Postal Banking – A Bank for Everyone (Fact Sheet)

Wednesday March 2 2016

Postal banking is the provision of financial and banking services through a post office. It is not a new or radical idea. Postal banks already exist in many parts of the world where they are used to:

increase financial inclusion
promote economic development
and generate revenue to preserve public postal service and jobs

In fact, our post office used to have a national savings bank – up until 1969 – and there is no reason we shouldn't have one today.

Why do we need postal banking?

Banks are failing to meet the needs of a growing number of Canadians. Thousands of towns and villages across our country do not have a bank. But many of them have a post office that could provide access to financial and banking services.
Nearly two million Canadians in urban and rural areas desperately need an alternative to predatory payday lenders. A postal bank could be that alternative.
Canadian banks have raked in enormous profits while cutting service, closing branches and charging some of the highest banking and ATM fees in the world. We deserve better.
Post administrations around the world, including Canada Post, have seen traditional mail volumes decline in recent years. Many post offices have added or expanded financial services in order to lessen their dependence on declining mail volumes and revenues. Postal banking could help Canada Post make money and increase its ability to provide public postal service and create decent jobs in communities throughout Canada.

Postal banking is lucrative!

New Zealand: Kiwibank generated 81% of New Zealand Post's after tax profits.

Switzerland: PostFinance produced 48% of Swiss Post's operating profits.

Italy: BancoPosta profits allowed the Italian post office to make 57 million Euros in profits ($86.1 million CAD) in spite of losses incurred by its postal business.

France: La Banque Postale's operating profits of 842 million Euros ($1271.6 million CAD) made a significant contribution to Le Group La Poste's operating profits of 719 million Euros ($1085.8 million CAD).

Sources: New Zealand Post, Swiss Post, Poste Italiane and Le Group La Poste, 2014

Postal banking has social & economic benefits

France: Banque Postale has an obligation to provide products and services to as many people as possible. It provides a Livret A or passbook savings account, at no charge, to anyone who requests it. It also provides banking services to the financially vulnerable and financing for social housing, voluntary organizations and microentrepreneurs lacking bank credit.

Brazil: Since its creation in 2002, Banco Postal at Brazil's post office has opened over 6,200 postal bank branches and provided bank accounts to about ten million people. These efforts are largely designed to meet the needs of poor and marginalized populations living in rural and underdeveloped areas.

Italy: BancoPosta offers current accounts, payment services and postal savings products on behalf of Cassa depositi e prestiti (CDP). The CDP, which is 80% owned by the Italian government, supports the development of the country by financing the investments of public entities, helping local authorities leverage their real estate assets, investing in social housing, and supporting energy efficiency policies.

We had a postal bank

Canada had postal banking for over a hundred years. The federal government passed legislation establishing a post office savings bank system just after Confederation in 1867 in order to provide a savings service to the working classes and small town residents. This system began operating in 1868 with 81 locations and grew quickly. By 1884, there were 343 post office savings banks, with a balance of $13 million from almost 67,000 accounts. However, Canada's postal banking system confronted challenges from chartered banks by the 1890s. These banks, facing a recession, became interested in attracting the kind of small-time depositors who used post office savings banks and they actively worked to undermine postal banking. In 1898, the chartered banks successfully lobbied the government to reduce the interest rate paid on deposits at postal savings banks from 3% to 2.5%. They also worked to eliminate advertising by postal banks. As time went on, chartered banks and credit unions increased their presence in communities and the post office and government became less interested in maintaining the network. The post office savings bank system was closed down in 1969.

Support for postal banking

Municipalities: Over 600 municipalities have passed resolutions that support postal banking.

Public: Almost two out of every three respondents (63%) to a 2013 Stratcom poll supported Canada Post expanding revenue-generating services, including financial services like bill payments, insurance and banking.

Canada Post: A number of former Canada Post presidents have considered and even promoted the notion of the corporation getting more involved in financial services: Michael Warren, Andre Ouellet, Moya Greene.

Universal Postal Union: The UPU, a United Nations agency, thinks post offices should be looking at expanding financial services. It has produced a global roadmap for the future. This roadmap calls for the continued development of postal networks along three dimensions – physical, financial and digital/electronic.

Federal parties: Most federal parties have expressed either support for or an interest in postal banking. In 2014, the Liberal Party postal critic said the merits of postal banking should be explored in the context of several different options for the future of Canada Post.

Canada Post's secret postal banking study

Canada Post conducted a secret four-year study on postal banking that indicates that adding this service "would be a win-win strategy" for the corporation. This study was obtained though an Access to Information (ATI) request. Unfortunately, 701 of the study's 811 pages were redacted. CUPW has asked Canada Post's President to release the full report, but he has refused.

What would a postal bank look like?

There are many different models of postal banking. Some postal administrations set up their own bank. Others act as a financial intermediary by providing services in partnership with banking and other financial institutions, such as credit unions. In this instance, they work with one or a number of institutions, which operate nationally or in different regions. Some postal banks deliver a broad range of financial services, while others provide a more limited offering.

Services provided by postal banks:

Savings and checking accounts
Online banking
Bank machines
Credit cards, debit cards, pre-paid cards
Money transfers, including remittances
Insurance (home, auto, travel, etc.)
Loans and mortgages
Investment products (RRSPs, mutual funds, annuities)
Foreign currency
Other services such as financial counselling

Government review of Canada Post

CUPW wants the government review of Canada Post to recommend the addition of financial and banking services at Canada Post, or at a minimum, a task force to determine how to deliver new financial and banking services through our postal service.

Please consider making this recommendation to the review.