A research report prepared by John Anderson for the Canadian Union of Postal Workers, 2018
Postal workers' unions — the Canadian Union of Postal Workers (CUPW) and the Canadian Postmasters and Assistants Association (CPAA) and more than 600 municipalities 1 and other allies are supporting the set-up of postal banking and making financial services available in every post office. This report recaps the case for postal banking, and shows how clear the path is for its implementation in Canada.
Do you no longer have a bank branch or credit union in your neighbourhood or community? Well, it is not just missing in your community. In fact, the total number of bank and credit union branches has declined massively. Today, there are 6,190 bank branches in Canada, down from 7,964 in 1990, and there are 2,831 credit union branches in 2017 compared to 3,603 in 2002. And closures are still going on today. 2
Many communities now have no banks or credit unions at all. A study showed in 2014 that 45 percent of small towns and rural communities with a post office did not have any bank or credit union. British Columbia and Nova Scotia had rates above 60 percent, and Newfoundland above 80 percent!
Table 1: Rural Post Offices Surveyed on Financial Services & Franchises 2014 |
|||
---|---|---|---|
Provinces and territories |
Total |
No bank or credit union |
% Communities with no bank or credit union |
British Columbia |
176 |
107 |
61% |
Alberta |
211 |
60 |
28% |
Saskatchewan |
322 |
144 |
45% |
Manitoba |
177 |
85 |
48% |
New Brunswick |
111 |
55 |
50% |
Nova Scotia |
157 |
102 |
65% |
Newfoundland and Labrador |
255 |
215 |
84% |
Prince Edward Island |
27 |
16 |
59% |
Ontario |
457 |
202 |
44% |
Quebec |
718 |
189 |
26% |
Nunavut |
3 |
1 |
33% |
Yukon |
6 |
2 |
33% |
Canada |
2620 |
1178 |
45% |
Source: John Anderson, "Why Post Offices need to offer banking services", Canadian Postmasters and Assistants Association, September 2014 http://cpaa-acmpa.ca/pub/files/banking_services_SEPT23Eng.pdf
But, it is not only in small town and rural Canada that this is happening. Many neighbourhoods in large and medium-sized cities now have no bank or credit union branch or now have fewer branches. In Ottawa, central downtown Bank Street (as the name implies, once home to major branches of all the major banks), now has more payday loan locations than bank branches. 3
The big six Canadian banks are among the most profitable banks in the world. They collectively earned $42 billion in profit in 2017, a 13 percent increase over 2016 and double the profits that the banks made in 2010. 4 Their total profits are more than twice the total of all annual deficits for 2016 of our federal, provincial and municipal governments combined, which according to Statcan was $18 billion! 5
The average monthly fee levied on chequing account plans rose by 13.6 percent from 2005 to February 2013. 6 Fees for chequing accounts with unlimited transactions range around $16-30 per month at the major banks. 7 This means many people are paying $360 a year for basic banking services! Cheaper plans are available but charge extra for many services or for using basic services multiple times.
While there are over 700 Indigenous communities in Canada, there are only about 66 bank or credit union branches in these communities. That means less than 10 percent of Indigenous communities have a bank or credit union branch. A Canada Post bank could work with Indigenous communities to offer banking services in their communities.
Table 2: Indigenous Communities Bank or Credit Union Branches |
|
---|---|
RBC 8 |
11 |
RBC branches in territories NWT,YT,NU |
6 |
First Nations Bank 9 |
12 |
CIBC 10 |
6 |
TD 11 |
5 |
Scotiabank 12 |
4 |
BMO 13 |
14 |
Total Banks |
58 |
Credit Unions 14 |
8 |
Total |
66 |
Figures are from the September 2017 websites of the major banks and credit unions.
But does anybody still use branches? Don't we do it all online? One argument used against starting a postal bank is that nobody uses a bank branch anymore. But the reality is that people still need bank branches. A study from the Canadian Credit Union Association showed that over 50 percent of Canadians still use a bank or credit union branch on a regular basis.
Table 3: Use of Branch (not ATM) Channel by Financial Institution |
||||||
---|---|---|---|---|---|---|
|
2015 |
2011 |
||||
|
C.U. Members |
Bank Customers |
C.U. Difference |
C.U. Members |
Bank Customers |
C.U. Difference |
Never |
10% |
9.8% |
0.2% |
8.3% |
10.1% |
-1.8% |
Over 6 months ago |
20.7% |
23.5% |
-2.8% |
18.7% |
23.7% |
-5.0% |
Past 6 months users |
69.3% |
66.7% |
2.6% |
73% |
66.2% |
6.8% |
Within the last 3 to 6 months |
14.2% |
16.7% |
-2.5% |
16.6% |
18.5% |
-1.9% |
Less than 3 months ago |
55.1% |
50.1% |
5.0% |
56.4% |
47.7% |
8.7% |
From Canadian Credit Union Association, System Brief, December 2015, https://www.ccua.com/publications/system_briefs
Table 4: 5 Major Successful Postal Banks |
|||||||
---|---|---|---|---|---|---|---|
Country |
Service |
Number of customers |
No. of employees |
Profits of postal financial services |
Sales |
Profits of group |
Fin/services |
United Kingdom |
Post Office Money 15 |
|
80-100 at HQ |
|
£301 million out of £940 million |
UK PO does not publish profits by sector |
32% |
New Zealand |
Kiwi-bank 16 |
800,000 |
1,000 |
$122 million NZ before write down of IT and then $58 million |
|
$27 million NZ 17 |
214% |
France |
Banque Postale 18 |
10.7 |
2,541 |
538 million € before tax 477 million € after tax |
|
975 million € (before tax) 19 |
55% |
Swit- |
Post-Finance 20 |
3 million |
3,599 |
542 million CHF 21 |
|
558 million CHF 22 |
97% |
Italy |
Banco-Posta 23 |
9.55 |
1,824 |
813 million € |
|
622 m. € |
144% |
Sources: All figures are from the 2016 annual reports of the Post Office Groups and Postal Banks
Postal banking can be run in many different ways. The simplest one would be as a subsidiary of Canada Post. It could be set up in one major region of the country at a time. The easiest way to set it up would be as a Crown Corporation in the same manner as the other federally-owned banks. (see below)
First, basic banking services such as savings and chequing accounts and bill payment. It could then build to other services such as mortgages, business and personal loans, foreign exchange, investments, insurance and alternatives to payday loans.
Some ask, "What do Canada Post and the Federal Government know about banking and financial services?" But the answer may surprise you:
The federal government already administers four very successful banks, all of which made profits totaling $3.2 billion in 2016. These banks could provide support for the new postal bank as they already have 242 offices across the country, provide loans to farm families and businesses as well as offer savings products such as Treasury Bills, and until recently, Canada Savings Bonds. Staff expertise from over 7000 public servants could be seconded to the new postal bank.
Table 5: Federally owned banks in Canada |
|||||||
---|---|---|---|---|---|---|---|
Name |
Assets |
Number of Customers |
Profits |
Number of Offices |
Headquarters |
Employees |
Services |
Farm Credit Canada 25 |
$33 billion |
100,000 |
$613 million |
100 |
Regina |
1800 |
Loans, mortgages |
Business Development Bank of Canada 26 |
$25.3 billion |
49,000 |
$464 million |
118 |
Montreal |
2200 |
Loans |
Export Development Bank 27 |
$63 billion |
7150 |
$1072 million |
18 Canada |
Ottawa |
1400 |
Loans |
Bank of Canada 28 |
$106.1 billion |
|
$1057.6 million |
6 Canada |
Ottawa |
1700 |
Treasury Bills |
Total |
$227.4 billion |
156,150 |
$3207 million |
242 Canada |
|
7100 |
|
Source: Table figures from Annual Reports 2016
While a new postal bank would require initial investments from the federal government, Canada Post already has the bricks and mortar offices as well as the staff – who would need training on new financial products, but already deals with financial products and retail sales. The profitability of postal banks worldwide shows that any new investments in equipment and training would be quickly repaid.
If you use the new services, you would have access to services for all your banking needs in your neighbourhood or community – where many have either had no bank or credit union, or perhaps only one other banking service to choose from. Postal delivery workers could also be equipped with a tablet to help with some of your banking needs if you were unable to leave your home or could not use online services.
If you do not use the services, you would still benefit because postal banking would support the economic development of your community and your country, especially helping local citizens get fair rates and helping local businesses access services they need. Also, postal banking would help guarantee the postal services we have now and even help expand them.
Research carried out for the Government of Canada's Postal Service Review Task Force in 2016 29 showed that, even without having all the details or being able to see how exactly the postal financial services would work, a large number of Canadians wanted to use them. Eleven percent of Canadians say that they would definitely use some financial services at Canada Post. There are 29.65 million Canadians over 18, meaning that 3.26 million Canadians would immediately be interested in the new banking services. 30 The 7 percent of Canadians who said a definite yes to using full banking services at the post office, plus the 22 percent who said they would probably use them, means some 2.075 million Canadians could soon have accounts at the postal bank, with another 6.5 million Canadians as probable users.
Since 47 percent of Canadians said new banking products were a good or excellent fit for Canada Post, the future for increasing the above numbers looks excellent. The 27 percent Indigenous support for adding banking services was also very encouraging. Finally, the 39 percent of business support and 11 percent of businesses committed to using postal banking services would make a Canada Post Bank one of the top business banks in Canada. There are 1.17 million businesses 31 (small medium and large) so an 11 percent of businesses using the services would mean 128,700 businesses ready to use postal banking services.
In Delivering Community Power, http://www.deliveringcommunitypower.ca/, we saw how the post office could become the new hub of community services. As well as traditional post office services and financial services, the local post office could offer such services as:
Because of the number of people who want to use banking services, and because of the revenues that can be made even while offering better and less expensive financial services, the postal bank can become the anchor for these other roles, cementing the long-term place of the post office within the community.
First, you can start talking about it with your friends, relatives and co-workers. You can find more resources on postal banking at http://www.cupw.ca/en/campaign/resources/postal-banking
Second, you can contact your MP and tell him or her that we need postal banking. http://www.cupw.ca/en/campaign/postal-banking/resources/send-your-mp-message-support-postal-banking
Third, if your town or city is not on this list of ones supporting postal banking, please contact your councilor or mayor and get them to pass a resolution. http://www.cupw.ca/en/campaign/resources/municipalities-and-groups-have-passed-resolutions-or-sent-letters-support
Fourth, if your labour council or your union or your community organization or NGO has not passed a resolution in support of postal banking, get one passed.
Fifth, if you need a speaker on this topic, please let us know and we will try to help you.
CONTACT US AT:
Canadian Union of Postal Worker
377 Bank St. Ottawa, ON K2P1Y3
Telephone: (613) 236-7236
https://www.cupw.ca/
feedback@cupw-sttp.org
Municipalities and groups that have passed resolutions or sent letters in support of expanding services like postal banking
Burford latest community affected by rural bank closures, March 1, 2018
https://kitchener.ctvnews.ca/burford-latest-community-affected-by-rural-bank-closures-1.3823958
Google Maps https://www.google.ca/search?q=Number+of+pay+day+loan+locations+on+Bank+Street+Ottawa&rlz=1C1CHBF_enCA722CA722&oq=Number+of+pay+day+loan+locations+on+Bank+Street+Ottawa&aqs=chrome..69i57.22640j0j7&sourceid=chrome&ie=UTF-8
https://www.huffingtonpost.ca/2017/12/06/canadian-banks-accused-of-gouging-after-clocking-42-billion-in-profit_a_23299071/
UK Post Office Annual Report 2015-16 http://corporate.postoffice.co.uk/annualreport1516
https://www.radionz.co.nz/news/business/338508/kiwibank-profit-tumbles-on-it-writeoff and https://www.nzpost.co.nz/about-us/media-centre/media-release/nz-post-annual-results
Groupe Postale France rapport annuel legroupe.laposte.fr/content/download/28264/217238/version/1/file/LeGroupeLaPoste_Presentation_Resultatsannuels2016.pdf
https://annualreport.swisspost.ch/app/themes/post-gb/downloads/en/EN_Post_Finanzbericht_2016.pdf
https://annualreport.swisspost.ch/app/themes/post-gb/downloads/en/EN_Post_Finanzbericht_2016.pdf
FCC Annual Report 2016-17 https://www.fcc-fac.ca/en/about-fcc/governance/reports.html
BDC, Annual Report 2016-17 https://www.bdc.ca/en/about/corporate_governance/financial_results/pages/default.aspx
Patterson, Langlois Consultants, Canada Post Review, Research with Canadians, Final Report, August 29, 2016, Prepared for: Canada Post Review Secretariat, Public Works and Government Services Canada and Ekos Canadian Businesses' Views on Canada Post Services https://www.tpsgc-pwgsc.gc.ca/examendepostescanada-canadapostreview/rapport-report/recherche-reseach-eng.html
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