Banking by post office: Canada’s postal unions push for return to financial role

[The post office is seen Saturday, April 25, 2015 in Iqaluit, Nunavut. THE CANADIAN PRESS/Paul Chiasson]

With Canada Post’s upcoming review to examine services, the postal unions have begun a social media campaign to get postal banking back on the radar.

“Postal banks are an alternative to payday lenders, providing basic financial services to the millions of people currently excluded from access to Canada’s big banks,” said Mike Palecek, Canadian Union of Postal Workers national president, in a press release announcing the push.

While the postal service ditched financial offerings back in 1968 under pressure from the banking lobby, some feel re-introducing banking at the 6,500-plus outlets throughout the country could generate revenue for the struggling network, which has hiked fees and planned to cut back on door-to-door delivery recently.

“There’s over 60 countries that have postal banking including most of the big European countries… both conservative and socialist governments,” John Anderson, author of the Canadian Centre for Policy Alternatives 2013 report – Why Canada Needs Postal Banking, told Yahoo Canada Finance.

He points to the United Kingdom and France.

“In the U.K. you can use your bank card to not only withdraw money at a post office, but to deposit money of all the major banks,” he says.

According to his report, banking services accounted for 25 per cent of sales in the U.K. that year and 36 per cent of before-tax earnings in France. Australian post also made 25 per cent of it’s revenue from the financial side, while Switzerland – one of the banking capitals of the world – made 54 per cent of its postal profits from banking services.

Anderson suspects establishing a system – which is already allowed by Canadian law, a layover from postal banking’s 100-year run in Canada – would benefit smaller, rural communities where banks are few and far between.

“A survey I did of rural and small towns in Canada found about 45 per cent of those communities which had a post office had no bank or credit union,” he says. “Who’s going to open a small business if you don’t have a bank there and you have drive 50 KM to get to one?”

Canada Post spent four years studying the viability of bringing the system back. In 2014, independent news outlet Blacklock’s Reporter tapped into some of those documents via an access to information request.

“It’s all redacted so you can’t read any of the pages,” says Anderson.

He points out that from what Blacklock’s could gather, the documents didn’t seem to show much risk other than a single postal bank that failed to show a profit – Ireland’s AnPost, which collapsed along with the nation’s economy in 2010.

As for the model, Anderson suspects it could be be buoyed by a partnership with a private sector bank much like Loblaw’s President’s Choice services.

“Most [of] their banking services are run by CIBC but the credit card is totally controlled by Loblaw’s,” he says. “In the financial world today you can make those kind of deals and see what works, what’s profitable.”

While neither Canada Post nor the Liberals have given any inclination as to whether or not banking services will be back on the table, Anderson says he’s optimistic.

“I think the possibilities are there, all this can be done by tendering bids, finding the best partnerships and then you can decide exactly what you want run through the post office,” he says. “The Canadian banking legislation is still on the books, it hasn’t been taken away – it’s just a question of actually starting it up again.”