When I was 10 years old, I had a light 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.
Canadian banks and other financial institutions do provide an important service. They guarantee that individuals and organizations can save their money securely, can borrow money 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.
Enforcing stricter regulations and establishing more transparency in the banking sector would help to alleviate these problems. However, there is an additional alternative which could further benefit the average Canadian: Postal Banking.
As was done in Canada 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 itself.
For the individual, this could include many improvements such as reduced interest rates, easier access to loans, and fewer service charges. With such offers made available to the public, private banks would feel pressured to follow suit. As a result, the cost of banking for all individuals and organizations could be significantly decreased.
However, that is not the only advantage to Postal Banking. Another benefit is improved accessibility. According to the Canadian Centre for Policy Alternatives (CCPA), between 3% and 15% of Canadians do not have a bank account. This can in part be attributed to the high number of Canadians who live in remote areas where the number of bank branches is not sufficient to reach everyone.
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 there existed only 54 bank or credit union branches in the 615 Indigenous and Metis communities across Canada.
Unlike bank branches, post offices are already located throughout the country. These branches could easily be expanded to offer financial servicesto all Canadians.
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 to 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 putjust as much trust into their real banks as they have put into their piggy banks.
ARTICLE BY JAY FALLIS