Postal bank service can put Canadians’ trust back into banking

The priority of our financial institutions should not be about profit, says Jay Fallis

When I was 10 years old, I had a blue piggy bank. I always knew that when I put a coin in, I would get it back. I never had to worry about being charged interest or having to pay fees after accidentally signing up for a costly new account. However, for myself and most other Canadians, growing up has meant exchanging our piggy banks for real bank accounts. As an adult, one’s banking experience is very different.

Canadian banks and other financial institutions do provide an important service. They guarantee that individuals and organizations can save their money securely, can borrow to invest, and can seek financial advice, among many things. However, banks and most other financial institutions are businesses. Their priority is profit. This reality can leave the average bank user at a disadvantage. Following a recent CBC Go Public investigation, large Canadian banks across the board have been accused of overselling to consumers. In the past few months, over a thousand employees of Canada’s five largest banks have come forward saying that they were pressured to offer services contrary to what was in the best interest of clients.

This has sparked outrage and has even led to a parliamentary committee review.

So what is the best way to address this problem? How do we make sure that all banks look out for the interests of their clients in all situations?

Among the most cited solutions include enforcing stricter regulations and establishing more transparency. However, there is an additional alternative which could further benefit the average Canadian: postal banking.

For many, the concept of postal banking promises definite change. As was done up until 1968, our country’s postal operator, Canada Post, could also offer banking services.

A Canadian postal bank, operating within the framework of a crown corporation, would focus on providing services that are affordable for consumers, rather than profitable for the institution. For the individual, this could include improvements such as reduced interest rates, easier access to loans and fewer service charges. Private banks would feel pressured to follow suit. As a result, the cost of banking for all could be significantly decreased.

However, that is not the only advantage to postal banking. Another benefit often cited is improved accessibility. According to the Canadian Centre for Policy Alternatives (CCPA), between three per cent and

15 per cent of Canadians do not have a bank account. This can in part be attributed to the high numbers who live in remote areas without banks. This has especially affected Indigenous Canadians. In a report compiled for the CCPA, by John Anderson, a former director of parliamentary affairs for the Official Opposition, it was found that only 54 bank or credit union branches existed in the 615 Indigenous and Metis communities across Canada.

It doesn’t have to be this way. Unlike banks, post offices are already located throughout the country. These branches could easily be expanded to offer financial services.

But what about the cost? How can our country afford to take on the financial burden that would be associated with transforming our national post service to include banking? Interestingly enough, this change has great potential to actually generate revenue. Several studies and experts predict that Canada Post would be able tap into the more than $35 billion in profits that Canada’s largest banks received last year.

At a time when our postal service is striving to retain its relevance, this change would present a viable and affordable service to the Canadian public.

Our country’s banking system is designed to benefit large banks. However, creative solutions, like postal banking, could make it so that Canadians can put just as much trust into their real banks as they have put into their piggy banks.