A life-raft proposal advocated by the Canadian Union of Postal Workers (CUPW) could see Canada Post create a bank.
The union has written to local governments across Canada seeking support for a study titled “Why Canada Needs Postal Banking”.
“Having established that there is a need for improved financial services in our country and viable models in other countries, the study concludes by suggesting possible models for postal banking in Canada,” writes CUPW national president Denis Lemelin. “It recommends that the federal government and Canada Post immediately establish a task force to determine how to deliver new financial services, and establish priorities for delivering new products.”
The study looks at five countries with a postal bank: the United Kingdom, France, Italy, Switzerland and New Zealand. Each offers a different combination of banking services, including insurance and mortgages. In Italy, Switzerland and New Zealand, the bank brings in about 70 per cent of the post office’s annual profits.
“The key component for success seems to be characteristics of the Post Office itself, including widespread locations, trust in the institution and staff,” reads the report by the Canadian Centre for Policy Alternatives.
The report suggests that a Canada Post bank could offer savings accounts and low-fee chequing accounts, low-interest credit cards and prepaid debit cards.
Down the line, Canada Post could consider expanding to offer mortgages, small business and agricultural loans, insurance products, mutual funds and stocks, and special new products for low income and Aboriginal people.
At the moment, Canada Post provides some financial services, such as postal money orders, domestic and international money transfers, bill payment, and prepaid Visa cards.
The report argues that the bank would be successful because it would operate out of Canada Post’s existing offices, at a time when bank branches have dropped by 22 per cent since 1990.
“Canada Post has a high trust factor among Canadians, and an already existing skilled and stable workforce of 68,000 employees, some of whom could easily be trained to handle financial services,” reads the report.
The proposal for a Canada Post bank comes as the federal government prepares to conduct a review of the Canadian Postal Service Charter in 2014. Canada Post has previously indicated that it needs to dramatically cut service to improve its financial situation.
The Regional District of East Kootenay board of directors decided on Friday, Nov. 1, to send a letter to the federal minister responsible for Canada Post to consider postal banking as part of the review of the postal service charter.
“This is a great concept,” said Area B Director Heath Slee. “The UK, France, Switzerland – they all have postal banking services. It’s a great way to preserve our rural post offices in addition to providing a service that members of the public could readily use, which is readily accessible.”
Canal Flats Mayor Ute Juras agreed: “It’s not only bringing more services to our rural areas; it’s also trying to preserve our post offices.”