm Nixu and part-funded by state innovation fund Sitra, the SoT hopes to provide the public and private sectors with a robust, low-cost authentication method.

The code generated by SoT will be offered as open source to produce a national identification system. It is also intended to help advance the digitisation of identification processes by its public and private sector users.

Facial recognition tools

Biometric authentication is being examined as one solution in the SisuID pilot. Facial recognition tools, supported by the SisuID app, are being developed to identify customers without the need for user interaction. The app employs facial recognition to validate document information. Collected biometric data can be used for authentication, subject to the user’s consent.

“The SisuID is undergoing rapid development through the pilot projects,” said Joonatan Henriksson, head of digital business at Nixu. “We have leading public and private players involved in testing their requirements for the new authentication application. We expect to be able to roll out SisuID and reach the production stage this year.”

Posti is exploring how best to optimise SisuID technology. The company is considering establishing self-service kiosks that would function as digital identity and authentication registration points. It believes SisuID has the potential to eliminate the need for customers to physically sign a paper verification form to retrieve a package from the post office in the future.

The post office-located kiosks envisaged by Posti would enable users to take a selfie and use an electronic reader to verify authenticity of their passport or ID card. The kiosks could also be used to obtain a digital identity registration and activate a SisuID mobile authentication to complete self-service tasks at post office outlets. Also, the SisuID mobile app could be used to access Posti’s digital services online, replacing the more customary user name and password.

Read more about IT in postal services

Posti began to roll out new digital service offerings in March when it launched its Plus Sticker tracking service for ordinary paper mail. Plus Stickers, which are attached next to traditional stamps on envelopes, provide traceability for ordinary letters.

The roll-out of Posti’s new customer-based digital offerings is being managed under a strategic partnership deal signed between the company and Infosys in 2019. The digital transformation technology agreement covers Posti’s business and IT services.

The primary focus is on modernising IT applications and infrastructure, while transitioning it to a flexible IT service model. The deal includes input by Infosys to drive Posti’s technology-led initiatives using advanced digital technologies supported by improved data utilisation, artificial intelligence and robotics.

The partnership with Infosys is intended to reinforce Posti’s ability to respond more rapidly to technology-driven trends and changes in customer needs, said Petteri Naulapää, Posti’s senior vice-president of ICT and digitisation.

“We operate in a changing business landscape,” said Naulapää. “Infosys will help us adapt to changes with greater agility and focus more on our core operations. Our goal is to be more reactive in improving our services in line with the increasingly digitised needs of our customers.”

Infosys has been tasked with optimising and modernising Posti’s existing IT estate. The scope of the assignment includes rationalising IT applications and hosting the workloads on a public cloud. Reducing costs through enhanced efficiencies is a clear objective of Posti’s broader digital transformation project.

This incorporates both the postal and logistics organisation’s technology-led business transformation, together with an end-to-end security operations network.

The growing popularity of online shopping, which saw a significant increase in value and volume in March and April against the backdrop of the Covid-19 pandemic, represents Posti’s most promising and potentially lucrative commercial revenue stream going forward.

E-commerce Box centres

Posti has responded to this e-commerce opportunity by sharpening its acquisitive edge and opening urban e-commerce Box centres that serve its consumer and online retailing customers.

These are equipped with fitting rooms, a parcel locker facility and a digital kiosk. Customers are permitted to “try on” clothes ordered online and delivered to the centre. If the clothes ordered do not fit, or are found to be defective, they can be returned on-site at the centre without penalty. 

The Box centres function as both a physical high-street store for online retailers and a testing space for Posti’s new digital services. Posti customers can arrange to have online orders delivered to Box for collection, and online retailers can dispatch orders from self-service kiosk terminals at Box.

“Over 20% of consumers who took part in a recent Posti survey indicated they will be buying everything, or almost everything, online by 2025,” said Kaisa Ilola, Posti’s head of customer experience and channels. “Box is our response to the growth of e-commerce and to new consumer trends in Finland. It’s a benchmark for how Posti’s digital transformation is progressing.”

In another deal to boost capacity in its e-commerce business, Posti acquired Sweden-based logistics firm Aditro Logistics in February, which has substantially strengthened its market presence in Sweden and Norway.

Aditro, which operates in the warehousing, staffing and logistics services sectors, reported a turnover of €100m in 2019. The company manages seven warehouses in Sweden and Norway with a total of 230,000m2 of storage space.

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