Banking on Indigenous communities
First Nations Bank of Canada aims to make financial services accessible to the underserved
Many Canadians are familiar with the Big Five banks — RBC, TD Bank, Scotiabank, CIBC and BMO. Each of them holds hundreds of billions in assets, millions of personal chequing accounts, and most of the headlines about institutional finance in this country. Yet they rarely provide Canadians, especially Indigenous peoples living in remote communities, access to convenient banking services.
The exception is the First Nations Bank of Canada. Tiny by Big Five standards, with around a billion dollars in total assets, the Saskatchewan-based institution nonetheless serves Indigenous communities with a single-mindedness not seen in the rest of Canada’s banking industry. Keith Martell, president and CEO of FNBC, helped found it in 1996 because there needed to be more options for Indigenous peoples, including entrepreneurs, to access financial services.
Around that time, First Nations in Saskatchewan had settled about $400million worth of land claims. “Most communities had a hard time getting a commercial loan,” Martell says. “There were very few, if any, banks in communities. Yet when you had a settlement of $400 million, every bank was 10 deep at the door wanting to manage your funds.”
Over the years, FNBC’s network of full-service branches, community banking centres and electronic banking options has expanded across Canada, including five branches on First Nations reserves themselves. Over 80 per cent of FNBC is owned by Indigenous shareholders. And Martell, on top of running the bank, has taken a keen interest in Indigenous entrepreneurship and economic development, as well as reconciliation.
He spoke about all of that with the Star earlier this summer:
The Big Five banks really started to lean into having their own Indigenous-focused departments several years ago. How does what you offer at First Nations Bank of Canada differ?
Indigenous business is not a sideline for us. It’s 90 per cent of the business we do. The other 10 per cent that would be non-Indigenous mostly just happens to be in regions where we operate. This is our core business. We’re not doing it for public relations, we’re not doing it for ESG (environmental, social and governance) credits, we’re doing it because it’s the business we’re in. Our ownership is from the communities where we bank.
The other difference is the Indigenous staff and having people that are committed to this long term. We don’t have a head of Indigenous banking that gets transferred over to wealth management in New York — it’s our core business.
I’ve heard there a number of barriers that make it really difficult for Indigenous entrepreneurs to open
businesses and get collateral and loans. Can you walk me through that?
There are some structural systemic issues, mostly around the Indian Act, which historically has been a burden for some entrepreneurs. It’s about taking security over assets on reserve land. Historically, that was typically the reason most lenders gave for not lending to Indigenous people who reside on reserve. Today in Canada, more than 50 per cent of Indigenous people don’t live on reserve. So, I don’t think that structural difference is the biggest impediment.
First of all, entrepreneurs need experience in the business that they’re in and they need to be passionate. If you have that experience and that passion, you can turn it into a business of your own. A lot of people get that passion first by working for someone else. Indigenous people aren’t getting that experience. It’s not just about getting loans. It’s about that equity capital. You can’t borrow your whole stake in your business. You need something to put down as your contribution. Entrepreneurs often get that start from parents or they got some equity in their house. Indigenous people — we don’t often have that capital. So, if you don’t have that capital, it’s hard to get a loan.
We’ve got Aboriginal capital corporations which did a really good job of getting that first risk stake of capital in there. Their experience in creating Indigenous entrepreneurs is magnificent. Aside from experience and capital, mentorship is also important. And most of the time, when banking services came into a community, they took their profits and left. Nothing really stayed in the community.
That’s why we created First Nations Bank of Canada.
Some of First Nations Bank of Canada’s branches are in very small communities like Pangnirtung (population 1,500). What’s the point of having a bank branch in such a small community?
We have two kinds of branches — full-service branches, like our head office in Saskatoon or our branch in the James Bay Cree Region. A lot of Inuit in Nunavut go to Iqaluit to do business and meet their lawyers and accountants and bankers. Those branches not only serve that community; they also serve the commercial banking needs of the wider region.
We also have nine community banking centres in places like Pangnirtung — as small as 1,500 people. In southern Canada, none of those communities would have a branch. We go into those regions because, first of all, people need banking service. You might say, why don’t they just get a banking app? But when you live in those communities, you understand that the banking app times out before your internet even lets you put in your password, because the internet is so slow. A lot of those electronic services just aren’t available.
We’re not in those small retail branches to make a lot of money. Our main objective is really to break even on those. We do a lot of commercial business in the region. By supporting these small communities, it also means the hamlets and the local Inuit organization or First Nations organization also deals with us — that’s where we get paid.
Do you break even on most of them?
For the most part, we do. You’re not going to find a standalone building for them. When you see the Arctic Co-op store in Pangnirtung, you’ll also see that there’s an FNBC sign on that business. They’re the oldstyle general stores that sell SkiDoos and tomatoes and everything in between. In the corner, there’s a100- to 200-square foot area where First Nations Bank of Canada is located. It’s like a kiosk within the store. That lowers the cost for us. It’s real banking, too. We set up accounts there. You can get your bank card right there. It doesn’t have to be mailed to you.
I wanted to get your thoughts on the whole issue of Indigenous consultation and resource extraction. Is there a balance to be struck between the economic benefits these communities may experience and concerns about environmental impacts?
There is a balance in every resource development or business development opportunity. There’s good, there’s bad; you mitigate the bad and you take advantage of the good. You become part of the development, or you decide it’s not for you. That’s the future of Indigenous people. For too long, resources were developed around and through Indigenous people, not with Indigenous people.
There are some communities which are very pro-development. They understand how oil and gas and mining works, and they know they’ve had their issues reflected. One of our largest customers in northern Saskatchewan are the First Nations that own sawmills and forestry development, and they have their beliefs and wishes respected by the forestry company because they own it. At the same time, they have good employment, good capital return and they become a major part of the economy in northern Saskatchewan. It definitely can be done. It’s done all the time with Indigenous involvement in resource development.
If one community doesn’t want to develop their resources, then that’s the reality. There’s lots of resources in Canada that don’t get developed. Ranchers in southern Alberta said they didn’t want coal development and that put the provincial government back on its heels. You talk to people about things before you dig up their backyard.
Does the First Nations Bank of Canada invest in or have any holdings in resource extraction companies?
When a First Nation decides they’re going to be involved in a mine or an oil service company, or a pipeline of some kind — if that’s their wish and that’s in the best interest of the community, we don’t shy away from getting involved in it. If the community was opposed to it and some non-Indigenous mining or forestry or oil and gas company wanted to push it through, we wouldn’t be involved. Our interest is the best interest of the Indigenous community.
Indigenous communities are uncovering graves across this country —hundreds of them. There will almost certainly be more. You care deeply about reconciliation and have written about it in the past. Is it even possible right now?
My biggest surprise about the discovery in Kamloops and Cowesses was that Canadians were surprised. I was quite surprised by that. My father went to residential school. All my aunts and uncles went to residential school. Our families have known this history for a long time.
Canadians had the Truth and Reconciliation Commission, which went through all of this in detail. A lot of Indigenous survivors poured out their hearts on what happened to them as children. To be blunt, it almost appears as though you’ve got to show people the bones before they believe the story. That’s what’s happening now.
Reconciliation starts with recognition of something that was wrong. You don’t have to be the Canadians who started the residential schools or ran them to recognize that our history includes some negative relationships with our Indigenous First Peoples. Some people just take longer to get to the truth, and I think people are starting to say this is real.
Is there anything the business community should be doing to get involved in that process of reconciliation that it currently isn’t?
The reckoning of the past is the first step. I think everybody, individuals and institutions and governments, are all going through that process now. It’s not about corporations pitying Indigenous people. Pity is what got us here. Lack of respect for the opportunity that Indigenous people had to create value and culture and spirituality for society, that’s what got us here. We don’t want pity. We want recognition. We want to move this relationship forward.
Most Indigenous people I know want to feed their kids. They want secure housing. They want to know the water they drink out of the tap is not going to kill them. They want a job. They want their kids to have more than what they had. What do corporations or individuals do about this? Start making Indigenous people part of society and part of the job market. Don’t look at a name on a resume and assume they’re not going to be worthy of hiring.