RBI: Canada: “Stay out of banking business,” banks tell post office
Posted July 14, 2020
The lobby group representing Canada’s big banks says there just is “no public policy objective or existing gap in the marketplace” calling for Canada Post to become a retail bank.
Posted July 14, 2020
The lobby group representing Canada’s big banks says there just is “no public policy objective or existing gap in the marketplace” calling for Canada Post to become a retail bank.
The Canadian Bankers Association argues that those who advocate postal banking are simply “disregarding the facts” of Canada’s efficient and competitive financial sector.
Canada Post Corporation (French: Société canadienne des postes), trading as Canada Post (French: Postes Canada), is a Crown corporation which functions as the primary postal operator in Canada.
Canada Post is operated as an independent company.
In a brief to the federal task force reviewing Canada Post, the bankers’ association says that Canadians are already enjoying access to a competitive spectrum of financial products and services.
Banks boast a high rate of customer satisfaction
A recent Competitive Policy Review Panel noted: “Canadians can justifiably be proud of our financial services sector, which is internationally held in high regard.”
Customer satisfaction with retail banks in Canada was high before the outbreak of covid-19, but satisfaction is falling flat in the critical area of digital banking experiences, according to the J.D. Power 2020 Canada Retail Banking Satisfaction Study published in May.
The survey found that overall satisfaction among banking customers in Canada has risen by five points to 790 (on a 1,000-point scale) from 2019, mainly driven by increases in score by the Big 5 banks.
Overall satisfaction among midsize bank customers decreases two points to 796 from a year ago.
The case for postal banking
The Canadian Union of Postal Workers (CUPW) and the Canadian Postmasters and Assistants Association (CPAA) are working together to help promote the idea of postal banking.
“We had a postal bank in Canada up until 1968. It’s time to bring it back,” says the group.
Here are its main arguments:
Thousands of rural towns and villages, and some Indigenous communities, don’t have a bank – but many of them have a post office that could provide financial services.
As well, nearly two million Canadians desperately need an alternative to payday lenders. Wouldn’t it be great if there were a better option than the big banks? A postal bank could be that alternative.
Many postal systems around the world operate banks that provide inclusive access to banking, fund economic development and help increase revenue to preserve both our public postal service and jobs.
“Two-thirds of Canadians support” postal banking
“We see postal banking as a much-needed financial solution for millions of people in under-serviced Indigenous communities, towns and villages in rural and urban areas. And we are not alone,” say the campaigners.
They claim that two-thirds of Canadians support the idea, “as do hundreds of municipalities, ACORN, the Universal Postal Union, and even former presidents of Canada Post. Most federal parties have also indicated some level of interest.”
ACORN (Association of Community Organisations for Reform Now) Canada is an independent national organisation of low- and moderate-income families. It has over 130,000 members organised into twenty-four neighbourhood chapters in nine cities across Canada.
“To top it off, Canada Post conducted a secret four-year study on postal banking that indicated that adding this service ‘would be a win-win strategy’ for the corporation.”
In January, the Federal government finally made public its long-awaited vision for a renewed Canada Post, calling for expanded service options and alternative revenue streams.
Mike Palecek, National President, Canadian Union of Postal Workers (CUPW), said:
“Postal banking fulfils the government’s vision for Canada Post. It is profitable, sustainable, and provides accessible banking services to all Canadians. It is a win-win opportunity for the Government to better serve Canadians.”
The battle over postal banking continues to heat up, with each side striving to align members of Parliament with its cause.
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Article by Mohamed Dabo for Retail Banker International