Post Office Bank Has Begun to Grow Again

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Canadian Centre for Policy Alternatives October 2013

Why Canada Needs Postal Banking

John Anderson

www.policyalternatives.ca RESEARCH ANALYSIS SOLUTIONS About the author

John Anderson is an independent researcher and consultant. He is the former Director of Parliamen- tary Affairs for the Official Opposition, and, before ISBN 978-1-77125-086-3 that was Director of Government Affairs and Public Policy for the Canadian Co-operative Association. This report is available free of charge at www. He has also been a Senior Policy Analyst at the Na- policyalternatives.ca. Printed copies may be or- tional Council of Welfare and the Vice-President dered through the CCPA National Office for $10. of Strategic Partnerships and of Research for the Canadian Council on Social Development. In the Please make a donation... nineties, he was Co-ordinator of the Technology Ad- Help us to continue to offer our justment Research Program of the Ontario Federa- publications free online. tion of Labour. He is the author of and researcher With your support we can continue to produce high on numerous studies and briefs on the economy, quality research — and make sure it gets into the hands poverty, technology and the workforce, co-opera- of citizens, journalists, policy makers and progres- tives and Aboriginal issues. He received his educa- sive organizations. Visit www.policyalternatives.ca tion at McGill University, University of Sussex and or call 613-563-1341 for more information. the London School of Economics. He has taught at McMaster, Western and York Universities. He has The CCPA is an independent policy research organ- been a long time supporter of and participant in ization. This report has been subjected to peer re- the CCPA Alternative Budget process. view and meets the research standards of the Centre.

The opinions and recommendations in this re- Acknowledgements port, and any errors, are those of the author, and The author would like to thank the Canadian Union do not necessarily reflect the views of the funders of Postal Workers (CUPW) for their generous sup of this report. port of this research. The views are the author’s own and do not necessarily reflect those of CUPW. He would like to especially thank Katherine Stein- hoff and Geoff Bickerton of CUPW for their help and for their own groundbreaking research on this top- ic. He would also like to thank all those who agreed to be interviewed for this project and all those who helped review the manuscript. Thanks are due to the dedicated staff at CCPA especially Bruce Camp- bell, David Macdonald, Kerri-Anne Finn, and Tim Scarth for his work on layout. Also a very special thanks to the translation team at CUPW, including Guy Laflamme, Manon Parrot, Anne Boulet, Charles Drouin and Maryse Prévost for all their excellent work and suggestions. 5 Summary 14 Introduction 16 The Changing Banking Environment in Canada 28 Postal Banking in Canada 38 Examining the Status of Postal Banking Around the World 43 Five Examples of Postal Banking 62 Conclusions 73 Bibliography 77 Notes

Summary Why Canada Needs Postal Banking

Over the last two decades, we have seen stitution in 380 communities. The Desjar- a major decline in the number of branches dins Group noted in 2013 that caisses popu- and locations for banks and credit unions. laires are the only financial institution in In 1990, there were almost 8,000 branch- 388 towns and villages in Quebec. But the es (7,964) and, by 2002, the number had total number of credit union and caisse fallen to 5,908, a decline of 26%. locations has also dropped from 3,603 in The Canadian Bankers’ Association re- 2002 to 3,117 in 2012, a decline of 13.5%. ports that, between 2006 and 2012, there was a small increase in the number of bank branches in Canada: from 5,902 to 6,205. The Rise of Banking Fees But since 1990, there has been a decline and High Credit Card Rates of more than 1,700 branches, a 22% drop, In 2010, a study by Vision Critical (com- and the number of branches increased by missioned by ING Direct bank before it only 5.1% from 2002 to 2012, with most of was taken over by the Bank of Nova Scotia) the new branches added in Ontario (195), found that banking fees in Canada were Alberta (98), and British Columbia (37). among the highest in the world. More than In many communities today, credit half of Canadians (55%) have fee-based unions or caisses populaires are the only chequing accounts and, on average, pay financial institution. In 2012, the Cred- $185 per year in fees for these accounts. it Union Central of Canada reported that Credit card rates remain high in spite of credit unions were the only financial in-

Why Canada Needs Postal Banking 5 low Bank of Canada prime rates. Typical Fringe Financial Institutions bank card interest rate hover around 20% Another major change in the banking en- annually and department store cards are vironment that shows there is an open- closer to 30%. ing for new financial services is the rise of Fringe Financial Institutions. These ATM, Internet, FFIs provide short-term loans and cheque Telephone Banking cashing services, as well as money transfers and prepaid credit cards. The decline of branch banking is not only While offering services customers want, linked to banks rationalizing their bricks- the interest rate charges for their services and-mortar locations. It is also linked to on an annual basis can only be considered the rise of ATMs, Internet and telephone usurious. A study of FFIs in Prince George, banking. Today there are more than 58,000 B.C., for example, concluded: “Given that ATMs across Canada, 61% of them so-called the average pay-day loan in Canada is white machines owned by non-bank com- $280 for a 10-day period, a pay-day lend- panies. Online banking has grown at a tre- er in B.C. can now legally charge $64.40 mendous rate in recent years, with 67% of for this transaction. This computes to a Canadians now using this form of bank- nominal annual percentage rate of inter- ing, according to a CBA study. The study est (APR) of 839.5%.” also noted that 47% of Canadians “now These are extremely profitable oper- use the Internet as their main means of ations. DFC, the owner of Money Mart, banking, up from 8 % 12 years ago.” the largest Canadian pay-day loan firm, made global profits before tax of $387 million on revenues of $1.062 billion in 2012, Retail Store Banking and 28.7% of their total global revenues for the fiscal third quarter 2013 came from Canadian Tire, WalMart, and PC Financial Canada. (to name only the largest) are all major chal- A new group of Internet branchless lengers to the traditional banks. Clients of companies, such as Zippy Cash and Wonga, these institutions are not using traditional have also started up in Canada in the last bank branches. There has also been a rise few years. In Canada, on the Wonga web- of branchless banking. ING Direct Canada, site, the cost for a $200 loan for 30 days a branchless bank, which was originally is $40.10, or a rate of over 240% per year. a subsidiary of a major Dutch bank, now The rise of this kind of institution is has some 1.8 million clients and almost linked in a chicken-and-egg fashion to the $40 billion in assets. It was absorbed by increase in the number of “unbanked” or the Bank of Nova Scotia in 2012, but still “underbanked.” It is estimated that be- maintains autonomous activity. tween 3% and 15% of the population do not

6 Canadian Centre for Policy Alternatives have a bank account. If we take the low- million in 1968. In 1968, the Postal Savings est figure of 3% that was estimated to be Bank was closed down, although the legis- 842,000 people in 2005. Today, the num- lation still remains on the books. ber of unbanked, using the same method Today, over 45 years later, the debate of calculation, would approach 910,000. around the need to revive or relaunch a Aboriginal communities remain large- Post Office Bank has begun to grow again. ly without banks or credit unions. Over In 2005, a study from Library of Par- the past decade, the Aboriginal popula- liament research services supported the tion has increased dramatically, growing extension of financial services as an im- by 20.1% between 2006 and 2011. Some portant means of preserving the post office 1.4 million people now identify as Ab- across Canada, and particularly in rural original, or 4.3% of the Canadian popu- areas. “At present, the idea of establish- lation. But banks and credit unions lag ing a postal bank underpinned by Canada behind in providing services. While the Post’s network is not based primarily on major banks all have Aboriginal services, a need to change the banking landscape. there are very few branches on reserves. Rather, it stems from the growing need to There are 615 First Nations communities in breathe new life into Canada Post so that it Canada today and many other Métis and can both cope with globalization and guar- non-status communities. A quick tally of antee universal postal service, which is a branches of banks and credit unions on real, if not official, part of its social man- reserve shows only 54. date, particularly in rural areas.” All these trends in financial services A recent study by the Conference Board have opened up the potential for the entry of Canada, commissioned Canada Post, of new banking and financial services in provided a positive analysis of the ef- Canada. They show there is a market de- fects of financial services in post offices mand that is not being met by the existing around the world, but failed to recom- major banks and credit unions. mend financial services or even to examine their possible application in Canada, on the grounds that a highly developed Postal Banking: banking system in Canada left no room The Canadian Debate for a postal banking option. Public support has been confirmed in a Postal banking is not something new to recent survey by Strategic Communications Canada. For over 100 years after Confeder- of 1,514 Canadians from May 24–26, 2013, ation, Canada had a postal savings system. commissioned by the Canadian Union of The high point of deposits for the Post Postal Workers. The survey showed that Office Savings Bank was $47.5 million total nearly two-thirds (63%) of Canadians “sup- in 1908. This would be around $1 billion ported Canada Post expanding revenue- in today’s money. The total shrank to $17.2 generating services, including financial

Why Canada Needs Postal Banking 7 services like bill payments, insurance and models in industrialized countries — the banking.” Politically the New Democratic United Kingdom, France, Italy, Switzer- Party has supported the expansion of fi- land, and New Zealand — which have all nancial services in Canada Post. maintained an important relationship between the financial services offered through post office outlets and the post Postal Banking office. These countries have been chosen Around the World because of their relevance to Canadian options. In all five countries, the Post Office Postal banking has deep roots internation- is publicly owned, although the UK is in ally and is entering a period of expansion the process of privatizing its delivery ser- of services. This has been shown in a ma- vices, the Royal Mail, while keeping the jor global study of postal banking recent- Post Office public. ly carried out in 2012 by researchers of the The United Kingdom’s Post Office’s Universal Postal Union, of which Canada financial services, in their present form, is a member. offer a model which is based on a major The UPU report shows that, “After partnership with a private sector finan- banks, postal operators and their postal cial institution, some new products, as financial subsidiaries are the second big- well as access for customers of most ex- gest world-wide contributor to financial isting banking services. inclusion, far ahead of microfinance in- France’s Banque Postale is a chartered stitutions, money-transfer organizations, bank owned by the Post Office that offers co-operatives, insurance companies, mo- a wide range of products, including insur- bile money operators, and all other pro- ance, and is particularly concerned with viders of financial services.” offering products to theNGO and mutual There are many large and important sector, as well as to low-income citizens. postal banking operations around the The bank makes the list of the world’s top world, from Japan Post Bank, the world’s 50 safest banks. largest deposit holder with ¥203 trillion Italy’s BancoPosta presents the mod- (C$2.15 trillion) in assets, to the Postal el of a non-chartered bank that offers a Savings Bank of China, the fifth-largest wide range of services and excels in offer- commercial bank in China with over 400 ing them through mobile phones as well million customers, to the Deutsche Post as banking cards. Bank, which is now owned by Deutsche Switzerland’s PostFinance, wholly Bank but remains one of the largest in owned by the Swiss Post Office, is the lead- Germany with its own network of over 100 er in money transfers and one of the lar- branches and 4,500 postal outlets. gest banks in a country famous for its pri- Our study does not examine these vate sector banking. It has just this year banks, but rather looks at five successful become a chartered bank. It also offers

8 Canadian Centre for Policy Alternatives figure 1 Summary of Postal Banking Models and Services in the United Kingdom, France, Italy, Switzerland and New Zealand

Name of Financial Structure of % of Post Office Postal Financial Services ownership of sales or profits for Services Institution(s) Financial Services Services Offered Bank Charter latest year Rank of Services

United Kingdom Post Office Main partnership All financial No 25% of sales No ranking with Bank of services, Ireland and including agreements with new chequing other banks accounts

France La Banque La Poste All services Yes 36% of before-tax 44th Safest Bank Postale earnings in World

Italy BancoPosta Poste Italiane All services; No 67% of total Largest retail and insurance savings in profits bank in Italy companies partnership with the CDP (Cassa Depositi e Prestiti)

Switzerland PostFinance Swiss Post, with All services Yes 71% of total Number 1 in partnership Swiss Post payment services on all loan operating profits and number 3 in and insurance customers products

New Zealand Kiwibank NZ Post All services Yes 70% of profits Largest NZ-owned bank

mortgages and loans in partnership with linked to the particular form of structur- major private sector financial institutions. ing of the financial services (which ranged Finally, Kiwibank, owned by New Zea- from full ownership by the Post Office to land Post, is a relatively new entrant in various kinds of partnership with the pri- the world postal banking sector and has vate sector), or to the kind of products of- been able to offer a wide range of servi- fered, as some offered all major financial ces, including special mortgage products products and some fewer. The diversity to low-income earners and to the Maori in successful models shows that the key community. component for success seems to be char- acteristics of the Post Office itself, including widespread locations, trust in the in- Postal Banking for Canada stitution, and the staff.

When we examined these five national postal banking systems in detail, we found that they were all successful in their own way. However, success did not seem to be

Why Canada Needs Postal Banking 9 Why Postal Banking? number of bank and credit union branches has shrunk over the last two decades. In Our study shows clearly that postal bank- rural Canada, many bank branches have ing would succeed in Canada and would closed in small towns and, while cred- help improve and stabilize Canada Post’s it unions have purchased some of these services and revenues. The five post of- branches, this process has slowed mark- fices we studied in other countries are all edly in recent years. publicly owned, and receive a substantial Because postal outlets are present in percentage of their sales and profits from both rural communities and inner city financial services while other sources of neighbourhoods, new postal banking revenue declined. could offer to citizens and businesses in The rise of virtual and new retail bank- many communities banking services where ing and the growth of Fringe Financial In- they do not currently exist. In Northern stitutions in Canada show that the trad- and rural Canada, on Aboriginal reserves, itional financial banking sector is not and in the three Northern territories, there meeting all the needs of Canadians. Mil- have always been fewer banks and cred- lions of Canadians have opened accounts it unions than are needed. (There are no in or are using the services of these new credit unions in the territories.) institutions; but, although they operate Second, it is estimated that some 3% in a similar fashion to traditional banks, to 8% of Canadians do not have a bank ac- they tend to be concentrated in urban count. This represents a potential of more areas and are not available in many parts than a million new customers for postal of the country. financial services. Many Canadians use A new Canada-wide financial institu- fringe financial services at a high person- tion could offer products and services that al cost. New postal banking services could challenge the existing patterns. The ability also be combined with legislation requir- to offer competition for existing fees would ing the immediate roll-back of FFI inter- be helped by the fact that banking servi- est rates to bring them in line with exist- ces would be delivered through existing ing banking rates. premises and staff. Use of the e-post sys- The Kiwibank and Banque Postale are tem, as well as existing Canada Post de- both excellent examples of how a postal livery services, could help keep costs low. bank can offer special services to low-in- Clearly, offering postal financial servi- come people, such as home mortgages, ces would allow the millions of Canadians rent-to-buy, and even social housing loans. without local bank branches or easy access In the case of Kiwibank, a special mort- to banking the access they need. gage program for Aboriginal peoples has First, there are many Canadians living been developed that could be replicated in large parts of Canada who lack physic- in Canada. al access to banks or credit unions. The

10 Canadian Centre for Policy Alternatives Canada Post’s the expertise developed at the Bank Banking Advantages of Canada, the Business Development Bank of Canada, Farm Credit Canada, • Canada Post has the largest network Canada Mortgage and Housing Corpor- of retail outlets already in place across ation, Export Development Canada, Canada. and Canada Savings Bonds. • Canada Post had a total of almost 6,400 The financial services Canada Post postal outlets in 2012. could provide would be tested regionally • 3,800 Canada Post outlets (60%) are first; would be fair and transparent; be de- in rural areas where there are fewer livered from bricks-and-mortar branches banks and credit unions. The post of- as well as through the telephone and In- fices in these locations could provide ternet; expand existing services; and con- key services for individuals, but also tribute to financial literacy. All services, for local businesses. of course, would be profitable for Canada Post to provide. • Some communities in Canada have a Canada Post already provides some fi- postal outlet, but no other (or limited) nancial services, such as postal money or- banking services, especially since the ders, domestic and international money closure of 1,700 bank branches and transfers, bill payment and financial trans- hundreds of credit unions over the action and payment notices, and prepaid last two decades. Visa cards. • Canada Post has a high trust factor Brand new services could consist of: among Canadians, and an already • access by all banks and credit union existing skilled and stable workforce customers to their accounts to de- of 68,000 employees, some of whom posit or withdraw cash, as is the case could easily be trained to handle finan- in the UK; cial services. Thus it would not mean starting from scratch, but rather build- • savings accounts and low-fee chequing on what already exists. ing accounts;

• Many Canada Post outlets are already • low-interest credit cards; and open 6 or 7 days a week and could oper- • prepaid debit cards. ate longer daily hours if necessary. Many of them are located in drug stores In the future, services could be ex- or small convenience stores with long tended to: weekday and weekend opening hours. • mortgages; • Since Canada Post is owned 100% by • small-business loans and agricultur- the federal government, it could use al loans;

Why Canada Needs Postal Banking 11 • insurance products; Who Should Own the Services? • mutual funds and stocks; and There are several possibilities: • special new products for low-income and Aboriginal peoples. • Create a non-chartered bank — a Can- ada Post-owned subsidiary — to deliv- Canada Post financial services should er financial services. This is the route offer new competitive products to all Can- taken in Italy adians, but they could also make sure that there were special services offered to low- • Create a chartered bank wholly owned income and Aboriginal Canadians, similar by Canada Post. This is the route taken to services offered by both the French and by France, Switzerland, and New Zea- New Zealand post office financial systems. land The postal bank could also provide • Create a bank to deliver some of the special services for NGOs and social econ- services and partner with banks and omy organizations. The Banque Postale in others to deliver the rest. This is the France has become a banker for NGOs, so- route taken by Switzerland. cial economy and mutual organizations in fields such as social housing. For a while • Create a national credit union or mu- it looked as though Citizen’s Bank would tual to deliver the financial services in take on this role in Canada, but its retreat partnership with Canada Post. A na- from the sector means that once again tional credit union is one such possi- there is no bank specializing in the needs bility, as it would allow for widespread of this kind of business. ownership by Canada Post employees as well as the public.

Delivering Financial Services • Partner directly with one or more financial institutions to deliver the servi- Canada Post Corporation could examine ces. This is the route taken in the U.K. the optimum method of delivering these services. This could be done by establishing a task force of experts from the finan- What Mix of Financial cial and postal services to examine how Services Should Be Offered? they are delivered in other jurisdictions, Who Should Deliver Them? the best method for Canada Post (in terms Canada Post already has partnerships of profit and sales), and the best method with a number of different institutions for users of these services. that could be approached to assist with these services. Once the first question is answered, the second one could be exam-

12 Canadian Centre for Policy Alternatives ined and the experience of other countries tive services to Canadians, nor ad- taken into account. equate service to many of the under- or All potential partnerships, if that is unbanked. a route taken, should be determined by • Canada’s postal system has a long his- open tender on delivering a service for tory of delivering financial services. a specific period of time. With its 6,400 Currently delivering some products, it outlets, which often serve populations could develop a full banking system. with no competition in financial services and sometimes no services at all, Can- • Postal banking systems are proliferat- ada Post would undoubtedly be courted ing around the world and are promin- by many financial institutions anxious to ent in most of the developed countries. supply services. There is also no reason They have shown themselves capable to necessarily have all services provided of generating the additional income by the same stakeholder or stakeholders needed to preserve the postal system across the country. as traditional letter volumes decline. Whatever the ownership mechanisms, • Analysis of the postal banking sys- some services could be completely owned tems in the five developed countries by Canada Post and others delivered by a we have selected has demonstrated partnership with existing credit unions or that there are many ways of creating banks. Partnerships could be made nation- a successful system. We can use the ally or developed on a regional basis. This experience of these countries to cre- would also allow Canada Post to partner ate our own model in Canada. with regionally-based credit unions and caisse populaires in different provinces. • Our study concludes that the idea of The question of delivery has become Canada Post expanding into finan- easier with the uptake in Internet and mo- cial services is a sound one. Other bile phone technology. For example, the studies, as well as opinions of past UK Post Office Ltd. delivers its services Canada Post presidents and experts with a core of 300 financial specialists, as around the world, have reached the well as trained Post Office staff for 11,500 same conclusion. outlets. Internet and telephone technolo- • We recommend that the federal gov- gies allow people in remote areas to con- ernment and Canada Post immediate- nect with financial specialists. ly establish a task force to determine how to deliver new financial services, Conclusion and determine priorities for delivering new products.

• Canada’s existing financial and banking system is not providing competi-

Why Canada Needs Postal Banking 13 Introduction

Why This Study? was $28.6 billion.2 This sum is larger than the federal deficit for the fiscal year 2012– This study tries to answer three questions: 13 (which was $18.3 billion).3 The profit rate 1. Could offering postal financial ser- of 17.1% return on equity in 2012, as ana- vices help stabilize Canada Post rev- lysed by PricewaterhouseCoopers, is one enues and services? The post office is of the highest of any industry and shows still a much-valued and needed service there is room for competition.4 in Canada, but the environment is rapid- 3. Could offering postal financial ser- ly changing as we have moved beyond vices allow the millions of Canadians the paper-and-parcel era to a combined without local bank branches or easy ac- paper, parcel and electronic communica- cess to banking the access they need? tions world. Thus, if we can help stabilize While Canada has a highly developed and strengthen this system through the banking system, many people and large introduction of new services such as fi- regions are not served by banking insti- nancial services, we can help preserve it. tutions. Postal banking can offer access 2. Could delivering financial services to financial services not now available to through the post office offer Canadians many Canadians as it does for citizens in competitive new services and divers- many similar countries around the world. ity of choice? Canada’s big six banks are To answer these questions, we will amongst the largest and most profitable in first examine the banking environment the world. The country’s six largest banks’ in Canada to see if there is potential for profit in 2011 was $23.4 billion1 and in 2012 a new entrant. We will then look at the

14 Canadian Centre for Policy Alternatives strengths that Canada Post could bring to banking in five similar countries, the UK, the table as a financial services provider. New Zealand, France, Italy and Switzer- We will next examine the history of postal land. Finally, we will look at what kinds banking in Canada. Then we will examine of options exist to make postal banking the postal banking environment around work in Canada. the world and particularly look at postal

Why Canada Needs Postal Banking 15 The Changing Banking Environment in Canada

Canada’s banking environment is The Decline of Bank Branch changing. For over 100 years, Canada’s and Credit Union Locations in banking world was composed mainly of Both Urban and Rural Canada the Big Six banks with banking hours that Over the last two decades, we have seen a started at 10 a.m. and ended at 3:00 p.m. major decline in the number of branches and with branches that were not open and locations for banks and credit unions. on weekends. Credit unions and caisses In a 2012 study, the Canadian Bankers populaires provided the only real alterna- Association (CBA) noted that only 17% tives, but the majority of Canadians (ex- of Canadians surveyed identify branch cept in Quebec and Saskatchewan) chose banking as their main banking method, the banks that continued to make very siz- down significantly from 29% in 2000.5 CBA able profits each year. also showed that residents of Manitoba In the last 20 years, however, the bank- and Saskatchewan are the highest users ing industry has begun to change dramat- of in-branch banking with 22% using it ically and opened possibilities for the entry for their main banking needs while only of new postal banking services. 10% of Quebec residents rely mainly on branches. As well, “33 per cent of Can- adians say their use of in-branch banking has dropped.”

16 Canadian Centre for Policy Alternatives figure 2 Bank Branch Statistics, 9 Bank Totals

As of October 31 2006 2007 2008 2009 2010 2011 2012 Newfoundland 103 105 106 105 104 107 108 Nova Scotia 198 200 199 197 197 197 191 Prince Edward Island 29 29 29 28 28 27 27 New Brunswick 162 164 164 162 161 160 154 Québec 1,092 1,099 1,103 1,094 1,089 1,097 1,095 Ontario 2,504 2,562 2,627 2,652 2,653 2,675 2,699 Manitoba 212 215 214 206 206 206 203 Saskatchewan 247 246 248 247 247 246 239 Alberta 573 605 629 636 649 657 671 British Columbia 759 773 790 775 783 783 796 Northwest Territories/Nunavut 16 16 16 17 17 13 16 Yukon 7 7 17 17 17 7 6 Canada 5,902 6,021 6,142 6,136 6,151 6,175 6,205

Note Banks include: BMO Financial Group, CIBC, Canadian Western Bank, HSBC Bank Canada, Laurentian Bank of Canada, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Financial Group Source Table from Canadian Bankers Associatino 2013 (only bank branches, not credit union locations)

The reasons for the decline in branch of Winnipeg, a total of nine bank branch- banking are, of course, complex. es have been closed since 1995 (Winnipeg Part of the decline is linked to the Free Press, February 2003).7 drop in the number and presence of bank By 2012, a decade later, the CBA (which branches. In 1990, there were almost 8,000 includes most of the banks in Canada) branches (7,964) and, by 2002, a Bain showed that between 2006 and 2012 the study commissioned by Power Corpora- number of bank branches increased in tion noted that the number had fallen to Canada from 5,902 to 6,205. 5,908, a decline of 26%.6 But a closer examination of these num- The study also noted: bers shows that: Branch closures appear to disproportion- • the increase has still left a decline of ately affect the most vulnerable Canadians. over 1,700 branches or 22% since 1990; It has been estimated that the Banks have exited 45% of the bank branches in rural • while the population of Canada in- Canada (Public Interest Advocacy Centre, creased by 11% from 2002 to 2012,8 the Financial Post, September 2000). Banks in number of branches only increased by low-income areas have also been particu- 5.1% in this decade; larly impacted. In the lowest income area

Why Canada Needs Postal Banking 17 figure 3 Closed Bank Branches 2002–12

Number Closed Number of Towns and Cities Newfoundland 9 7 Nova Scotia 18 9 New Brunswick 14 11 Prince Edward Island 2 2 Quebec 212 96 Ontario 489 124 Manitoba 33 5 Saskatchewan 31 13 Alberta 92 27 British Columbia 104 37 Nunavut 1 1 Northwest Territories 2 2 Yukon Total 1007 334

Source Financial Consumer Agency of Canada, http://www.fcac-acfc.gc.ca/eng/resources/toolCalculator/banking/BranchClosures/index-eng.asp?bLang=True&userProv=1&city =all#closureList

• the increase in bank branches since In many communities today, credit 2006 was only substantial in Ontario unions or caisses populaires are the only (with 195 branches added), Alberta (98) financial institution.9 In 2012, the Cred- and BC (37). In the other provinces, it Union Central of Canada reported that Manitoba, Saskatchewan, the three credit unions were the only financial in- Maritime provinces and the Yukon, the stitution in 380 communities.10 The Des- number of bank branches declined, jardins Group noted in 2013 that caisses while in Quebec and Newfoundland populaires are the only financial institu- the growth was very small with only tion in 388 towns and villages in Quebec.11 three branches added in Quebec. But the total number of credit union and caisse locations has also dropped from The Financial Consumer Agency of 3,603 in 2002 to 3,117 in 2012, a decline of Canada (FCAC) also measures the branch 13.5%.12 The number of Desjardins Group closings, though it does not indicate new locations fell from 1,568 caisses and service branches or total locations. According to centres in Quebec and Ontario in 2002, to the FCAC, the number of bank branches 1,310 in 2011, a 16.5% decline.13 closed from 2002 to 2012 was calculated These declines are partly due to the at 1,007 in some 334 towns. fact that many individual credit unions

18 Canadian Centre for Policy Alternatives figure 4 U.S. Branch Numbers

101,000 99,500 98,000 96,500 95,000 93,500 92,000 90,500 89,000 Number of Branches 87,500 86,000 84,500 83,000 81,500 80,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source SNL Financial and FDIC Summary of Deposit filings. Note Data as of Oct 4, 2012. Based on FDIC Summary of Deposits data as of June 30 of each year. Excludes credit unions.

or caisses have merged. But membership more dramatic from the late 1980s to mid- is also down due primarily to a decline in 1990s. Credit unions have since taken Desjardins membership, while CUCC mem- over some closed-down bank branches. bership grew. The Credit Union Central of In 2000 and 2001, credit unions bought Canada reported this year, “According to 72 bank branches mainly in rural areas. the 2011 census data, Canada’s popula- But this acquisition boom has slowed and tion grew by 5.9% over the 2006 to 2011 is now a trickle.15 period. During the same period, the com- The decline in bank branches in Can- bined credit union/caisse populaire sys- ada has been even steeper than the de- tem (including the Desjardins system) cline in the United States. In 2012, there recorded a 0.8% decline in membership. were 97,337 bank branches in the U.S., a Membership in credit unions and caisses decline for the first time from the 99,163 populaires affiliated with Canadian Cen- branches recorded in 2008. (In 1994, the tral increased by 2.8 per cent.”14 In other total was only 81,297.) The average per words, the total credit union member- capita number of people per bank branch ship is shrinking while Canada’s popula- is still much higher here than in the U.S.: tion is growing. The decline in the num- 5,621 people per branch in Canada in 2012 ber of locations of credit unions was even

Why Canada Needs Postal Banking 19 compared to only 3,225 people per branch • Having fewer branches in rural and in the U.S.16 urban areas particularly affects busi- It is clear that many Canadians do not ness banking, whether it is retail, ser- have immediate access to a bank branch vice, manufacturing or agriculture. and that our bank branches serve on aver- As loans, mortgages, and other major age many more people per branch than products are very often negotiated in they once did, and than American branch- branches and advice sought there, the es do today. We also know that many com- lack of nearby branches, or the long munities have no bank branch and that distances to travel to reach one, can some do not have a credit union. affect the possibility of starting or ex- Having a bricks-and-mortar branch is panding businesses. For many exist- important for a number of reasons: ing businesses, (particularly retail and some services) there is also a need to • Many Canadians are still dependent be able to go into a branch on a daily on branch banking as their main form basis to deposit and withdraw cash of banking. Even the CBA notes that and cheques. Businesses in rural and almost one-fifth of Canadians view poor neighbourhoods in Canada are branch banking as their main meth- thus often disadvantaged with more od of banking. We also know that sen- branch closings compared to those iors are a subgroup within this cat- in urban and richer neighbourhoods. egory that is particularly attached to branch banking.17 But these figures do A survey showed that for major trans- not indicate how many Canadians rely actions, such as loan applications, “76% on access to a bank branch to carry out of consumers in the U.S. and 85% in Can- important financial business. ada prefer to visit a branch.” The same study showed that when asked what was • Bank branches are particularly used the most trusted means of banking in for such activities as to open new ac- both Canada and the U.S. over 80% as counts, for advice, to trade securities shown in the chart on p.21 said branches and apply for mortgages and loans in were the most trusted channel for finan- a much more intensive manner than cial transactions. overall use (see charts below). These A recent U.S. study shows the still im- transactions are usually the most lucra- portant reliance on branches for purchas- tive for banks and credit unions; thus, ing financial products, even in changing by making it more difficult to get to a times. (Please see chart on p. 21.) branch, these transactions may not be carried out or be made outside of the traditional bank network.

20 Canadian Centre for Policy Alternatives Figure 5 Most Trusted Channels for Bank Transactions According to Consumers in the U.S. and Canada, Q2 2010

100% U.S. Canada 90%

80%

70%

60%

50%

40%

Percent of Respondents Percent 30%

20%

10%

0% Branch Internet Telephone Mobile

Note Respondents who selected 4 or 5 on a 5-point scale, where 1=do not trust and 5=highly trust Source Empathica, “Consumer Insights Panel, Q2 2010, Issue 3,” Sep 30, 2010

Figure 6 Channels U.S. Consumers Use to Apply for Retail Financial Products

50%

2011 2010

40%

30%

20% Percent of Respondents Percent

10%

0% In a Branch/In Person On the Internet On the Phone By Mail On the Internet (Computer) (Mobile Device)*

Note Base: 10,647 U.S. online adults (18+) who purchased a financial product. * Base: 20,036 U.S. online adults (18+) who purchased a financial product. Source Forrester, “The State of North American Digital Banking: Priorities, Goals and Metrics,” July 2012

Why Canada Needs Postal Banking 21 The Opening of Bank Branches New postal banking services could on Weekends and Evenings ensure that fees and charges could be more transparent than is the case now Another major change which is still on- with the traditional banks, as shown in a going is the change in banking hours recent Marketplace investigation on CBC from the old 10–3 p.m. Monday to Friday Television.25 experience.19 First, there was the opening The episode revealed how the big five in the late afternoon, evenings and early banks are charging unnecessarily high morning, and these days, it is the move to fees on banking services. openings not only on Saturday but on Sun- A well-known Bay Street insider, Preet days as well. The TD Canada Trust bank Bannerjee, revealed how banks are making for example now has 300 branches open huge amounts on banking fees amounting on Sundays.20 to some 6% to 7% of bank earnings ($1.6 billion to $2 billion last year alone). The The Rise of Banking Fees episode then showed how the banks’ mu- and High Credit Card Fees tual fund fees were very high and, finally, how collateral mortgages now make it cost- As a spokeswoman for the Canadian Bank- ly and difficult to transfer your mortgage. ers Association said, “About 30 years ago, ATM fees for using an ATM at a bank we had no fees.... The cost of banking was other than one’s own are particularly in- covered off in the spread between loan rates sidious as in other countries such as the and deposit rates. Borrowers paid for the UK users are not charged.26 banking activities of other clients.”21 But by 2010, a study by Vision Critical (commissioned by ING Direct bank before it The Rise of ATMs, was taken over by the Bank of Nova Sco- Internet, Telephone and tia) found that fees in Canada were among Mobile Phone Banking the highest in the world. More than half The decline of branch banking is not only of Canadians (55%) have a fee-based che- linked to banks rationalizing their bricks- quing account and, on average, pay $185 and-mortar locations. It is also linked to per year in fees for these accounts.22 Sta- the rise of ATMs, Internet and telephone tistics Canada reports households spend banking. an average of about $16.20 per month on Today there are more than 58,000 ATMs bank service fees. 23 across Canada. 61% of these ATMs are so Credit card rates remain high in spite called “white machines” owned by non- of low Bank of Canada prime rates: “The bank companies. The average ATM sur- typical bank card interest rate continues charge in 2008 was $1.50 usually paid for to hover around 20% annually and department store cards are closer to 30%.”24

22 Canadian Centre for Policy Alternatives using a machine not linked to one’s bank that discovered that 83% of Canadians or credit union.27 conduct at least one transaction month- Online banking has grown at a tre- ly at a branch.28 mendous rate in recent years. The CBA But it is not only the telephone and In- reported in 2012 that, “A majority of Can- ternet banking methods that are new. In adians (67 per cent) report using online Canada we are also at the start of the mo- banking in the last year.” The study also bile phone revolution (although it is much noted that 47% of Canadians “now use In- further advanced in other countries such ternet as their main means of banking, up as Italy or Kenya). from 8% 12 years ago.” The demographics A recent study by the Federal Reserve show 53% of 18-to-34-year-olds use the In- said that mobile phone banking is on the ternet as their main means of banking, as rise in the United States. The survey said do 45% of those 55 and older. that that “28 percent of all cellphone users But the study also pointed out that 33% have used their mobile device to bank in of Canadians do not use Internet banking the past 12 months — up from 21 percent and it does not define what “main means” in December 2011.” 29 actually means to the 47% who claim it as According to the survey, mobile phone their preferred banking method. Does it banking is “particularly popular among mean they never go into a branch, or only the ‘underbanked’ or those who have bank less frequently, or for certain services? For accounts but use cheque cashers and pay- example, for bill payments, the study fig- day lenders. Nearly half, 49 percent, of ures indicate: these consumers said they had used mobile banking in the past 12 months.” At • 46% of Canadians use online banking the far extreme, in Kenya, where there is as their primary method of bill payment no developed telephone or banking infra- • 18% prefer pre-authorized bank ac- structure, 17 million or two-thirds of adult count payments Kenyans use M-Pesa, the mobile banking system.30 • 9% pay in a branch One of the consequences of this trend is • 8% use telephone banking that entry into financial services is cheaper than it has been in the past as many of the • 7% pay at an ATM services can be offered over the Internet. The study does not include how many people pay their bills by mail or at the company or utility offices. So while Internet banking is important, many people also use branches for all or some of their banking and bill payments. In 2003, Power Fi- nancial Corporation commissioned a study

Why Canada Needs Postal Banking 23 The Rise of Retail Stores still a large and growing market for alterna- Offering Banking Services tives to the Big Six banking institutions. and Banks Without Branch Locations The Rise of Fringe Financial While use of traditional bank branches Institutions, the Unbanked may be declining, another factor contrib- and the Underbanked uting to this decline, or probably also a result of it, is undoubtedly the growth of Another major change in the banking en- non-traditional banks in Canada. PC Fi- vironment, that shows there is an open- nancial, Canadian Tire and Walmart (to ing for new financial services, is the rise of name only the largest) are all major chal- Fringe Financial Institutions or FFIs. These lengers to the traditional banks. Clients of institutions provide short-term loans and these banks are not using traditional bank cheque cashing services as well as money branches. PC Financial services and the transfers and prepaid credit cards. PC Bank are owned by Loblaws and offer While offering services customers want, banking services from CIBC and a Master- the interest rate charges for their services Card from Loblaws. PC Financial has some on an annual basis can only be regarded as 2.9 million accounts of which about 50% usurious. A study of FFIs in Prince George, have a positive balance and $2.2 billion BC, concluded, “Given that the average in account balances.31 Canadian Tire Fi payday loan in Canada is $280 for a 10- nancial Services has 1.7 million accounts day period, a payday lender in B.C. can with balances. Over 40% of Canadian Tire’s now legally charge $64.40 for this trans- income before taxes for 2012 ($276.9 mil- action. This computes to a nominal an- lion out of $677.2 million) comes from fi- nual percentage rate of interest (APR) of nancial services.32 Walmart Canada also 839.5 %. As a point of reference, the Bank launched a bank in 2010, which is a sub- of Canada’s bank rate is currently 1%, and sidiary of its U.S. bank. So far, its only a typical credit card carries a 19.5% APR.”35 product is a MasterCard.33 The Canadian Payday Loan Associa- There has also been a rise of branch- tion (CPLA) is the main organization that less banking. ING Direct Canada, a branch- represents 764 retail fringe financial ser- less bank, which was originally a subsidi- vices outlets providing payday loans and/ ary of a major Dutch bank, has some 1.8 or cheque cashing services to customers million clients and $40 billion in assets. It in Canada. The organization has some 20 was absorbed by the Bank of Nova Scotia members with branches in every province. in 2012 although, for the moment, it main- Money Mart/Insta-cheque is the largest tains autonomous activity.34 company with 458 locations of the 764.36 The growth of retail and branchless The CPLA member companies claim to banking in recent years shows that there is serve nearly two million Canadians a year.37

24 Canadian Centre for Policy Alternatives These are, in general, extremely profit- The rise of this kind of institution is able operations. DFC, the owner of Money linked in a chicken-and-egg fashion to the Mart, made global profits before tax of rise of the “unbanked” or “underbanked.” $387 million on revenues of $1.062 bil- It is estimated that between 3% and 15% of lion in 2012 and 28.7% of their total global the adult population do not have a bank revenues for the fiscal third quarter 2013 account. If we take the lowest figure of 3% came from Canada.38 this was estimated to be 842,000 adults in But these are not the only Fringe Fi- 2005.43 As a recent study for the Financial nancial Institutions. A new group of Inter- Literacy Task Force noted: net branchless companies such as Zippy National level studies of financial exclu- Cash and Wonga, a UK company, have sion in Canada are limited. It is estimat- also started up in Canada in the last few ed that 3 per cent of the adult population years, but are not members of CPLA. In have no bank account, but that this propor- Canada, on the Wonga website, the costs tion rises to 8 per cent among low-income for a $200 loan for 30 days are $40.10 or adults (McKay 1998). In addition to being a rate of over 240% per year.39 The rates more likely to not have an account, low- of Wonga in the UK, at 5,853% APR by income people are also 36 per cent more British measures, are even higher! As the likely to not have a credit card (Buckland Daily Telegraph noted recently about Brit- and Dong 2006) and more likely to have ish Wonga rates: “Among the criticisms of been refused a credit card (Simpson and the industry is the high interest rates ap- Buckland 2009).44 plied, as well as campaigns that critics say target the vulnerable. Wonga, the largest Today, the number of unbanked, using short-term lender, raised its standard in- the same method of calculation, would terest rate quoted on its website by more approach 910,000. In the United States, than 1,600 percentage points to 5,853pc,40 a report from the Federal Deposit Insur- despite calls for a cap on the cost of short- ance Corporation showed a similar trend, term credit. The new APR is based on a in that 821,000 households opted out of £150 loan taken out over 18 days, which the banking system from 2009 to 2011 and would add up to £183.49 after adding fees that the so-called unbanked population and interest, with the quoted interest rate grew to 8.2% of U.S. households. 45 The assuming that the loan is extended over study also showed: a year.”41 Recently Wonga made the news • Roughly 17 million adults are without when the Archbishop of Canterbury, Justin a chequing or savings account. Welby, was embarrassed to find, after he had denounced Wonga’s usurious rates, • 51 million adults have a bank account, that the Church of England had major in- but use pawnshops, payday lenders or vestments in Wonga!42 rent-to-own services.

Why Canada Needs Postal Banking 25 But the unbanked is not the only trend. Aboriginal Communities Even larger in terms of numbers is the Remain Largely Without “underbanked.” Banks or Credit Unions The same U.S. federal government Over the past decade, the Aboriginal popu- agency study also emphasizes the growth lation has increased dramatically, grow- of this underbanked group. One of the ing by 20.1% between 2006 and 2011, while criteria that the U.S. uses to determine the non-aboriginal population increased an underbanked family is when a house- by 5.2%, according to the 2011 Nation- hold has only one account. According to al Household Survey. Some 1.4 million U.S. numbers: people now identify as Aboriginal, or 4.3% • The underbanked population shot up of the Canadian population.47 But banks from 18.2% to 20.1% of households and credit unions lag behind in provid- from 2009 to 2011. ing services. While the major banks all have Aboriginal services, there are very • 28.3% of households either had one few branches on reserves. or no bank account. There are 615 First Nations commun- • Minorities, the unemployed, young ities in Canada today and many other Mé- people and lower-income households tis and non-status communities. The Roy- are least likely to have accounts. al Bank, the country’s largest bank, claims to have seven branches on reserves and The study of FFIs in Prince George, BC four agency outlets as well as six branch- made similar findings. It found that 60% es “North of 60” (three branches in Nuna- of payday loan users self-identified as be- vut).48 The Bank of Montreal has 11 branches ing Aboriginal. “Aboriginal users of FFIs on reserves and three community bank- had lower incomes, less education, were ing outlets for Aboriginal banking.49 The more likely to be younger, more likely to Bank of Nova Scotia has only four branch- be unemployed, and more likely to rely es on reserves.50 The TD Bank has a part- on income assistance than the non-Ab- nership with the First Nations Bank, which original users.” has eight branches and two community Only 12% of the FFI users were found centres.51 CIBC has seven reserve branch- to be unbanked in the sense of never hav- es and one agency.52 There are three cred- ing had a bank account. About 50% still it unions with on-reserve branches (such regularly used the accounts, while 50% as Affinity Credit Union, which opened the did not use a bank or credit union account first credit union branch on a First Nations on a regular basis.46 reserve in Saskatchewan in 2009) and five caisse populaires on Quebec reserves. A quick tally of these numbers (54) would indicate that of the 615 communities most

26 Canadian Centre for Policy Alternatives are not directly served by a bank branch under administration. Concentration has or credit union. grown substantially in each of these three pillars. The only pillar where the Big Six Banks do not have significant share is the Trends in Banking insurance industry, where banks represent Open Up Opportunities about 3% of insurance industry premium revenue.”54 The major banks are interest- The trends in financial services discussed ed in rationalizing their operations and above have opened up the potential for the in merging, as the unsuccessful 1998 at- entry of new banking and financial servi- tempt to merge four of the biggest banks ces in Canada. The decline of branches, into two monster banks (prevented by the the increase in branch hours, the higher federal government with popular sup- and higher cost of banking, the contin- port), showed.55 Had these mergers suc- ual rise of new technologies, the growth ceeded, even more branches would have of new banks and financial services, and undoubtedly closed. the rise of underserved communities and We have tried to show that financial groups show there is a market demand services, as they now exist, do not serve that is not being met by the existing ma- all Canadians, in all locations, in the man- jor banks and credit unions. ner, at the competitive rates, or with the One of the major reasons behind these adequate transparency that they should. trends is the highly concentrated nature Thus we can conclude that changes in the of the Canadian banking system. A recent banking system have created the conditions academic study noted the big five banks in and opened new potential opportunities Canada have a share of 85% of total bank for new financial services entrants such as assets.53 Another 2003 Bain & Company re- Canada Post. In the next chapter, we will port noted that the “Six major Schedule 1 examine the history of postal banking in Banks control 87% of chartered banking Canada, its success and decline, and the assets, and 100% and 87% respectively debate around its possible return. of the trust and brokerage industry assets

Why Canada Needs Postal Banking 27 Postal Banking in Canada

This chapter will examine post of- The Canadian Post Office Act of 1867, fice banking services offered from 1867– in its savings bank clauses, was modeled 1969 and the current debate since 1969, after the British Post Office Savings Bank including studies recommending postal Act. The British postal banking system banking, and the opinions of Canada Post had begun in 1861 and was set up to pro- presidents. The chapter will also look at vide a guaranteed savings system and to the positions of major political parties as provide the government with a “financial well as major stakeholders such as unions. asset” to help pay down its debt. Postal banking is not something new In 1876 the initial requirement in the to Canada. For over a hundred years af- Act, that the Canadian postal savings bank ter Confederation, Canada had a postal balance be funded in Canadian govern- savings system. In fact, the proposal to ment securities, was dropped. The bal- adopt the Post Office Savings Bank sys- ance was now made part of the unfund- tem in Canada was introduced in Parlia- ed federal debt. ment during the November 1867 session, The Post Office Savings system start- only a few months after the British North ed to function in Canada in 1868. It began America Act was signed on July 1. A fi- with 83 locations and was ramped up to nancial crisis in Canada in October 1867 343 by 1884. By 1884, there already was may also have hastened its creation. The a balance of $13 million from 66,682 de- traditional banks were worried at the time positors’ accounts. In Ontario, 1 in 34 cit- that they would lose deposits, so a limit izens had an account; in Quebec, 1 in 136. of $1,000 was fixed on savings and a rate An observer remarked that in Scotland, set at 4%.56 the ratio was 1 to 35, “to which the pro-

28 Canadian Centre for Policy Alternatives portion in the Province of Ontario bears to be shut down, although interest was a close analogy.” The largest percentage paid until the end of 1969.59 of depositors in the Canadian system was found in major cities, not in rural districts. Initially the system operated main- Support for Postal Banking ly in Ontario and Quebec, because in the Over 45 years have passed since the clos- Maritime provinces the Post Office Sav- ure of the Post Office Savings Bank. To- ings Bank had to share the savings mar- day the debate around the need to revive ket with savings banks originally set up or relaunch a Post Office Bank has begun by the provinces and then later run by the to grow again. Support for postal banking Finance department. It was finally decid- has come from a wide range of sources. ed to merge the two systems into the Post Office department.57 One study links the decline of the Post- Management Support al Savings Bank system to the decision of the Minister of Finance, in 1898, to lower Until recently, there has been a continu- the interest rate on deposits as a result of um of support from Canada Post manage- lobbying by the chartered banks.58 ment for increased postal financial services. Other institutions, such as the caisses Past presidents and CEOs of Canada Post, populaires and credit unions began in 1900 from the first president Michael Warren, with the creation of the first credit union to André Ouellet and Moya Greene, have in Lévis, Québec by Alphonse Desjardins endorsed the idea of Canada Post getting and in 1908 with the founding of CS Co-op much more involved in financial services. (now Alterna Savings) also by Desjardins Michael Warren, President of Can- in Ottawa. The credit unions and caisses ada Post from 1981–85, said before the populaires offered alternate savings insti- Rotary Club of Ottawa in 1982: “We have tutions for working people. post offices in more than 2,000 commun- The high point of deposits for the Post ities where there are no banks. But the Office Savings Bank was $47.5 million total breadth of transactions taking place in in 1908. This would be around $1 billion those offices is not large enough in rela- in today’s money. The total shrank to $17.2 tion to their capital costs. We could con- million in 1968. sider providing any number of services In 1968, the Postal Savings Bank was that would benefit from a widespread re- closed down although the legislation still tail network...perhaps an indirect role for remains on the books today. Eric Kierans, the chartered banks on a fee for service Postmaster General in the Trudeau Lib- basis. We may also have a part to play in eral government announced the closing, the catalogue sales business or in travel... which meant that 290,000 accounts had maybe insurance.”60

Why Canada Needs Postal Banking 29 In 1998, before the House Standing tions, with other banks. We could do it as Committee on Finance, Mr. Ouellet also an agent for other banks. There is a spec- supported the idea of postal financial trum here. Obviously we have not final- services. ized our study and we have not come to a conclusion on which way we should go if When you look at the Post Office Act you we were to do it again. It’s just a remind- see there is a section that is dormant, be- er to parliamentarians that in the not-too- cause from very early on all the small post distant past the postal outlets were receiv- offices were able to receive deposits. For a ing deposits, and we could do it again.61 number of years we’ve been doing some financial services for the community. He also noted that Canada Post had a pilot project offering financial services As the banks expanded their branches with an existing bank in the North. throughout the country, a decision was In April 2010, Canada Post CEO Moya made to stop providing these services and Greene went before the Senate Standing no longer compete with the banks. So the Committee on Finance to back the need financial institutions of Canada basically for Canada Post to get into financial ser- occupy all of the territories, but as the num- vices in a big way: bers have been indicated to you, there are still a lot of areas in Canada that are not These are the two areas — electronic com- covered. If the movement is to close more munication for transaction mail and on- branches, that will mean that fewer and line marketing offers for direct marketing fewer Canadians will have direct access. mail — where we would build on what we have. However, we also need to diversify We have come here to tell you not to forget the revenue stream and be in wholly dif- that Canada Post used to provide this ser- ferent businesses than we are today. vice. We could do it again by just enacting the dormant section. You don’t even have I note, for example, that many postal admin- to amend the Canada Post Corporation Act. istrations have made a success of banking. The section is there that would allow us New Zealand, for example offered a limit- to do it. You just re-enact the section and ed banking service, but about eight years we will resume receiving deposits, as we ago, they moved into more financial trans- used to do in the past. actions. Canada Post has over $1 billion of money order business. For many small busi- Mr. Ouellet described the possible nesses in Northern Canada that money or- forms postal banking could take: der business operates as a bank for them. There are different ways of doing it. We We do a lot of verification for credit card could do it on our own, as we used to do customers to ensure that the people show- it, or, as Mr. Tremblay said, we could do ing up are the people who should get the it in conjunction with financial institu- card. We think this trust category of servi-

30 Canadian Centre for Policy Alternatives ces can move in the future, as many post- Canada Post’s Present al administrations have done, into a more Leadership Not Supportive traditional and generalized banking offer. of Banking Options We are considering that now.... Canada Post’s present leadership has Ms. Greene went on to describe the not been supportive of banking services value of postal banking services in New for the Post Office but has pushed ahead Zealand and Italy: dramatically on expanding the epost bill payment services. Such bill payments are We communicate regularly with postal a part of postal financial service offerings companies around the world. We have in other countries. seen New Zealand, where they started of- Canada Post also recently commis- fering banking services in 2002, and by sioned a study by the Conference Board 2009, it was probably 30 per cent of their of Canada, The Future of Postal Services revenues and 70 per cent of their profit. It in Canada, which failed to recommend fi- is possible. It does not just leverage your nancial services or even to examine their existing retail outlets because, in some possible application in Canada. It began cases, in order to offer a successful finan- with a very favourable analysis of the ef- cial offer it is actually not going to be ap- fects of financial services in post offices propriate in those outlets; it has to be in around the world: other places. We are looking at that and “For international postal operators, at Italy, which did the same. Italy offered the primary new business line being en- their banking services at the same time tered is financial services. In some coun- they entered the cell phone communica- tries, such as Japan and Great Britain, fi- tions area. They became, in a short space of nancial services have been a core element time — I will say 24 months — the key wire- of the post office for many years. In other less payment mechanism in Italy for small countries, financial services have been payments. They did a deal with a clearing gradually introduced to postal services house, and many of the things that had to over time. The addition of financial ser- be done internal to the banking establish- vices through postal outlets offers many ment are not so today. Many areas of the potential benefits. For instance, it can fa- back office can be outsourced, and that cilitate financial inclusion in rural areas makes many new things possible.62 while also mitigating the decline in post- However, a month later, Ms. Greene al revenues. Postal banks serve large mar- had moved on to become the CEO of Roy- kets, but can be low in incremental cost be- al Mail in the UK, where modern financial cause they make shared use of the postal services for the postal system have been retail network. According to a discussion much more ensconced since 2003 (see the paper of the United Nations Department chapter Five Examples of Postal Banking). of Economic and Social Affairs, banking

Why Canada Needs Postal Banking 31 revenues in many countries are actual- year with the first three quarters of 2009 ly essential to generate profits from their outperforming 2008 by 75 per cent. This postal networks.”63 was also true for Poste Italiane, which The Conference Board then went on recorded a 5.5 per cent drop in its postal to note that the high public trust in the services’ segment revenue. But due to its post offices helped in their delivery of- fi growth in the financial and insurance ser- nancial services. vices, Poste Italiane saw overall revenues increase by 13 per cent. Postal services are generally accepted as safe, trusted, reliable institutions. As such, It even referenced the recent swift the public tends to view postal financial success of the Kiwibank in New Zealand: services as a ‘safe haven.’ In New Zealand, the government-owned The study noted the worldwide suc- postal service set up Kiwibank as a sub- cess of postal banking: sidiary in 2002.... Within the first five years of its creation, 500,000 customers (or ap- The Universal Postal Union (UPU) estimates proximately 13 per cent of New Zealand’s that more than 1 billion people worldwide population) transferred their deposits to conduct banking through postal services Kiwibank. In the second half of 2011, Ki- and, in 2010, 51 postal operators world- wibank had a return on equity of 11.7 per wide held 1.6 billion in savings and de- cent. posit accounts. Surprisingly, after this effusive praise It underlined the success of postal for postal banking, the Conference Board banking in developed countries similar study simply nixed any possibility of rec- to Canada: ommending financial services with the Financial services have also been lucra- following three sentences: tive for postal operators. For instance, Ger- Canada has a highly developed financial many’s Deutsche Postbank increased its services sector that extends from large total volume of savings by 21 per cent in banks to small credit unions. While there the first half of 2009 alone, and its mar- is clearly room for Canada Post to explore ket share increased by 10.3 per cent. For digital products involving financial trans- PostFinance, the financial branch of Swiss actions such as invoicing and bill pay- Post, financial services were the main driv- ments, the conditions that allowed other er of growth, leading to an 11.5 per cent in- postal administrations to succeed in bank- crease in net profit in 2009. In the first three ing do not exist in Canada. Therefore, this quarters of 2009, PostFinance saw a 4 per report does not explore financial services cent increase in the number of new cus- as an option in Canada. tomers; a 5 per cent increase in the number of new accounts; and an exceptional

32 Canadian Centre for Policy Alternatives What are these “conditions” that do work is not based primarily on a need to not exist in Canada? The report does not change the banking landscape. Rather, it elaborate. But Canada does have similar stems from the growing need to breathe banking conditions to countries such as new life into Canada Post so that it can Switzerland and the UK. both cope with globalization and guarantee universal postal service, which is a • Big established banks among the top real, if not official, part of its social man- world banks. date, particularly in rural areas. With the • An uncompetitive system where a few prospect of even more intense globaliza- major banks control the vast majority tion and technological change, Canada Post (85% or more) of the market in an oli- risks stagnation or even financial losses. gopolistic fashion. According to two consultants referenced in the report,65 today’s postal ad- • A lack of services in rural, northern ministrations can either sink, while con- and inner city neighbourhoods. tinuing to complain about declining mail • A lack of new innovative banking volumes and electronic alternatives in a products for Canadians from which world of rapid technological change, or to choose. swim, by harnessing new technology, form- ing new business partnerships, and adopt- So rather than a serious study of how ing new ways of doing business to create postal banking might or might not work, new products and services that will help Canadians were deprived of any real pub- them boost their performance and their lic examination of the issue in a report earnings. From this perspective, the finan- that was supposed to examine all possi- cial services option would seem to be the bilities for the current Canada Post man- logical way to ensure the Canadian post- agement.64 al system’s viability.”66

Library of Parliament Popular Support Study in 2005 Supports Financial Services If most Canada Post managers have ex- pressed support for postal banking over In 2005 an important study from the usu- the years, the support of most Canadians ally more neutral Library of Parliament re- has also been very recently confirmed. A search services supported the extension of survey by Stratcom of 1,514 Canadians financial services as an important means from May 24–26, 2013, commissioned by of preserving the post office across Can- The Canadian Union of Postal Workers ada and particularly in rural areas. “At (CUPW), showed that nearly two-thirds present, the idea of establishing a postal (or 63%) of Canadians “supported Can- bank underpinned by Canada Post’s net-

Why Canada Needs Postal Banking 33 figure 7 Canada Post Adding Revenue-Generating Services, Including Financial Services

Strongly Support 21% Somewhat Support 42% Somewhat Oppose 19% Strongly Oppose 18%

Note Results from an on-line survey of a representative national sample of 1514 adults Canadians, May 24–26, 2013 Source Stratcom Poll on popular support for postal financial services, http://www.cupw.ca/index.cfm/ci_id/14575/la_id/1.htm

ada Post expanding revenue-generating novate and noted one of the major in- services, including financial services like novations should be financial services.68 bill payments, insurance and banking.” The union cited Moya Greene’s support The Stratcom poll also found that in their statement. “there is no appetite for major changes Between 1867 and 1969, the Canadian Post- such as postal privatization and deregu- al Savings Bank provided basic banking lation. 69% of poll respondents opposed services at branches across Canada. privatization of Canada Post and 71% opposed allowing private companies to de- Earlier this year, former Canada Post Presi- liver letter mail in Canada.”67 dent Moya Greene indicated that the corporation is thinking about getting back into banking. Union Support CUPW would like the corporation to do The Canadian Union of Postal Workers more than think about banking. We’d like (CUPW) has been a major supporter of the to see a plan. There are many good reasons idea of Canada Post offering financial ser- to move forward. vices since 1984. In its backgrounder for 1. It would help Canada Post make money negotiations that year, CUPW said one of and increase the corporation’s ability to the new services needed to sustain the invest in public postal service and jobs. post office was financial services: “Bill payments such as utility bills and credit 2. It would give people access to bank- cards, etc. could be accepted at all wick- ing services in communities that do not ets. The Post Office Savings Bank could have banks. be established.” And in the same docu- 3. It would make it easier for people to get ment CUPW reprinted Michael Warren’s basic financial services, like credit, with- comments in support of postal banking out having to pay exorbitant fees through services. loan companies. In a more recent statement in 2010, CUPW again mentioned the need to in-

34 Canadian Centre for Policy Alternatives 4. It would give small businesses and groups New Zealand Post established its own access to financial services in their commun- bank — Kiwibank — in 2002. It now has ities and help stimulate local economies. more branches than any private-sector bank in the country. 5. It would help Canada Post diversify like other post offices around the world and leave France’s postal service, La Poste, launched the corporation less dependent on mail. its own bank in 2006 and now has over 11 million postal banking accounts. 6. It would provide meaningful work and new and interesting jobs for CUPW members. Italy’s post office expanded its traditional savings bank services in partnership with Time to Move Forward private-sector banks. It now gets 55% of When Canada Post became a crown cor- its revenues from postal banking services. poration in 1981, then President Michael India Post offered financial services but now Warren argued for banking services at re- the government is looking at setting up a tail counters. He said there were 2,000 com- postal bank to help service the rural poor. munities across the country with a post office but no bank. He thought the postal The United Kingdom’s Post Office partnered service should step in and fill this vacuum. with the Bank of Ireland to offer banking The need for a postal bank has grown since services. But the Post Bank Coalition wants this time. In the past 20 years, more than better banking services and is campaign- 2,000 bank branches have closed, main- ing for a bank run by the post office. The ly in rural and low-income areas. We still government recently indicated it is think- don’t have a postal bank but many other ing about allowing all banks to use postal countries do. counters for savings bank transactions.”70

In the world today, 1.5 billion people use postal financial services each year and Political Positions more than 400 million people have postal bank accounts.”69 NDP

CUPW’s statement also noted the wide The New Democratic Party has supported variety of models: the expansion of financial services in Can- ada Post. On April 23, 2013, in response There are several different models that to the Conference Board of Canada study Canada Post could consider. commissioned by Canada Post that fa- Brazil’s post office partnered with a pri- voured cuts to service but not the intro- vate-sector bank to greatly increase the duction of financial services, the New availability of banking services in all re- Democratic Party issued a statement en- gions of the country. titled, “Government must reject reductions to postal services.”

Why Canada Needs Postal Banking 35 The statement by NDP Critic for Trans- Unfortunately, the resolution was not port, Infrastructure and Communities, discussed on the conference floor. Olivia Chow noted:

For over one hundred years, Canada Post Green Party has provided a critical and essential ser- The Green Party in its Policy Lab put for- vice to Canadians. Instead of service reduc- ward a motion for discussion on a Canada tions, the government must aggressively Post Savings Bank from Jean-Luc Cooke of explore new opportunities to provide bet- Nepean-Carleton on May 3, 2012. The mo- ter and expanded services, and generate tion attempts to: revenue through e-commerce.... Conserv- atives have been reducing postal services direct Canada Post to reactivate their retail to Canadians while ignoring opportun- banking operation (they currently hold a ities to expand Canada Post services. In bank charter). The Canada Post Saving Bank Germany, Switzerland and New Zealand, (CPSB) would operate a very basic retail postal services have been strengthened banking presence (0% no-fee chequing and to deliver banking and financial services maybe 5-year fixed rate mortgages) giving which have proven to be lucrative.71 Canadians the option of using a publicly owned bank. The driver for such a Crown Ten days earlier a resolution on Post- bank can be seen from how the big banks al Banking (6-24-13 Resolution on Postal remained profitable during the depths of Banking) from Ottawa West-Nepean was the 2008–09 crisis, on the backs of user submitted to the April 2013 NDP Party fees. More importantly, remote commun- Conference: ities need basic banking if any economic WHEREAS Canada Post Corporation is a activity is expected to take place. publicly owned utility that is currently Canada Post Retail Bank being underutilized, PREAMBLE: WHEREAS the future of the Post Office de- pends on the expansion of services, WHEREAS remote communities currently pick up cheques from CANADA POST re- THEREFORE BE IT RESOLVED that the NDP tail and walk 5 meters to get them cashed; will work with labour, community groups and other interested parties to develop a WHEREAS remote communities are under- plan to implement postal banking and serviced by retail banking; other service expansion at Canada Post. WHEREAS effective banking is a prerequi- BE IT FURTHER RESOLVED that this plan site for economic activity and growth; will be a component of the NDP platform WHEREAS during the worst economic down- in the 2015 election.72 turn since the great depression in 2008–

36 Canadian Centre for Policy Alternatives 09 the 5 major banks remained profitable Having shown that changes and trends on the strength of their customer user fees within the financial service sector offer op- which indicate the fees are too high; portunities and favour the potential entry of new players, and that a real interest in WHEREAS Canada has a long tradition of postal banking exists among the general using crown corporations to amplify and public, Canada Post managers, unions, attenuate market conditions through com- and political parties, let us next look at petition; the global success of postal banking. In WHEREAS Canada Post has a massive retail particular, we will examine the success presence coast-to-coast-to-coast; of postal banking in five countries — the UK, France, Italy, Switzerland and New OPERATIVE: Zealand — as well as a range of services, BE IT RESOLVED THAT Canada Post re- many of which could be implemented in turn to operating an elementary retail Canada, and a cadre of experts in postal banking service. banking who could help develop a new range of services. Conservatives and Liberals have no public positions on this issue.

Why Canada Needs Postal Banking 37 Examining the Status of Postal Banking Around the World

Postal banking has deep roots around panies, mobile money operators and all the world and is entering a period of ex- other providers of financial services.”73 pansion of services. This has been shown Growth in the people using postal in a major global study of postal banking banking services has been more rapid in recently carried out by researchers of the developing countries, where few tradition- Universal Postal Union. UPU was found- al banking outlets exist (from 70 million ed in 1874 and, in 1948, became a special- to 500 million accounts between 1980 and ized agency of the United Nations. It has 2011). It is also significant that growth in 192 member countries, including Canada. industrialized countries with well-estab- The UPU report on postal banking was lished banking systems has also been sub- presented at the October 2012 UPU confer- stantial (from 170 million to 220 million ence in Doha, and the final version pub- accounts over the same period). lished in March 2013. The study shows The research showed that in 2010, out that “After banks, postal operators and of 123 postal systems surveyed, 51 postal their postal financial subsidiaries are the operators held 1.6 billion savings and de- second biggest world-wide contributor to posit accounts (this includes China). “If financial inclusion, far ahead of micro- we take a conservative position, and as- finance institutions, money-transfer or- sume that an average postal client has 1.5 ganizations, cooperatives, insurance com-

38 Canadian Centre for Policy Alternatives accounts, this means there are more than 1 Business Model 2 billion people banked through the Post.” 74 Proprietary electronic remittances and The report also showed that while transactional financial services (present only 8% of postal operators did not offer in 63% of countries). Postal money orders some form of financial services there was and various kinds of electronic payment still room for expansion as many postal services and domestic and internation- operators surveyed did not offer account- al transfers. based financial services. The report noted Business Model 3 that “with 660,000 contact points in the Partnership with a financial service pro- world, Posts and their financial subsidi- vider (present in 24% of countries). This aries come only second to banks in their model is a revenue-sharing partnership potential to contribute to financial inclu- with a financial partner such as a bank, sion. There are 523,000 bank branches often based on a fee-per-transaction. The and ATMs in the world, according to the UK model, which we highlight later, is an International Monetary Fund.”75 The UPU example of this through its partnership is determined to increase financial servi- with the Bank of Ireland. But the Post Of- ces as a means of promoting financial in- fice also offers cash-merchant services to clusion and “has entered into valuable other banks for transactional services, partnerships with the International Fund similar to Business Model 1. for Agricultural Development (IFAD), the World Bank, the Alliance for Financial In- Business Model 4 clusion and the Bill & Melinda Gates Foun- Unlicensed postal financial services, in- dation, as well as others, to research and cluding account-based services (present develop financial inclusion through the in 24% of countries) The prime example postal network.”76 of this is BancoPosta, a division within One of the significant contributions of Poste Italiane (PI), which we highlight the report was to break down the kind of later. BP does not have a banking licence financial services offered in postal systems from the Central Bank of Italy. It offers sav- into six major business models: ings products and other products such as loans and mortgages, which are offered in Business Model 1 partnerships with other banks. Cash merchant for government and financial services providers (present in Business Model 5 83% of countries). Under this model, the Licensed postal financial services (present postal service offers no opening of new in 9% of countries). The prime example of accounts, only transactions on existing this is China’s postal bank, the world’s big- bank accounts. gest, which has secured a bank licence. It has more than 870 million accounts and is the fifth-largest bank in China. The Swiss

Why Canada Needs Postal Banking 39 Postal Office recently secured a banking postal banking is providing over 30% license for PostFinance, its financial ser- of the access points. vice, but it still does not offer its own loans, • In high-income countries, which gen- credit or mortgages. erally enjoy high levels of financial in- Business Model 6 clusion, “there are pockets of poverty When the postal operator rents space to and exclusion, particularly concen- a financial service provider to sell its ser- trated among certain groups that are vices. There are no examples of this in under-served in terms of financial high-income countries but Malawi is one services. This is especially true of mi- example in Africa. grant populations and religious or ethnic minorities that are economic- In conclusion, the study showed: ally disadvantaged. For example, in • There are 10 common factors that have France, a large proportion of migrants been proven to lead to success in postal are banked through the postal bank, banking: i) network; ii) staff; iii) finan- which has the mandate to open ac- cial capacity; iv) trust; v) automation counts to everyone without any sort and process integration; vi) willingness of discrimination.”79 to foster financial inclusion; vii) gov- • The recommendations to postal oper- ernance between the Post and postal ators in high-income countries was to financial services; viii) legal and regu- “continue offering low cost but high latory framework; ix) marketing; and quality products for the vast majority, x) flexibility.77 and to launch or put emphasis on gov- • Post offices in business models (BM) ernment payments, savings and inter- 3–5, which offered their own savings, national remittance transfers, which insurance or loans services (whether are services the underbanked and mi- licensed or unlicensed) had a higher grants most need. This can help the fi- share of income from postal financial nancial inclusion process in the devel- services than those in a partnership oping world especially if international model or transactional models such transfers are made on an account-to- as BM 1 and BM 2. The examples of account basis. In that case, we can the Swiss versus the UK experience, expect a “double-banking” process, which we detail later, would tend to where the migrant is banked in the substantiate this finding. destination country and the migrant family also becomes banked in the re- • While postal financial outlets pro- ceiving country.” vide a majority of the financial access points in low-income countries, Finally, the use of financial service by even in the highest-income countries, post offices is something that has been

40 Canadian Centre for Policy Alternatives supported not only by the UPU but by a al organizations is picking up speed, due major international consultancy group. to factors such as improving liquidity, Accenture publishes an annual review focusing on core competencies and the of 26 postal systems and the 2012 and 2013 removal of mandates to provide bank- editions are the fifth and sixth in the ser- ing services.” The study goes on to show ies. In both of these reviews, the firm at- that there is a still an excellent future in tempts to show the need for postal sys- developed countries for postal financial tems to embrace new practices such as services. ”Postal banking products differ financial services. Both Accenture studies, in developing and developed economies which include Canada Post, denominate with the former offering basic products, CPC as a “traditionalist” in their four cat- for financial inclusion purposes, and the egories of post office types (of which the latter offering a complete range of bank- other three are “global players, regional ing services.” diversifiers and service providers”). They also list their own set of categor- In the 2012 study, Accenture emphasiz- ies for financial services: es that, ”Full-scale banking services are Postal operators are adopting four mod- systematically becoming part of the retail els in developed economies: value proposition mix, as postal organizations focus on the productivity of the post • Broad financial services office network to diversify revenue streams • Narrow financial services and protect margins through higher profit revenue streams. As market commenta- • Partnerships with banks tors have identified,there is potential for • Banks using post offices for retail postal operators around the world to target 1.1 billion new account holders.” The model for financial services diversifi- Accenture then notes there is a differ- cation has been influenced by the incum- ence between postal financial services in the bent’s strategic, political and economic developing and developed worlds: “How- situation and capabilities. For example, ever, analysis of successful postal models Poste Italiane offers extensive financial for financial inclusion shows that there and insurance services through its post is no ‘one-size-fits-all’ approach. While offices while Correios (Brazil) is driving fi- there is a wide heterogeneity in terms of nancial inclusion through the use of mo- models for the provision of financial ser- bile banking.80 vices through postal operations, there is In their 2013 report, Accenture again a strong commitment to financial inclu- underlines the need for high performance sion policies across all BRIC countries— postal systems to embrace diversification. Brazil, Russia, India and China.” It then It uses the Italian example to show the notes that in developed economies, “the strength in this strategy: ”Poste Italiane divestment of banking operations by post-

Why Canada Needs Postal Banking 41 offers financial services, telecommunica- differentiated customer experience at the tions services and expanded retail prod- retail counter. Cross-selling revenue and ucts through its outlets. In addition, it has improved customer satisfaction are just two created an extensive consumer database of the benefits this solution provides.”81 across its business units that results in a

42 Canadian Centre for Policy Alternatives Five Examples of Postal Banking

As shown in the previous chapter, there because of their relevance to Canadian are many large and important postal bank- options. In all five countries, the Post Of- ing operations around the world, from fice is publicly owned.85 Japan Post Bank, the world’s largest de- The United Kingdom’s Post Office’s posit holder with ¥203 trillion (C$2.15 financial services, in their present form, trillion) in assets82, to the Postal Savings offer a model which is based on a major Bank of China, the fifth-largest commer- partnership with a private sector financial bank in China with over 400 million cial institution, some new and innova- customers,83 to the Deutsche Post Bank, tive products, as well as access for cus- which is now owned by Deutsche Bank tomers of most existing banking services. but remains one of the largest in Germany France’s Banque Postale is a chartered with its own network of over 100 branch- bank owned by the Post Office that offers es and 4,500 postal outlets.84 a wide range of products, including insur- This chapter describes five success- ance and is particularly concerned with ful models in industrialized countries, offering products to theNGO and mutual the United Kingdom, France, Italy, Switz- sector as well as to low income citizens. erland and New Zealand, which have all The bank makes the list of the world’s top maintained an important relationship 50 safest banks.86 between the financial services offered Italy’s BancoPosta presents the mod- through post office outlets and the post el of a non-chartered bank that offers a office. These countries have been chosen wide range of services and excels in offer-

Why Canada Needs Postal Banking 43 ing them through mobile phones as well stocks and bonds in 1880, war savings in as banking cards. 1916, and premium savings bonds in 1956. Switzerland’s PostFinance, wholly In the last decade, financial services owned by the Swiss Post Office, is the at the UK Post Office have been revived in leader in money transfers and one of the a new format to help save the post office largest banks in a country famous for its and offer new competitive services. private sector banking. It has just become In the 1960s, Harold Wilson’s Labour a chartered bank this year. It also offers government made the first major change mortgages and loans in partnership with in postal financial services. Under the major private sector financial institutions. policy initiative of Tony Benn, the govern- Finally Kiwibank, owned by New Zea- ment’s first Postmaster General, it estab- land Post, is a relatively new entrant in lished the National Giro in 1968 as a new the world postal banking sector and has bank. The aim of the technologically-mod- been able to offer a wide range of servi- ern bank was to serve those without bank ces, including special mortgage products accounts — which then was the majority of to low income earners and to the Maori UK citizens, whom the major banks were community. not targeting.88 At the time, most employees in the United Kingdom were paid weekly in cash and the new bank allowed the United Kingdom quick transfer of money and bill payments. The bank first operated at a loss due Financial Services in the UK Post Office go to high start-up costs. But by 1971, the Na- back to the mid-1800s, when it became the tional Giro broke even and by 1972 it start- first post office to offer savings products. ed to turn a profit.89 As Benn commented Just as the UK is deemed to have start- at the 40th anniversary of its established the modern postal service with the in- ment in 2008,90 “We set up a bank with- vention of the postage stamp in 1840, the out nationalising anything.... It became UK was the first to start postal financial the sixth-biggest bank in Britain.” 91 The services with the creation of the Post Of- renamed National Girobank was profit- fice Savings Bank PO( SB) on September 16, able and successful and: 1861. Canada’s Post Office Savings Bank began a few years later in 1868. As the UK • received 25% of all cash deposited in Postal Museum website states: “The Bank banks in the UK; was set up to encourage ordinary people • was the first bank in Europe to adopt to save money safe in the knowledge that optical character recognition tech- it was secured by the government.” 87 The nology; Bank provided a huge financial asset to the government. As time went by other prod- • was the first UK bank to offer free -ac ucts were offered, including government counts to individuals;

44 Canadian Centre for Policy Alternatives • was the first bank to offer interest-bear- ers and has the largest branch network in ing current accounts; international banking.98 Under the Labour Government of Tony • was the first bank in Europe to offer Blair (1997–2007), the idea of postal bank- telephone banking service.92 ing was resuscitated in a deal with the During the same period, the govern- Bank of Ireland. This new initiative came ment also made the Post Office Savings about as Tesco, Britain’s large supermarket Bank a separate government department chain, and other retailers began to open accountable to Treasury ministers and re- financial services, while at the same time named it National Savings. The post offices mail volumes began to decline.99 were then turned into distribution points The partnership, with the privately- for National Savings products. In 1996, owned Bank of Ireland, involved setting National Savings came under the Chan- up a 10-year jointly-owned company, Mi- cellor of the Exchequer and, from 2002, dasGrange, which would control the pro- it was renamed again National Savings cess. From 2004 on, through the partner- & Investments (NS&I).93 Today the NS&I ship, the Post Office offered personal loans, continues to function as a distributor of savings accounts, credit cards, person- savings products for the UK government, al insurance and mortgages through the but savings holders can also withdraw and post office branch network, via the tele- deposit at the post office.94 NS&I is today phone and over the web. At the time, the “one of the largest savings organiations Post Office had 16,900 outlets. in the UK, with over 26 million customers David Mills, chief executive, Post Office and more than £100 billion invested.”95 It Ltd, said at the time: “Post Office Ltd’s re- is organizationally totally separate from tail network is larger than all the UK banks the Post Office. and building societies put together. Our Under the Conservative government branches serve approximately 29 million of Margaret Thatcher, in one of the last people who make some 42 million visits acts of privatization of her government to our branches each week; 27 pence in in 1990, the National Girobank was priva- every £1 in circulation passes through a tized and acquired by Alliance & Leices- Post Office branch.”100 ter, a building society, which is a kind of The Post Office and the Bank of Ire- member-owned bank, i.e., equivalent to land already operated a joint foreign ex- credit unions in Canada. In 1997 Alliance change venture, First Rate Travel Services, & Leicester privatized its assets.96 In 2003, set up in March 2002 that became the UK’s Girobank became the Alliance & Leices- second-largest foreign exchange service. ter Commercial Bank. In 2008, the Span- Mike Soden, then group chief executive, ish Bank Santander acquired Alliance & Bank of Ireland, said: “First Rate Travel Leicester.97 Santander is the largest bank Services generated pre-tax profits of £35 in the Eurozone with 100 million custom-

Why Canada Needs Postal Banking 45 million last year and underscores the po- £180 million to support the Post Office tential of this new venture.”101 network “at around its current size”; In December 2009, near what was to • Establish a 10% down-payment mort- be the end of its run in power, the Labour gage targeted at first-time home buy- government initiated a consultation pro- ers (Mortgages providing up to 90% of cess on expanding post office banking. the cost of buying a home were to be During the next three months over 2,400 offered to first-time buyers.); responses were received.102 The top products the public wanted • Establish a new “Saving Gateway” to see were: account, with the government to add 50p to every £1 that people on low in- • Current accounts: 64% comes save; • Access to bank accounts: 55% • Provide services to small businesses. • Business account: 54% With the change of government in May • Children’s savings account: 49% 2010, to a Conservative-Liberal Democrat- ic coalition, most of these proposals came • Weekly budgeting account: 42% under review or were terminated, but some • Credit unions: 37% were continued. In September 2010, the new coalition government announced In March 2010, the government re- the privatization of the Royal Mail and sponded to the consultation and announced the separation of the Post Office from the plans to expand post office banking, in- Royal Mail. The Post Office would not be cluding commitments to: 103 privatized but could be mutualised in the • Establish a Post Office current account; future.104 The Postal Services Act, which announced the Royal Mail’s privatization, • Deepen and widen the relationship be- also said at least 10% of the shares would tween the Post Office and credit unions go to its employees. to improve the supply of affordable The new government also scrapped the credit for low-income households; Labour Savings Gateway scheme for low- • Increase access to the current accounts income earners, which was to be admin- of other banks at Post Office counters; istered through the Post Office.105 In April 2012, the Post Office finally • Establish children’s savings accounts; separated from the Royal Mail. The Roy- • Explore the development of a Post Of- al Mail is now the organization that picks fice business bank account; up and delivers the mail while the Post Of- fice manages the physical post office -out • Increase government funding for the lets, most of which are franchises. It then network of post offices with funding of began to examine ways to increase its bal-

46 Canadian Centre for Policy Alternatives ance sheet.106 In July 2012, the government, most are franchise branches. State-owned in a major position paper titled Building or “Crown post offices” represent just 3% a Mutual Post Office, committed to freez- of the network and are the largest branch- ing the branch closure program and main- es handling 20% of all transactions and taining a network of at least 11,500 offices: 40% of financial services sales. In April “90% of the UK population (and 99% of 2013, the Post Office announced plans to those in urban areas) must live within a franchise off 70 of the remaining crown mile of a Post Office.” It also committed branches.112 The Post Office, like Canada to invest £1.34 billion to 2015 to “support Post, still has more branches and outlets and modernise the network.”107 than all the banks combined. One of the key goals was “Supporting Financial Services today range from the Post Office as it expands the range the newly introduced (April 2013) current of accessible and affordable personal fi- accounts to: nancial services it offers to customers.”108 • Mortgages Growth in revenues was seen “particularly through Government and financial servi- • Savings ces provision.” Government services pro- • Loans vision means that the Post Office bids for government contracts to deliver products • Money Transfers such as drivers’ licenses, etc. • Credit Cards As the Post Office LimitedPO ( L) 2011– 12 annual report states: “operating prof- • Insurance it from continuing operations before ex- • Currency Exchange ceptional items for 2012 was £30 million (2011 £11 million) after including receipt • Post Office Card Account (This is an of £180 million (2011 £150 million) in re- account for people without a bank ac- spect of the Network Subsidy Payment.”109 count who receive pensions and bene- In other words, while the Royal Mail is ex- fits from government and tax credits. It tremely profitable in its delivery services, is offered by J.P. Morgan Europe Ltd.)113 the Post Office is heavily reliant on gov- The Post Office also allows deposits ernment subsidies. Today, however, the and withdrawals to customers with ac- financial services represent about 25% counts at most of the major banks and it of total revenues and they are growing.110 is “one of the country’s largest cash hand- The Post Office continues to be “vis- lers, processing around £70 billion of cash ited by a third of the UK population — just and £636 million of coinage every year.”114 under 20 million people — and half of all Today the POL offers current account with- small businesses visit one of over 11,500 drawals at a post office from 19 of the lar- post offices every week.”111 The Post Office gest banks and makes deposits of cash network involves over 11,800 branches but

Why Canada Needs Postal Banking 47 or cheques into 13 of the largest banks.115 • a basic account to help customers avoid Ninety-five per cent of UK bank debit card- costly charges, which comes with a £5 holders have free access to their cash at monthly fee.120 The basic account has all Post Office branches across the UK.116 a monthly charge but no additional In August 2012, the Post Office renegoti- charges. This means that the account, ated its agreement with the Bank of Ire- which tries to prevent overdrafts, will land and extended it for 11 years to 2023. not have charges should an NSF slip There are now 2.8 million Bank of Ireland through. It has a cash card but no debit customers in the UK — most coming from card, chequebook or overdraft. the Post Office connection. The deal in- The first two accounts have no inter- creased rates for the Post Office and dis- est on accounts but a very simple over- solved the joint venture vehicle Midas- draft charge of 14.9% per annum (a low Grange. The Post Office received £3 million rate by UK standards) and no other fees from the Bank of Ireland for dissolving Mi- except for bounced cheques.121 dasGrange.117 The Post Office believes the opening of In April 2013 the Post Office announced new current accounts will be helped by the new current accounts (chequing accounts decision of the Payments Council Board, in Canada) to be tested in East Anglia until starting in September 2013, to introduce 2014 and then rolled out across the UK.118 a service guarantee that consumers and This is a major move in partnership with small businesses will be able to switch all the Bank of Ireland to offer new competi- aspects of their current account from one tive products in a highly concentrated financial institution to another in seven oligopolistic banking market much like working days.122 (This was a recommenda- Canada’s. In 2012 the Big Five — Lloyd’s, tion of the Independent Commission on Barclays, RBS, HSBC and Santander — con- Banking.) According to Nicholas Kennett, trolled between them 83% of personal cur- POL Financial Services Director, this is a rent accounts.119 key service, as, in the past, it took too long There are three new chequing accounts for customers to make the transition.123 offered through the Post Office: The Post Office sees the current -ac • a fee-free standard account that comes count as a key relationship-building tool with a debit card. It is free providing between the Post Office and its custom- you have money in the account. Cus- ers in order to develop sales of other fi- tomers can have a chequebook and nancial products. But that relationship an overdraft. with the current account has to be transparent, straightforward and honest, and • a packaged account offering extra bene- according to Nicholas Kennett, Director of fits for £8 a month with other features Financial Services, it needs to be fair. “A such as travel insurance and vehicle lot of the bank accounts in the UK are os- breakdown coverage.

48 Canadian Centre for Policy Alternatives The Case For a Postal Bank

“The Post Bank would be an economic driver, lending at small margins, supporting local enterprise rather than global speculation.

• The current banking crisis provides an opportunity for a radical redesign of banking. Combating financial exclusion and creating rights to a fair, accessible and trusted banking system can best be done through a Post Bank.

• A Post Bank would offer current accounts, access to credit, direct debit facilities, and expand its savings capacity. It would not be shareholder driven and would, through a Universal Banking Obligation, be local- ly based through post office branches.

• A Universal Banking Obligation, similar to the guiding principle of the Universal Service Obligation of Roy- al Mail, must be established through a Post Bank based on the unique national reach of the Post Office network.

• The UK economy relies on small businesses which in turn rely on the Post Office and its efficient, affordable and local service. A Post Bank will both safeguard the Post Office network and offer a more extensive range of financial and other services to aid small businesses.

• A Post Bank would reconnect banking with local economies and would liaise with other financial bodies including credit unions and community development financial institutions (CDFIs).”126

From Post Bank Coalition, The Case for a Post Bank, March 2009127

tensibly free for a customer. But as soon • The Federation of Small Businesses as I bounce or get a returned cheque... • nef (the New Economics Foundation) there are a raft of fees that are attached....” • Unite (a major union)

The Movement for Postal Banking • The Public Interest Research Centre

The UK model is significant in that all pol- • The National Pensioners’ Convention itical parties, unions, postmasters and It has been successful in getting ex- small businesses support the continua- panded financial services at the Post Of- tion and enlargement of postal banking. fice but unsuccessful in its goal of a sep- The Post Bank Coalition was formed arate state-owned postal bank. in 2009 to promote the establishment of As the Coalition’s manifesto, The Case a Post Office Bank and involves:124 for a Post Bank, states “It is important to • The Communication Workers’ Union distinguish between the coalition’s pro-

Why Canada Needs Postal Banking 49 posals for a Post Bank, and the financial Background services POL currently provides. POL’s fi- France has a long history of postal servi- nancial products are currently provided ces and also of postal financial services.130 on a purely commercial basis, and are in The Caisse nationale d’épargne (CNE) was partnership with the Bank of Ireland which created in 1881 and modeled on the British receives 50 per cent of any profits gener- Postal Savings Bank initiative of 20 years ated. A Post Bank should instead oper- earlier. The CNE was administered by the ate independently and while it will run a post office and offered the forerunner of commercial operation which will make a the famous Livret A savings book system, profit, the Government could use the Post which was started with over 800,000 users Bank as a vehicle to tackle financial exclu- in 1881 and quickly expanded to over 8 sion and help those on low incomes.”125 million by 1928. It was also the first banking program to offer accounts to women France without their husbands’ permission and hired thousands of women to work as tell- Another recent success story in postal ers.131 Today, the Livret A is held by about banking — but a very different model — is 20 million customers. the Banque Postale (BP) in France. The From the 1960s on, laws were changed Banque Postale was created in 2006 and to favour commercial banks and limit the is wholly owned by the state-owned Post existing financial activities of the post of- Office group, La Poste. It has grown rapid- fice. In 2005, Banque Postale was estab- ly and in 2013 had some 10.6 million cus- lished as a project to consolidate the finan- tomers in a country of over 65 million. cial services of the post office. The Groupe The BP also has 446,000 corporate and La Banque Postale is organized in three institutional customers and total assets of divisions: retail banking, insurance, and some €195 billion. BP made a €791-million financial management. profit in 2012 before taxes and €574 million It has a mandate to encourage: after tax, with banking services delivered • Sustainable development (it has won through over 17,000 postal outlets across the title of the most sustainable bank France.128 It now has 5.2% of the mortgage in France five years in a row);132 and loans in France doubling its total since 2007.129 While the bank has a section con- • Financial accessibility centrating on high-income customers, its ⋅⋅It must open a Livret A (savings) policy towards the most vulnerable cus- account free of charge for any per- tomers is exemplary. son who so requests. Withdrawals from and deposits to Livret A accounts are authorized starting at €1.5 compared to €10 elsewhere.

50 Canadian Centre for Policy Alternatives figure 8 Division of Revenues by Activity

Mail 49.70% Parcels/Express 25.60% Banking Activities 24.10% Other 0.60%

Source 2012 Annual Report of La Poste Group, http://legroupe.laposte.fr/Finance/Bilan-et-perspectives-Chiffres-clefs-2012

⋅⋅It offers among the lowest charges the total dividend paid to the French state of any bank in France and encour- by La Poste. ages methods of payment other than by cheque for “fragile” clients. Lending to Municipalities ⋅⋅It offers microcredit loans for those and Local Government who have been previously finan- The BP has also launched into new areas. cially excluded. In March 2013, La Banque Postale and la The bank’s financial advisers must re- Caisse des dépôts (the French public pen- fuse to sell any products that would risk sion investor) announced the creation of increasing the “fragile” financial situa- the “Banque postale collectivités locales,” tion of a client. 35% owned by the Caisse and 65% by the The 2012 annual report of La Poste BP. The role of this new venture is to fi- Group shows banking activities contrib- nance municipalities and local govern- ute 24.1% of total revenue. ments after the collapse of Dexia, a Fran- co-Belgian bank, which went down during the financial crisis of 2008. Financial Performance Dexia had been the world leader in The Banque Postale was established only funding local governments but its collapse, two years before the major financial crisis finalized in 2011, left many French muni- hit the world and hit the French banking cipalities with serious deficit situations.133 system especially severely. But the success of the Banque Postale can be seen from The Banque Postale: The Social profits during the period 2006–12, which Economy and Social Housing grew from €372.4 million in 2006 to €574 million in 2012. The BP has a special relationship with not- About 25% of the total income of the for-profits and mutuals (co-operatives and Post Group, La Poste, comes from finan- other member-owned organizations). Ap- cial services and the dividend paid by the proximately 335,000 or roughly one-third Banque Postale to La Poste is larger than of all social economy organizations and

Why Canada Needs Postal Banking 51 two-thirds of all mutuals are clients. In ship Policy Committee, chaired by Phi- 2012, it formed a special subsidiary with lippe Wahl, Chairman of the Executive 28 special counsellors to deal with their Board, with leaders from the housing sec- needs. It offers all kinds of financial prod- tors to confirm its commitment to the so- ucts for these clients, including loans and cial housing sector.138 mortgages.134 The BP has a very strong mandate to Financially Vulnerable Customers encourage social housing and housing for low-income people. In May 2012, the La Banque Postale has expanded its com- Fonds d’Investissement Durable et Soli- mitment to provide consumer micro-loans, daire was created and involved Habitat which began in 2007, adding 18 partner- Réuni, le Crédit Coopératif et La Banque ships with organizations working in the Postale, with the presence of Fédération social inclusion area (UDAF, CCAS, etc.) des Coopératives HLM with a total capital in 2011, and raising to 96 the number of of €125 million to €150 million to support partnerships. The philosophy behind these social housing.135 Habitat Réuni is an as- actions is clear on this issue: “The Bank sociation of 21 social enterprises and co- finances personal projects for private in- operatives HLM. It has 100,000 social hous- dividuals who are excluded from normal ing units and builds 3,000 new units for banking services.”139 ownership and rental. The Bank has also supported the “Mani- The Banque Postale is also a big lender festo to provide vulnerable population to social housing landlords across France groups in France with banking services” for building and renovation. It has created drafted by the French Red Cross, the Se- a network of 730 special advisers who are cours Catholique (Catholic Relief), and the experts in social and low-income housing. UNCCAS. In December 2011, La Banque Since October 2012 it has also become the Postale put together “a dedicated bank- main provider of PAS (prêt d’accession so- ing product range and support package for ciale), special loans to low-income citizens vulnerable customers, together with the at low rates and favourable terms for the major social service partners in France, purchase of housing.136 The BP is sched- and specifically with the major voluntary uled to lend €350 million for these pur- organisation networks.”140 poses in 2013 and by 2015 a total of €1.3 With the National Union of Commun- billion.137 It is also starting a social rental Centres for Social Action (UNCCAS), BP to-buy (PSLA) loan offer to help low-in- will provide education and information come earners purchase property. It aims for people excluded from banking. “This to spend €3 billion total by 2015 in the so- experiment was hailed and recognised in cial housing sector. 2012 as good practice in the fight against On April 19, 2013, the bank held the banking exclusion in France as part of first meeting of a Social Home Owner- the preparation for the national conven-

52 Canadian Centre for Policy Alternatives tion on the fight against poverty and for In 2012, the Banque Postale Group’s social inclusion that was held on Decem- insurance business made an overall con- ber 10th and 11th 2012, and at the Euro- tribution of €219 million in profits, an in- pean level at the Annual Convention of crease of almost €39 million compared the European Platform against Poverty with 2011. and Social Exclusion that was held from • Life Insurance: €116.5 billion in life in- 5th to 7th of December 2012.”141 surance deposits and 4.8 million poli- In 2012, in a partnership with the Mis- cies in 2012, representing 8.5% of the sions Locales network, the BP developed overall market. workshops targeting “young people in difficult financial situations.”142 The work- • Personal Risk: Personal risk products shops are led by young civil service vol- (death, long-term care, funeral, acci- unteers to whom the BP gave one year of dent coverage, etc.) through La Banque free banking services and two months’ Postale Prévoyance, with more than free home insurance payments. 442,000 new policies in 2012.144 In October 2012, BP also helped establish a think tank called “The initiative against exclusion from banking services” Switzerland to develop new initiatives to combat bank- In both the Conference Board report and ing and financial exclusion. Members in- in the Canada Post Strategic Review, finan- clude: ATD Quart Monde, Adie, Crésus, cial services are downplayed as a possi- the French Red Cross, les Restos du cœur, bility because, according to both reports, Secours catholique, le Secours populaire Canada has a large financial services net- and UNCCAS.143 work and therefore would not need more. If there is one country in the world that is Insurance best known for the power and strength of its private banking system, which is one The Banque Postale also has a large insur- of the country’s biggest industries and at- ance business in personal, home, health, tracts large amounts of out-of-country in- and life insurance. One of its subsidi- vestments, that country is Switzerland. But aries, La Banque Postale Prévoyance is Switzerland also has one of the largest and the second-largest French firm in con- most important postal banking systems. tingency insurance. It also has a larger property and general insurance business, including personal insurance (life History of PostFinance and retirement insurance, personal risk Postal banking in Switzerland started in and health) and asset and liability insur- 1900, when the Councillor Carl Koech- ance (means of payment, home, auto, and lin of Basel submitted a motion to start a legal protection).

Why Canada Needs Postal Banking 53 figure 9 PostFinance Profits as a % of Swiss Post

Operating Profits Swiss Post Operating Profits PostFinance Percentage 2012 890 627 71% 2011 908 591 65% 2010 930 571 61% 2009 721 441 61% 2008 812 229 28%

Source Katherine Steinhoff and Geoff Bickerton, Banking on a Future for Posts?, CUPW 2013

figure 10 Charts from PostFinance149: Customer Deposits in Millions of CHF (1 CHF = 1.14 CDN $) [2]

2007 43,667 2008 49,265 2009 70,250 2010 80,335 2011 92,225 2012 103,850

Source PostFinance, https://www.postfinance.ch/

“postal and giro cheque service.” The first With over 3 million customers in a chequing account was opened at the Ba- country of 8 million, PostFinance is now sel Post Office in 1906.145 It began its pay- one of the top three Swiss banks and is ment services that year, which have re- still growing. The most profitable sectors mained its key service since that time. of PostFinance are payment services, as In 1978, before the banks in Switzerland the bank now has about 50% of the total had ATMs, they were introduced at Post- transactions and is number one in Switz- Finance (PF). In 1997, PF launched invest- erland in payment services.146 PostFinance ment funds in partnership with the future has until now been forbidden by the state UBS. In 1998, it began electronic banking to offer credit, so credit is offered through and life insurance products with Winter- partnerships with other banks. thur (AXA). In 2010, it launched free mo- Since the world financial crisis more bile phone apps for banking. than four years ago, PostFinance has Today an increasing percentage of the gained well over 100,000 new clients a Swiss Post (SP) Group profits has come from year147 as people look for a safe haven for financial services. This now amounts to their money and as major Swiss banks over 71% of total operating profits last year. such as UBS and Credit Suisse have run

54 Canadian Centre for Policy Alternatives into major problems.148 For example, UBS, tors and PF, this is one of the reasons SBA the largest Swiss bank, announced in Feb- has approved this change.152 ruary 2009 that it had lost nearly CHF 20 billion (US$17.2 billion) in 2008, the biggest single-year loss of any company in Italy Swiss history. Since the beginning of the Poste Italiane and the Rapid financial crisis,UB S has written down Success of the Bancoposta more than US$50 billion from subprime mortgage investments and lost US$30 bil- The Italian state-owned postal group Poste lion in 2008. It had to be bailed out by the Italiane Group (PI Group) is one of the shin- Swiss National Bank.149 ing success stories in postal financial and On June 26, 2013, the Swiss PostFinance other services. It has made diversification became a state-owned subsidiary of the SP and modernization a very profitable strat- Ltd., the public postal operator in Switz- egy. Its success as we have shown is even erland, which also became a state-owned touted by Accenture, a major internation- company with three subsidiaries: Post- al consultant to postal services. Finance Ltd, PostBus Switzerland Ltd., Some 80% of PI Group revenues (up and Post CH Ltd. SP has a workforce of from 50% in 2002) now come from non- 62,058 employees and is the second-lar- traditional postal services; 75% from fi- gest employer in Switzerland. In 2013, Post- nancial and insurance services and the Finance became a chartered bank for the rest from mobile telephone services. Pri- first time, although financial services in marily because of its financial subsidi- Switzerland have been delivered through ary BancoPosta and other financial and the Post Office since 1900. insurance branches, Poste Italiane has The Swiss Bankers Association (SBA), been profitable since 2002, after 50 years surprisingly, did not object. It has main- of losing money.153 In 2012, the PI Group tained that all banks should exist on an had total profits of over €1 billion. equal footing. “The [Swiss Bankers Associ- ation] insists on a level playing field for all History of BancoPosta banks operating with a banking licence,” according to an SBA spokesperson.151 But The history of Italian postal banking is one of the reasons SBA has not objected to similar to the UK and Swiss examples. Its a banking license for PostFinance is that financial services have the fourth-longest PostFinance is still not quite equal to other history after the UK, Canada, and New Zea- banks in the kinds of banking services it land. Financial services were first offered controls. PostFinance is still not allowed by the Italian post office in 1875, when sav- to issue its own credit or mortgage loans ings books and bonds were offered by the and must subcontract this business to pri- post office on behalf of the Cassa Depositi vate banks. And according to commenta- e Prestiti (CDP), a joint-stock company

Why Canada Needs Postal Banking 55 figure 11 % Revenues from Non-Traditional Services on Total Revenues 2002–12

2002 2012 Increase in Earnings Before Income Tax Royal Mail (excludes Post Office Limited) 7.7 1.8 4% LaPoste 22.8 24.1 3.80% DP-DHL (Germany) 47.2 47.3 6.70% Poste Italiane Group 50.5 80.7 9.80%

Source http://www.poste.it/resources/editoriali/azienda/pdf/PosteItaliane-Investor-Presentation-June2013.pdf

under public control. CDP postal savings lion before taxes. The insurance division bonds and passbook savings accounts are brought in revenues of €13.833 billion and guaranteed by the Italian state. profits before tax of €371 million. Out of On February 28, 1998, Poste Italiane a total of €1.382 billion before-tax profits was set up as a joint stock company wholly 67% came from financial services.155 owned by the Ministry of Economy and Fi- From 2002–12, Poste Italiane Group rev- nance (MEF).154 The BancoPosta was set enues from non-traditional sources went up in 1999 but was not given a banking from 50% to 80% of its total, the highest license nor allowed to loan money. compared to Germany, France and the UK The BancoPosta was set up to man- (excluding the UK Post Office and only age the financial services of Poste Itali- looking at Royal Mail). ane. Today, it has some 30 million cus- As the following chart (taken from a tomers using one or more services. Its 2013 PI report to investors) shows, Post total assets are around €430 billion of Italiane has become the most diversified which €310 billion are in postal savings of the major European post offices in terms accounts with 25 million customers. Its of revenue sources. assets in 2010 were estimated to be about BancoPosta has become the leader 10% of the total banking assets in Italy. in the domestic market and is now the BancoPosta does business through some largest retail bank in Italy and a leading 14,000 postal outlets, which is more than player in Europe in payment cards, issu- twice the number of outlets of the mar- ing around 16 million of them, including ket banking leader. In 2011 BancoPosta 6.6 million debit cards and 9.56 million Ring Fenced Capital (RFC) (patrimonio prepaid cards (Postepay). It also has 5.8 destinato) was set up. Through this com- million current accounts. pany BancoPosta RFC assets and liabil- As one observer wrote: ities were unbundled from those of Poste “Among BancoPosta’s products, the Italiane for BancoPosta activities. Postepay prepaid credit card, introduced BancoPosta revenues in 2012 were at the end of 2003, probably represents €5.312 billion, with profits of €565 mil- one of the most outstanding successes in

56 Canadian Centre for Policy Alternatives Poste Italiane’s recent history. As of the lowed it to be a leader of banking through end of 2009, over 5.5 million individuals mobile phones. In 2008, it launched a new (Note: now almost 10 million) in Italy have on-line account, “ContoBancoPosta Click,” chosen the prepaid Postepay card, which which can be accessed from the web or by can be topped up and allows customers to mobile phone via a PosteMobile SIM card. make purchases and withdraw cash from This account has no fees and uses the Pos- ATMs.”156 For four years running, the Po- tamatBancoPostaClick debit card, which is stepay card has won AIFIN’s Cerchiod’oro free.161 PosteMobile is also the Italian lead- (“Golden Circle”) award for financial in- er in NFC (Near Field Communication) SIM novation in “payment products.”157 cards for contactless payments. In 2012, BancoPosta is also the leader in cur- mobile payment services with Remote Fi- rent accounts, personal loans and mort- nancial Services and Proximity Payments gages. In addition, it is the market leader (NFC) together reached a total of 23.4 mil- in Italy in life insurance in terms of pre- lion transactions (18.7 million in 2011).162 miums issued. In 2012 (under the Poste Vita brand since 1999) BP had a 15% share of the Italian market. It has some 2.5 million New Zealand clients and 4.6 million insurance policies. One of the biggest recent success stories It is also one of the biggest banks manag- in postal banking is the Kiwibank in New ing pension plans with 510,000 pension Zealand. In the 10-year period since its plan members in 2012.158 founding in 2002, Kiwibank has grown to Poste Italiane financial services have be the largest New Zealand-owned bank also “played a major role in the gradual and the source of more than two-thirds integration of new immigrants” through of New Zealand Post (NZ Post) profits. Ki- transfer services with postal operators wibank now has more than 800,000 cus- around the world.159 tomers in a population of 4.5 million and BancoPosta is not the only bank owned 900 staff in more than 280 PostShops.163 by Poste Italiane (PI). PI is also involved in About half the branch network is owned the development banking industry. In the and operated by NZ Post. The other half south of Italy it has a wholly-owned sub- is made up of owner-operated franchises sidiary, Banca del Mezzogiorno (BdM). The (book shops, video shops, general hard- role of BdM is to support “the productive ware shops, etc.). sector in the southern regions, with the aim The bank made an after-tax profit of of supporting economic growth through NZ$79.1 million (Note: 1 NZ$ is worth .84 the provision of credit for young people CDN$) for the year ending June 30, 2012, and women looking to start new business- 276% more than in 2011 when it made es and to finance innovative projects.”160 NZ$21.2 million.164 The control by Poste Italiane of the cell phone company PosteMobile has also al-

Why Canada Needs Postal Banking 57 Kiwibank has been voted New Zea- to 159,331 accounts with assets of £4 mil- land’s “Most Trusted Bank” three years in lion and by 1964 to 2.5 million accounts a row at the Readers Digest Trusted Brand worth over £421 million.168 Awards, and has won the Sunday Star- The Kiwibank’s establishment in 2002 Times CANSTAR Supreme Award for best has to be seen in the context of corporatiz- value bank the last six years running.165 ation. In April 1987, the New Zealand Post To establish the bank, the NZ Post Office was “corporatized” and split into Group made a total direct capital invest- three separate companies — Telecom, the ment in the bank of NZ$360 million by Post Bank and New Zealand Post — each 2012. “The bank received initial funding set up as a state-owned enterprise. from the government and an agreement The State-Owned Enterprises Act 1986 with the owners, NZ Post, to withhold divi- required New Zealand Post to operate as: dends. The bank has a government fund- 1) as profitable and efficient as compar- ing resource available of NZ$300 million, able businesses not owned by the Crown but has not called on it. Capital funding re- quirements to date have been met by Post 2) a good employer and from withheld dividends,” according 3) an organisation that exhibits a sense of to Kiwibank Director of Communications social responsibility by having regard to Bruce Thompson.166 the interests of the community in which This has been a successful investment it operates and by endeavouring to ac- as today about 70% of NZ Post’s profits commodate or encourage these when it come from Kiwibank.167 is able to do so.169 When asked “If you were to analyze your success what are the three most im- But two years after New Zealand Post portant factors that have contributed to became a separate state-owned firm, the your rapid growth?” Mr. Thompson said Postal Savings Bank was privatized and simply, “New Zealand-owned, better ser- sold to ANZ, a large Australian-owned vice, better rates.” bank, and was soon completely absorbed.170

History of Postal Banking Birth of Kiwibank in New Zealand Kiwibank was launched in 2002. It was Postal banking in New Zealand began in largely the result of the policies of the left- 1867, when the Post Office Savings Bank wing Alliance Party led by Jim Anderton, (POSB) was founded the same year as which governed in a coalition with the the POSB in Canada. Like its Canadian Labour Party from 1999–2002.171 Dominion cousin, it was modeled on the “The Alliance’s biggest gain in coali- British Postal Savings Bank established tion with a later Labour Government was in 1861. By 1906, the NZ POSB had grown the establishment again of a state-owned

58 Canadian Centre for Policy Alternatives Reasons for Kiwibank Success

The Kiwibank of New Zealand, established in 2002, was billed as a no frills “people’s” bank. Paul Frampton noted it could build on the following potential strengths and desires:

“1. Under-utilised branch network: New Zealand Post is committed to retaining its retail network and over the last few years has increased the number of PostShops. However, the basic business of New Zealand Post and its retail network has been in decline for some years due to the reduction in the use of physical mail. Con- sequently, New Zealand Post has been investigating other business opportunities that leverage off its current position and capabilities, including offering a full banking service.

2. Community access to low cost banking services: There is a market gap in New Zealand that is not being well served by existing banks. Banks in New Zealand are not currently well regarded primarily due to the fees and charges they levy that are believed to be excessive, non-transparent and unreasonable in many instances.

• The existing banks appear to be increasingly focussed on servicing the ’high net worth’ segment of the market at the expense of the remainder of the marketplace.

• Many customers regret the reduced access to banks caused by bank branch closures

• Banks are currently earning a significant return on capital of around 25%

• The banks in New Zealand are mainly foreign owned and profits are being repatriated overseas

• Many New Zealanders are supportive of a New Zealand owned bank with a truly national coverage where profits are retained in New Zealand and not repatriated overseas

• A new entrant into the banking market would be able to achieve a cost advantage through the use of new technology to lower the manufacturing costs. Banks in New Zealand, as is generally the case around the world, are encumbered with expensive and unresponsive legacy technology systems

• New Zealand Post is committed to a nationwide network of franchise and corporate owned shops offering a range of products and services. This would allow a new bank to attract a variable cost for distribution and servicing rather than bear the full cost of establishing its own retail network.”

3. Leveraging the Post Brand: Additionally New Zealand Post has a strong brand and position of trust in the community that could be leveraged and is well placed to provide additional services to banking customers such as:

• Better physical access through the extensive network of PostShops. In fact, with between 250 and 314 outlets offering banking services, the new bank will have more outlets than any other bank in New Zea- land

• Longer opening hours linked to retail shop hours rather than traditional banking hours.”175

Why Canada Needs Postal Banking 59 bank, Kiwibank,” notes a recent news- be able to access the bank the way they paper article in which the story is told: want to access it. So for those people who want to go into a branch, let them go into Mr Anderton delighted Parliament with a branch.”174 a new story of the negotiations with Labour — and the nudge given by deputy leader Annette King to then Finance Min- Programs Aimed at Low- ister Michael Cullen. Income and Maori People

Annette King finally turned to Michael While it offers excellent competitive rates, Cullen after three hours of this and said Kiwibank also offers one special program these immortal words: ‘Michael, Jim’s beat- aimed at low-income New Zealanders. en back every argument against the bank Welcome Home Loans is a government- we’ve ever put up, for God’s sake give him initiated scheme to enable people on lim- the bloody bank.’ And Michael Cullen... ited incomes or without significant de- said: ‘Oh, all right then.’172 posit savings to borrow to buy their first house: “With a Welcome Home Loan, you But if Anderton deserves a large de- will only need a 10% deposit to purchase gree of the credit for convincing Labour your first home.... to found the bank, the deeper socio-eco- To be eligible to apply for a Kiwibank nomic reasons are also linked to the state Welcome Home Loan, you must: of the New Zealand banking industry. The New Zealand banking industry is controlled • have a total household income of no by four big Australian banks. As the New more than $80,000 a year for individ- Zealand Green Party noted in 2011, “ASB, ual borrowers ANZ, BNZ, and Westpac have collectively • have a total household income of no sent $8.9 billion out of the country in the more than $120,000 a year if there are form of dividend payments to their parent two or more main sources of house- banks in Australia over the last five years.” hold income and all income earners In 2011 Kiwibank had 2.5% of all banking are co-borrowers. assets compared to 90% from the Austral- ian Big Four. One of the reasons the Kiwi • have an acceptable credit history Bank has gained customers for its servi- • be able to meet the loan repayments ces is because it is New Zealand-owned.173 One of the key designers of the Ki- • buy the house to live in yourself wibank, Paul Frampton, explained why • not already own a home the creation of a new bank was an opportunity for accessibility. “I guess one • meet Kiwibank’s lending criteria.”176 of the things that drove the creation of Ki- wibank was saying we want customers to

60 Canadian Centre for Policy Alternatives Maori Housing Loans ilar to CMHC) to insure the loan on the house, but not the land. The borrowers In the past, traditional banks were often get financed to build, buy or re-locate a reluctant to lend for homes built on com- home on their land. munity-owned land. So Kiwibank started In December 2012, the criteria for Ka- a home building loan program in Febru- inga Whenua loans were altered to make ary 2010 aimed at aiding Maori peoples. building on multiple-owner Maori land eas- The aim of the Kainga Whenua loan pro- ier and allow a wider group of borrowers gram is to “make it easier for owners of to access lending as well as allowing them Maori land to build on their land.” A Ka- to borrow for repairs and maintenance.177 inga Whenua loan allows Housing New Zealand (a state housing corporation sim-

Why Canada Needs Postal Banking 61 Conclusions Possible Models for Postal Banking in Canada

In this study, we have looked at the ing widespread locations, trust in the in- wide range of diverse models of postal stitution, and the staff. banking in many countries. In this chapter, we conclude by looking at why postal banking should exist in Canada, how Why Postal Banking? it could work, as well as some of the pos- To consider why postal banking could suc- sible options. ceed in Canada, let us go back to the three When we examined five national postal questions we asked at the start. banking systems in detail, we found that they were all successful in their own way. 1. Could offering postal financial ser- However, success did not seem to be linked vices help stabilize Canada Post rev- to: 1) the particular form of structuring of enues and services? the financial services (which ranged from Our study has shown clearly that the full ownership by the Post Office to various answer is yes. All five post offices studied, kinds of partnership with the private sec- all publicly owned, received a substantial tor), or 2) the kind of products offered, as percentage of their sales and profits from some services offered all major financial financial services while other sources of products and some fewer. The diversity revenue declined. in successful models shows that the key Post offices we have examined showed component for success seems to be char- gains from 25% of revenues in the UK, and acteristics of the Post Office itself, includ- 36% in France to 67% of profits in Italy,

62 Canadian Centre for Policy Alternatives figure 12 Summary of Postal Banking Models and Services in the United Kingdom, France, Italy, Switzerland and New Zealand

United Kingdom Post Office Main partnership All financial No 25% of sales No ranking with Bank of services, Ireland and including agreements with new chequing other banks accounts

France La Banque La Poste All services Yes 36% of before-tax 44th Safest Bank Postale earnings in World

Italy BancoPosta Poste Italiane All services; No 67% of total Largest retail and insurance savings in profits bank in Italy companies partnership with the CDP (Cassa Depositi e Prestiti)

New Zealand Kiwibank NZ Post All services Yes 70% of profits Largest NZ-owned bank

71% in Switzerland and 70% in New Zea- does not explore financial services as an land. We contend Canada Post could gain option in Canada.”178 substantial additional revenues and prof- However, all the countries we looked its in a similar fashion. have highly developed banking systems, We have also shown that the argument and all the countries we examined (ex- put forward by the recent Conference Board cept New Zealand, where Australian banks report, The Future of Postal Service in Can- dominate) have several banks in the list of ada (funded and commissioned by Can- the world’s 54 largest banks by assets.179 ada Post), does not hold water. The report All these countries, which have successful concluded that financial services were not postal financial services, also have “highly possible for the post office in Canada be- developed financial systems,” as do many cause: “Canada has a highly developed fi- other countries with both traditional and nancial services sector that extends from postal financial services. Behind this line large banks to small credit unions…the of attack could be the unstated position conditions that allowed other postal ad- of the Conference Board that the post of- ministrations to succeed in banking do fice should not compete with the private not exist in Canada. Therefore, this report banking sector.

Why Canada Needs Postal Banking 63 The Strategic Review of Canada Post in spite of low Bank of Canada prime rates. completed in 2008 echoed this view: “The The new retail banks, such as Walmart, provision of financial services accounts Canadian Tire and President’s Choice, for a substantial economic line of busi- offer credit card rates mostly in line with ness, but this activity is often off-limits to standard bank credit card rates of 19% to posts that have no historical tradition in 20%, while traditional credit card interest this market and/or where there is a fully rates on unpaid balances are about 20% developed financial sector.”180 and retail stores range up to between 26% When we look at the possible divers- and 30%.181 ity of financial services offering from che- It is not only interest rates where com- quing accounts, loans, mortgages, and petition is limited or rates are too high. As credit to insurance, combined with new shown in the first chapter, the fees Can- technologies such as mobile phone tech- adians pay for their accounts are also nology, contactless payment and Internet very high.182 banking, the possibilities for new postal One of the reasons for this, as shown financial services are probably the best in the first chapter, is the oligopolistic na- they will ever be. ture of the banking system in Canada. In 2012, this system became even more con- 2. Could delivering financial services centrated with the purchase by Scotia through the post office offer Canadians Bank of ING Direct, one of the few large competitive new services and divers- banks to offer competitive rates to the Big ity of choice? Six. The 2009 failure of the virtual Canada- As discussed in the first chapter, the wide Citizen’s Bank, owned by the coun- rise of virtual and new retail banking and try’s largest credit union VanCity, and the the growth of Fringe Financial Institutions purchase of its mortgage and loan assets show that the traditional financial bank- by TD Bank was yet another move towards ing sector is not meeting all the needs of a more concentrated sector. Canadians. Millions of Canadians have A new Canada-wide financial institu- opened accounts or are using the services tion could offer products and services that of these institutions. But, although these challenge the existing patterns. The ability new services operate in a similar fashion to offer competition for existing fees would to traditional banks, the institutions tend be helped by the fact that banking servi- to be concentrated in urban areas and are ces would be delivered through existing not available in many parts of the coun- premises and staff. Use of the e-post sys- try. Many Canadians do not have access to tem as well as existing Canada Post de- this kind of choice. As well, few of these livery services could help keep costs low. services offer competitive value as shown This could mean lower banking fees. by the FFIs’ usurious interest rates and by For example, the UK Post Office (in part- the fact that credit card rates remain high nership with a private-sector bank) has

64 Canadian Centre for Policy Alternatives just begun to offer new accounts, one of much-needed banking services, mortgages which offers the customer a set fee per and personal loans at non-usurious rates. month of not more than £5 for all charges. Second, it is estimated that some 3% New postal banking services could to 15% of Canadians do not have a bank also make fees and charges more trans- account. This group alone represents a parent than is now the case with the trad- minimum potential of around a million itional banks.183 possible new customers for postal financial services. Many Canadians use fringe 3. Could offering postal financial ser- financial services at a high personal cost. vices allow the millions of Canadians In a study of Prince George, it was noted without local bank branches or easy ac- that even many of those who had a bank cess to banking the access they need? account used fringe financial services in- Here, again, as we have shown the an- stead.184 New postal banking services could swer is yes. also be combined with legislation requir- First, there are many Canadians living the immediate roll-back of FFI inter- ing in large parts of Canada that do not est rates to bring them in line with exist- have physical access to banks or credit ing banking rates. unions. The number of banks and credit The Kiwibank and Banque Postale are union branches has shrunk over the last both excellent examples of how a postal two decades. In rural Canada, many bank bank can offer special services to low-in- branches have closed in small towns and come people, such as home mortgages, while credit unions have purchased some rent-to-buy and even social housing loans. of these branches, this process has slowed In the case of Kiwibank a special mort- markedly in recent years. Because postal gage program for Aboriginal peoples has outlets are present in both rural commun- been developed that could be replicated ities and inner city neighbourhoods, new in Canada.185 postal banking could offer to citizens and businesses in many communities banking services where they do not currently exist. What Strengths Does Canada At the same time, in Northern and rural Post Have That Could Be Canada, on Aboriginal reserves, and in the Translated into Banking? three Northern territories, there have always been few banks and few credit unions If we can conclude that financial ser- (no credit unions in the territories). Our vice sector changes are desirable, what study showed only 21 bank branches in strengths does Canada Post already have the Northwest Territories, Nunavut and that would enable it to begin offering -fi Yukon. Postal banking could also offer nancial services? small businesses in these communities 1. Canada Post has the largest network of retail outlets already in place across

Why Canada Needs Postal Banking 65 Canada. Canada Post had a total of almost vey result confirms a number of external 6,400 postal outlets in 2012. In 2012, 3,900 evaluations of Canada Post, which is rec- were Canada Post-owned and 2,500 were ognized as a top 100 employer in Canada managed by private dealers as franchise by Maclean’s magazine and which is the outlets. Some 78.9% of Canadians live most trusted federal institution in Can- within 2.5 kilometres of an outlet, 90.6% ada, ranking ahead of the military, the within 5 kilometres, and 98.8% within 15 Supreme Court, the RCMP and the CBC. kilometres.186 This means the cost of estab- Léger Marketing reports that Canada Post lishing a financial network is much lower ranks third among the 150 most-admired as the physical facilities and communica- businesses in Quebec. Finally, the Nanos tions links are already in place, includ- poll also reports that Canada Post has a ing delivery and pick up on a daily basis. higher favourability rating among Can- adians than UPS, FedEx or Bell Canada 2. 3,800 Canada Post outlets or 60% Enterprises (BCE).”187 are in rural areas where there are few- This high level of trust is an excellent er banks and credit unions. The post of- basis to start financial services. Trust in fices in these locations could provide key the post office has been cited by several services for individuals but also for local other countries including the UK, New Zea- businesses. land and Switzerland as a key reason for 3. A number of communities in Can- their success in postal banking. ada have a postal outlet but no other 5. Canada Post already has an existing (or limited) banking services. As we skilled and stable workforce that would have shown, 1,700 bank branches and be open to skills upgrading. Canada Post hundreds of credit union locations have has a large and skilled workforce of 68,000 been closed down over the last two dec- employees in 2012, some of whom could ades. A 2003 Bain study showed that in easily be trained to handle financial ser- 30 small towns with a population below vices. The corporation would not need to 2,000, only seven towns were served by hire many new staff in postal banking lo- a bank branch. cations. New banking professionals could 4. Canada Post has a high trust factor be hired at headquarters or at regional cen- among the Canadian public. The Stra- tres. CUPW, the major union representing tegic Review of the Post Office in 2008 Canadian postal workers, supports and noted: “A Nanos poll (commissioned by promotes the concept of postal banking Canada Post) reported that nearly nine in Canada’s postal outlets. out of 10 Canadians had a favourable or 6. Canada Post already delivers a num- somewhat favourable impression of Can- ber of financial services (see next sec- ada Post, and seven out of 10 were satis- tion). Thus it would not mean starting fied overall with Canada Post. This sur-

66 Canadian Centre for Policy Alternatives from scratch but rather building on what • Canada Mortgage and Housing Cor- already exists. poration CMHC had assets of over $292 billion in 2012 and made over a 7. Many Canada Post outlets are already $1.7 billion in income (profits).190 CMHC open 6 or 7 days a week and could oper- is the largest mortgage insurer in Can- ate longer daily hours than 9:00 a.m. to ada and the primary funder of federal 5:00 p.m. Many Canada Post outlets oper- low-income housing. ate in drug stores or small convenience stores with long weekday and weekend • Export Development Canada EDC opening hours. It would not be difficult made over $1 billion in income in 2012 to increase hours for Canada Post-owned and had assets of $36 billion. It helps outlets. Canadian companies secure loans and insurance for export deals.191 It is now 8. The federal government already has examining taking positions through significant experience in the financial major financial transactions abroad industry. As Canada Post is owned 100% even when there are no Canadian com- by the federal government, it could use the panies involved.192 expertise developed at Bank of Canada. It could also draw on expertise from • Canada Savings Bonds While the pro- other federal banks and financial ser- gram is not valued as much by savers vices set up to deal with the public and as it was in the past, as of March 2012, with businesses. the value of Canada Savings Bonds (CSBs) and Canada Premium Bonds • Business Development Bank of Can- (CPBs) in circulation was $8.9 billion. ada BDC has over 1,900 employees in This was a decrease of 12% over the 107 locations across Canada and in year before. However, $8.9 billion is 2012 made over $531 million in prof- still a considerable sum and the ex- its and had assets of some $17 billion. pertise in administering this program Its role is to loan money to small and could be used by a new institution.193 medium-size entrepreneurs.188

• Farm Credit Canada FCC has more than 1,500 employees and concentrates What Kind of New on loans to farmers and agricultural Financial Services Could businesses. It has a loan portfolio of Canada Post Provide? more than $23.2 billion. In 2011–12 it All new services would have to be: loaned $7.1 billion to 45,578 customers across Canada with $1.9 billion loaned • Profitable for Canada Post. Canada to young farmers. It had a net income Post would examine the best way to of $565 million in 2011–12.189 deliver each service;

Why Canada Needs Postal Banking 67 • Tested regionally before being to 6,200 postal outlets.194 (Unfortu- launched nationally; nately MoneyGram has a troubled recent history. It admitted aiding in wire • Delivered through both bricks-and- fraud and failing to maintain an ef- mortar locations as well as by In- fective money laundering program. ternet and telephone, including mo- It was forced to establish a $100-mil- bile phones; lion compensation fund for victims in • Transparent, meaning without hid- November 2012.)195 den fees; • Bill payment and financial trans- • Fair, meaning delivered at lowest cost action and payment notices. Can- while assuring profitability; and ada Post through its on-line Internet epost system opened 800,000 new ac- • Contribute to financial literacy in counts in 2012 for a total of 8.2 million the schools using the kind of finan- accounts. So far, 100 companies have cial literacy programs developed by signed on to allow customers to pay Desjardins in Quebec and VanCity in bills on-line. The federal government Vancouver. is trying to encourage pension recipi- ents to switch to epost instead of mail 196 Expanding Existing Services to receive notices. • Prepaid Visa cards. Canada Post has a Canada Post already provides some fi- prepaid reloadable Visa card in a part- nancial services. In the past (until 1968), nership with Citizen’s Bank, a subsidi- Canada Post delivered banking services ary of VanCity Credit Union. and was a world leader in the 19th cen- tury. Getting involved in financial servi- A first step for a new postal financial ces would first mean extending and revis- services division would be to review these ing the existing financial services Canada services and look at expanding them. For Post delivers. example: Today Canada Post delivers: • Postal money orders could also be • Postal money orders, which can be delivered on cards and telephones that bought and used to pay bills. would be loaded and unloaded with cash, and become a means of trans- • Domestic and international money mitting money electronically. transfers. Canada Post has had a partnership with the money transfer giant • Money transfers. Is the troubled MoneyGram, a Dallas, Texas-based MoneyGram the company that Can- money transfer giant for over 10 years. ada Post should be working with? There In 2011 this partnership was extended are other choices. For example, the UPU

68 Canadian Centre for Policy Alternatives has its own electronic money transfer and the BancoPosta have based their system, used by more than 60 coun- operations on delivering the core gov- tries, which should be considered.197 ernment savings plans.

• Bill payments. Bills could also be paid • Low-interest credit cards. Instead of at post office outlets, not just on-line. starting out at the highest rates (20% to 30%), cards at the low end of the bank • Prepaid Visa cards. Regular Visa rates (around 12%) could be offered. cards and prepaid debit cards could also be offered. • Prepaid debit cards (reloadable ones such as are offered in Italy). A reloadable debit card, which could be Brand New Services used via mobile phones and recharged at any post office or even corner store, A first wave of new services could consist of: could be introduced. • Access by all banks and credit union In the future, services could be ex- customers to their accounts to de- tended to: posit or withdraw cash, as is the case in the UK. There is no good rea- • Mortgages. These could be offered in son that existing customers of banks partnership with existing banks and and credit unions could not access credit unions and CMHC. their accounts at a local post office. • Small-business loans and agricul- This should be based on free access tural loans. These could be offered for clients of any bank or credit union. through existing federal financial ser- • Chequing and savings accounts such vices such as BDC and Farm Credit as low-fee chequing accounts. The Canada or in partnership with exist- kind of accounts offered by the UK Post ing institutions. Office show that a new financial -ser • Insurance products. Insurance has vice could offer very competitive ac- been a very successful product for post counts with lower fees. office outlets in Italy and France — es- • Other savings products such as gov- pecially in many rural and northern ernment bonds (both federal and areas where no outlets exist to sell in- provincial bonds, according the surance products. location in each province). Federal • Mutual funds and stocks. Given that government bonds (hopefully resusci- Canada’s banks, as the CBC’s Market- tated) and those of the various prov- place recently reported, charge some inces could be sold through the post of- of the highest mutual fund fees, Can- fice as an easy way of starting a major ada Post financial services could offer savings program. The Banque Postale

Why Canada Needs Postal Banking 69 low-cost rates on mutual funds and serve — based on the home, not on the stock trades. communally-owned land, and similar to that offered in New Zealand. This could be an excellent new product, Special New Products if designed with First Nations com- for Low-Income and munities. Aboriginal Peoples

Canada Post financial services should offer new competitive products to all Can- Special Services for NGOs and adians, but they could also make sure that Social Economy Organizations there were special services offered to low- The Banque Postale in France has become income and Aboriginal Canadians, similar a banker for NGOs, social economy and mu- to services offered by both the French and tual organizations in fields such as social New Zealand post office financial systems. housing. While for many years it looked as These could include: though Citizen’s Bank would take on this • New systems for establishing the iden- role, its retreat from the sector meant that tity of clients when opening an account once again there is no bank specializing or getting a loan or other product. One in the needs of this kind of business. This of the major criticisms revealed in the is a role that could link new financial ser- study and in focus groups undertaken vices to communities across the country. by Dr. Paul Bowles is that low-income people do not always have the two or three pieces of ID required to open How Could Financial an account in a bank or credit union, Services Be Delivered? while Money Marts simply take finger- Canada Post Corporation could examine prints.198 the optimum method of delivering these • Simpler processes for opening up ac- services. This could be done by establish- counts and securing products could ing a task force of experts from the finan- be assured in new services. cial and postal services to examine how they are delivered in other jurisdictions, • Rent-to-own products and joint mort- the best method for Canada Post (in terms gages (i.e., several people contributing of profit and sales) and the best method the income necessary for a mortgage), for users of these services. such as Kiwibank has introduced for low-income people.

• A mortgage product for Aborigin- al people — particularly those on re-

70 Canadian Centre for Policy Alternatives Who Should Own ined and the experience of other countries the Services? taken into account. All potential partnerships, if that is There are several possibilities: a route taken, should be determined by • Create a non-chartered bank — a Can- open tender on delivering a service for ada Post-owned subsidiary — to deliv- a specific period of time. With its 6,400 er financial services. This is the route outlets, which often serve populations taken in Italy; with no competition in financial services and sometimes no services at all, Can- • Create a chartered bank wholly owned ada Post would undoubtedly be courted by Canada Post. This is the route taken by many financial institutions anxious to by France, Switzerland and New Zea- supply services. There is also no reason land; to necessarily have all services provided • Create a bank to deliver some of the by the same stakeholder or stakeholders services and partner with banks and across the country. others to deliver the rest. This is the Whatever the ownership mechanisms, route taken by Switzerland. some services could be completely owned by Canada Post and others delivered by a • Create a national credit union or mu- partnership with existing credit unions or tual to deliver the financial services in banks. Partnerships could be made nation- partnership with Canada Post. A na- ally or developed on a regional basis. This tional credit union is one such possi- would also allow Canada Post to partner bility, as it would allow for widespread with regionally-based credit unions and ownership by Canada Post employees caisses populaires in different provinces. as well as the public; The question of delivery has become • Partner directly with one or more fi- easier with the uptake in Internet and mo- nancial institutions to deliver the ser- bile phone technology. For example, the vices. This is the route taken in the UK. UK Post Office Ltd. delivers its services with a core of 300 financial specialists as well as trained Post Office staff for 11,500 What Mix of Financial outlets. Internet and telephone technol- Services Should Be Offered? ogy allow people in remote areas to con- Who Should Deliver Them? nect with financial specialists.

Canada Post already has partnerships with a number of different institutions Why We Recommend Moving that could be approached to assist with Forward on This Issue these services. Once the first question is answered, the second one could be exam- In this study we have tried to show that:

Why Canada Needs Postal Banking 71 • Canada’s financial and banking sys- we have chosen has shown that there tem is not providing competitive servi- are many ways of creating a success- ces to Canadians nor adequate service ful system. We can use the experience to many of the under- or unbanked. of these countries to create our own model in Canada. • Canada’s postal system has a long history of delivering financial services. It • Canada does not need to hold more already delivers some products and discussions on whether financial ser- could develop a full banking system. vices for Canada Post are a good idea. That answer we hope is clear from this • Postal banking systems are growing paper, and other studies cited, as well around the world and are prominent as from the comments of past Canada in most of the developed countries and Post presidents and experts around the have shown themselves able to pro- world. Rather, the federal government vide the income needed to preserve and Canada Post should immediately the postal system as traditional letter proceed to a new stage of setting up volumes decline. a task force to decide how to deliver • The study of the postal banking sys- new financial services and what new tems in the five developed countries products to deliver first.

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Why Canada Needs Postal Banking 73 Capgemini Consulting, “The Future of Bank Branches Coordinating Physic- Deborah Ball, Paul Sonne and Carrick Mollenkamp, “UBS: Rogue Trad- al with Digital”, April 2013, http://www.capgemini.com/resources/ er Hit Firm Swiss Bank Says It Lost $2 Billion On London Employ- the-future-of bank-branches-coordinating-physical-with-digital ee’s Unauthorized Bets”, Wall Street Journal, September 15, 2011 Catherine Tomasko, “MoneyGram must pay $100 million to victims http://online.wsj.com/article/SB1000142405311190406060457657 of fraud scheme”, 1931690088522.html Thomson Reuters, Dec. 3, 2012, http://blog.thomsonreuters.com/index. Desjardins Group, «Desjardins s’impose comme moteur économique php/moneygram-must-pay-100-million-to-victims-of-fraud-scheme/ du Québec », April 5, 2013 http://www.desjardins.com/fr/a_propos/ salle_presse/nouvelles/2013040501.jsp CBC, Busting the Banks, (video), Marketplace, January 25, 2013 http:// www.cbc.ca/marketplace/episodes/2013/01/busting-the-banks.html DFC, Annual Report 2012, http://ir.dfcglobalcorp.com/phoenix. zhtml?c=177357&p=irol-reports CBC News, “MPP calls for cap on money-transfer fees in Ontario,” May 31, 2012, http://www.cbc.ca/news/canada/toronto/story/2012/05/31/ Ellen Roseman, “Why are bank fees so high?”, March 18, 2007 http:// toronto-ontario- www.thestar.com/opinion/columnists/2007/03/18/why_are_bank_ fees_so_high.html CBC News, “Federal deficit shrinks again”, May 31, 2013http://www. cbc.ca/news/business/story/2013/05/31/business-deficit-march.html Emarketer, “Consumers Continue Switch to Online Banking”, Feb.28, 2011, http://www.emarketer.com/Article/Consumers-Continue- CBC News, “Scotiabank to buy ING Bank of Canada for $3.1B”, August Switch-Online-Banking/1008255 29, 2012, http://www.cbc.ca/news/business/story/2012/08/29/ scotiabank-ing-bank.html Encyclopaedia of New Zealand 1966, “The Post Office Savings Bank”, http://www.teara.govt.nz/en/1966/post-office/page-7 Christian Mahne, “New Zealand: The People’s Bank”, BBC News, May 3, 2002 http://news.bbc.co.uk/1/hi/business/1963655.stm Esther Addley, “Is it the last Christmas post for a state-owned Royal Mail?”, The Guardian, Dec. 18, 2012, http://www.guardian.co.uk/ CIBC, Aboriginal Banking Services https://www.cibc.com/ca/small- uk/2012/dec/18/last-christmas-post-royal-mail business/aboriginal/index.html Export Development Canada, Annual Report 2012 http://www19.edc. Claudio Eggert, A Strategy Analysis Of The “Big Five” Canadian Banks, ca/publications/2013/2012ar/english/11-2-4.shtml Athabasca University, April 4, 2012 http://dtpr.lib.athabascau.ca/ action/download.php?filename=mba-12/open/eggertclaudioProject. Farm Credit Canada, Annual Report 2011–12 http://www.fcc-fac.ca/en/ pdf AboutUs/Profile/pdf/AR2011-12_LO_full_e.pdf CMHC, Annual Report 2012, http://www.cmhc-schl.gc.ca/en/corp/ Federal Deposit Insurance Corporation, Summary Tables, 1994 and about/anrecopl/anre/2012/upload/CMHC_2012_Annual_Report.pdf 2012, http://www2.fdic.gov/sod/sodSumReport.asp?sInfoAsOf=199 4&sAreas=&barItem=3, http://www2.fdic.gov/sod/sodSumReport. 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Why Canada Needs Postal Banking 75 Post Bank Coalition, The Case for a Post Bank, March 7, 2009, http:// Relbanks, “Top Banks around the World”, http://www.relbanks.com/ dnwssx4l7gl7s.cloudfront.net/nefoundation/default/page/-/files/ worlds-top-banks/assets The_Case_for_a_Post_Bank.pdf Rhéal leBlanc, “Getting strategic with money transfers”, Union Pos- Post Finance, Facts and Figures, 2013, https://www.postfinance.ch/ tale, March 2013, http://actualites.upu.int/uploads/media/union_ en/about/company/number.html postale_1_2013_en.pdf Post Finance, History, https://www.postfinance.ch/en/about/company/ Richard Hughes, ”Third world leads first in mobile banking”, The Syd- history.html ney Morning Herald, May 29, 2013, http://www.smh.com.au/money/ Poste Italiane Group, Annual Report 2012, http://www.poste.it/resources/ third-world-leads-first-in-mobile-banking-20130529-2nail.html editoriali/azienda/pdf/Annual_Report_2012.pdf Rosie Murray-West, “Five cities with fastest growing payday loan debts”, Poste Italiane Group, Company profile 2013, http://www.posteitaliane. Daily Telegraph, June 25, 2013, http://www.telegraph.co.uk/finance/ post/english/press-room/press-kit.shtml personalfinance/borrowing/loans/10141306/Five-cities-with-fastest- growing-payday-loan-debts.html Poste Italiane Group, Investor Presentation, June 2013 http://www. posteitaliane.post/resources/english/editoriali/pdf/PosteItaliane_ Rupert Neate, “Post Office workers announce new strike over plan to close InvestorPresentationJune2013.pdf 70 branches”, The Guardian, April 30, 2013, http://www.guardian. co.uk/business/2013/apr/30/post-office-strike-may Post Office, “Branch Personal Banking Services”, 2013, http://www. postoffice.co.uk/branch-banking-services?intcampaignid=MNfin Rupert Jones, “Post Office unveils new current accounts”, The Guard- anceperbanking#withdrawals_&_deposits ian, May 13, 2013, http://www.guardian.co.uk/money/2013/may/13/ post-office-unveils-new-accounts Post Office, “HSBC customers to get access to their money at the Post Office’s unrivalled network of over 11,500 branches”, September 17, Rupert Jones, “Q&A: Post Office current accounts”, The Guardian, May 2012, http://www.postoffice.co.uk/news-hsbc-customers-to-get-access 18, 2013, http://www.guardian.co.uk/money/2013/may/18/post- office-current-accounts Post Office, “Post Office Card Account”, 2013, http://www.postoffice. co.uk/post-office-card-account Santander, “About the Group” http://www.santander.com/csgs/ Satellite?appID=santander.wc.CFWCSancomQP01&c=GSInformac Post Office Limited, Annual Report 2011–12, http://www.postoffice. ion&canal=CSCORP&cid=1278687785447&empr=CFWCSancomQ co.uk/sites/default/files/Post_Office_Limited_2011–12_report_ P01&leng=en_GB&pagename=CFWCSancomQP01%2FGSInforma and_%20accounts.pdf.pdf cion%2FCFQP01_GSInformacionDetalleSimple_PT08 Post & Parcel, “Canada Post extends fund transfer alliance with Money- Santander, “Alliance & Leicester historic financial results”, http:// Gram”, July 14, 2011, http://postandparcel.info/40801/news/canada- www.aboutsantander.co.uk/investors/results-and-presentations/ post-extends-fund-transfer-alliance-with-moneygram/ santander-uk-plc/alliance-and-leicester.aspx Post & Parcel, “La Banque Postale to introduce loans service in lo- Scotia Bank, Aboriginal Banking Centres, 2013, http://www.scotiabank. cal branches “, Feb. 10, 2012 http://postandparcel.info/45524/ com/ca/en/0,,291,00.html news/markets/la-banque-postale-to-introduce-loans-service-in- local-branches/ Senate of Canada, Proceedings of the Standing Senate Committee on National Finance, April 27, 2010, http://www.parl.gc.ca/Content/ Post & Parcel, “Much maligned Italian postal service posts first profit SEN/Committee/403/fina/04evb-e.htm?Language=E in 50 years”, April 8, 2003, http://postandparcel.info/8086/news/ much-maligned-italian-postal-service-posts-first-profit-in-50-years/ Service Public, « Prêt d’accession sociale (PAS) », January 1, 2013, http:// vosdroits.service-public.fr/F22158.xhtml Post & Parcel, “Post Office Ltd extends Bank of Ireland alliance to 2023”, August 3, 2012, http://postandparcel.info/49670/news/companies/ Strategic Review of the Canada Post Corporation, Report of the Advis- post-office-ltd-extends-bank-of-ireland-alliance-to-2023/ ory Panel to the Minister, Postal Savings Bank of China, Banks of the World, http://www.relbanks. December 2008, http://www.cpcstrategicreview-examenstrategiquescp. com/asia/china/postal-savings-bank-of-china gc.ca/finalreport/rpt-eng.pdf Power Financial Corporation, Bain & Company, “Concentration and Tim Devaney, “Global crisis squeezes Swiss banks”, The Washington Times, Competition in the Canadian Banking Industry”, December 2003, November 4, 2012, http://www.washingtontimes.com/news/2012/ http://www.fin.gc.ca/consultresp/mergersrespns_20-eng.asp nov/4/global-crisis-squeezes-swiss-banks-as-regulations-/?page=all th Power Financial Corporation, Submission to Minister of Finance Future Tony Benn, Girobank: The 40 Anniversary of the People’s Bank, pod- Structure of the Canadian Financial Services Industry, December cast, http://www.postalheritage.org.uk/page/3839/Podcast 2003, http://www.fin.gc.ca/consultresp/mergersrespns_16-eng.asp Urban Forum, Government Response to Post Office Banking Consul- President’s Choice Bank, Basel II Pillar 3 Disclosures, September 30, 2012 tation, March 30, 2010, http://www.urbanforum.org.uk/briefings/ http://www.loblaw.ca/files/4.%20Investor%20Centre/Financial%20 government-response-to-post-office-banking-consultation Reports/2012/Q3/PC%20Bank%20Basel%20II%20Pillar%20III%20 Universal Postal Union, “Doha Postal Strategy 2013–16: The global road- Disclosures%20Q3%202012%20Final_v001_x1g2uy.pdf map for postal services”, September 24, 2012, http://www.upu.int/ Prêt Accession Sociale, La Banque Postale Se Lance Seule Dans L’accession en/the-upu/strategy/doha-postal-strategy.html Sociale, Dec. 14, 2012, http://www.pret-accession-sociale.com/ Universal Postal Union, “Posts facilitate financial inclusion”, http:// la-banque-postale-se-lance-seule-dans-l-accession-sociale.php news.upu.int/insight/backgrounders/postal-financial-inclusion/ PricewaterhouseCoopers, Canadian Banks 2013, A New Normal, PWC Universal Postal Union, “Posts must exploit untapped potential for 2013 http://read.ca.pwc.com/i/112317?utm_source=page&utm_ financial inclusion”, Feb. 10, 2012, http://dohacongress.upu.int/ medium=referral&utm_campaign=canadian-banks-2013-view-now no_cache/cnd/article/posts-must-exploit-untapped-potential-for- PricewaterhouseCoopers, “Canadian banks strong in 2012 and head- financial-inclusion/ ing towards a ‘new normal’”, Toronto, Feb. 25, 2013, http://www. Vijay Gill, Crystal Hoganson, and David Stewart-Patterson, The Future newswire.ca/en/story/1119563/canadian-banks-strong-in-2012-and- of Postal Service in Canada, heading-towards-a-new-normal-pwc The Conference Board of Canada, April 2013, http://www.conferenceboard. Radio Canada, « Les fermetures de caisses Desjardins tirent à leur ca/e-library/abstract.aspx?did=5443 fin », Feb. 18, 2013,http://www.radio-canada.ca/nouvelles/ Willy Staley, “Could the Elderly Suffer as Banks Close Branches?” My Economie/2013/02/18/008-fermetures-caisses-mouvement-desjardins- Bank Tracker, March 12, 2012, http://www.mybanktracker.com/ tire-fin-leroux.shtml news/2012/03/12/elderly-branch-banking-chase/ Ratemarket, Credit Card Rates, 2013, http://www.ratesupermarket. Wonga, “How it works”, 2013, https://www.wonga.ca/how-it-works ca/credit_cards/ RBC, Aboriginal Banking Services, http://www.rbcroyalbank.com/ aboriginal/init.html

76 Canadian Centre for Policy Alternatives Notes

1 CBA, Bank revenues and earnings, 2013, http://www.cba.ca/en/ 15 Ibid. media-room/50-backgrounders-on-banking-issues/119-bank-revenues- 16 These figures are achieved by dividing bank branches into popu- and-earnings-profits. Note the “big six” includes the National Bank. lation figures for each country for 2012. The “big five” excludes this bank. 17 Willy Staley, “Could the Elderly Suffer as Banks Close Branches?”, 2 Canadian banks strong in 2012 and heading towards a ‘new normal’: My Bank Tracker, March 12, 2012, http://www.mybanktracker.com/ PwC, Toronto, Feb. 25, 2013, http://www.newswire.ca/en/story/1119563/ news/2012/03/12/elderly-branch-banking-chase/ canadian-banks-strong-in-2012-and-heading-towards-a-new-normal-pwc 18 Emarketer, “Consumers Continue Switch to Online Banking,” Feb. 3 CBC News, “Federal Deficit Shrinks Again” May 31, 2013 http://www. 28, 2011, http://www.emarketer.com/Article/Consumers-Continue- cbc.ca/news/business/story/2013/05/31/business-deficit-march.html Switch-Online-Banking/1008255 4 PricewaterhouseCoopers, Canadian Banks 2013, A New Normal, 19 Which I remember as a McGill student in the sixties not getting cash PwC 2013 http://read.ca.pwc.com/i/112317?utm_source=page&utm_ for the weekend because I had missed that Friday 3 p.m. deadline and medium=referral&utm_campaign=canadian-banks-2013-view-now of course there were no ATMs. 5 CBA, How Canadians Bank, http://www.cba.ca/contents/files/ 20 TD Canada Trust, Open Earlier, Open Later. Even Sunday, August 2013, backgrounders/bkg_technology_en.pdf http://www.tdcanadatrust.com/products-services/banking/openlater.jsp 6 Power Financial Corporation Submission to Minister of Finance Fu- 21 Ellen Roseman, “Why are bank fees so high?”, March 18, 2007 ture Structure of the Canadian Financial Services Industry, http://www. http://www.thestar.com/opinion/columnists/2007/03/18/why_are_ fin.gc.ca/consultresp/mergersrespns_16-eng.asp bank_fees_so_high.html 7 Ibid. 22 Liam Lahey, “Canadians pay $185 a year in banking fees among 8 Government of Newfoundland and Labrador 2013, Statistics http:// world’s highest”, March 20, 2012 http://smallbusiness.yahoo.com/ www.stats.gov.nl.ca/statistics/population/PDF/Annual_Pop_Prov.PDF advisor/blogs/insight/canadians-pay-185-banking-fees-among-world- 9 David Phillips, CEO, CUCC, Standing Committee on Finance, May 21, highest-191158887.html 2013, http://www.parl.gc.ca/HousePublications/Publication.aspx?Do 23 Canadian Bankers Association, Banking Service Fees, May 2013, cId=6160966&Language=E&Mode=1 http://www.cba.ca/en/media-room/50-backgrounders-on-banking- 10 Gary Rogers, Vice-President, Financial Policy, Credit Union Cen- issues/82-banking-service-fees tral of Canada, at the Finance Committee, October 18th, 2012, https:// 24 Garry Marr, “High credit card rates costing Canadians a for- openparliament.ca/committees/finance/41-1/79/gary-rogers-1/only/ tune”, Financial Post, March 30, 2013 http://business.financialpost. 11 Desjardins Group, «Desjardins s’impose comme moteur économique com/2013/03/30/high-credit-card-rates-costing-canadians-a-fortune/ du Québec », April 5, 2013, http://www.desjardins.com/fr/a_propos/ 25 CBC, Busting the Banks, (video) Marketplace, January 25, 2013 http:// salle_presse/nouvelles/2013040501.jsp www.cbc.ca/marketplace/episodes/2013/01/busting-the-banks.html 12 Bob Leshchyshen, Survey Results of the Largest Canadian Credit 26 Fodors, ATM Bank fees in London, http://www.fodors.com/ Unions, 2004 Financial Results, 2005, http://www.canadiancreditunion. community/europe/atm-bank-fees-in-london.cfm ca/files/report-2004.pdf and Credit Union Central of Canada, System 27 Canadian Bank Machines Association, Facts and Publications, Au- th Results, 4 Quarter 2012, Feb. 2013, http://www.cucentral.ca/SitePages/ gust 2013, http://www.canadianbankmachineassociation.com/facts- Publications/FactsAndFigures.aspx publications.html 13 Radio Canada, «Les fermetures de caisses Desjardins tirent à 28 “Concentration and Competition in the Canadian Banking Industry”, leur fin », Feb. 18, 2013, http://www.radio-canada.ca/nouvelles/ Prepared by Bain & Company, Inc. for Power Financial Corporation, Decem- Economie/2013/02/18/008-fermetures-caisses-mouvement-desjardins- ber 2003, http://www.fin.gc.ca/consultresp/mergersRespns_20-eng.asp tire-fin-leroux.shtml 29 Hayley Tsukayama, “The Circuit: Federal Reserve says mobile 14 Credit Union Central of Canada, System Brief, Canada’s Credit Unions banking on the rise”, Washington Post, March 28, 2013, http://www. and the State of the System, January 2013, http://www.cucentral.ca/ washingtonpost.com/blogs/post-tech/post/the-circuit-federal-reserve- SitePages/PolicyAndAdvocacy/Publications.aspx

Why Canada Needs Postal Banking 77 says-mobile-banking-on-the-rise/2013/03/28/9a52bf7a-97b7-11e2-814b- 53 Claudio Eggert, A Strategy Analysis Of The “Big Five” Canadian 063623d80a60_blog.html Banks, Athabasca University, April 4, 2012 http://dtpr.lib.athabascau.ca/ 30 Richard Hughes, “Third world leads first in mobile banking”, action/download.php?filename=mba-12/open/eggertclaudioProject.pdf The Sydney Morning Herald, May 29, 2013, http://www.smh.com.au/ 54 Power Financial Corporation, Bain & Company, “Concentration and money/third-world-leads-first-in-mobile-banking-20130529-2nail.html Competition in the Canadian Banking Industry”, December 2003, http:// 31 President’s Choice Bank, Basel ii Pillar 3 Disclosures, Septem- www.fin.gc.ca/consultresp/mergersrespns_20-eng.asp ber 30, 2012, http://Www.Loblaw.Ca/Files/4.%20investor%20centre/ 55 “Canadian bank mergers highly unlikely now,” Toronto Star, July 3, Financial%20reports/2012/Q3/Pc%20bank%20basel%20ii%20pillar%20 2009, http://www.thestar.com/business/2009/07/03/canadian_bank_ iii%20disclosures%20q3%202012%20final_V001_X1g2uy.Pdf mergers_highly_unlikely_now.html 32 Canadian Tire Corporation, Annual Report 2012, http://corp. 56 Stewart, J.C., The post-office savings bank system of Canada: (prov- canadiantire.ca/EN/Investors/FinancialReports/Annual%20Reports%20 inces of Ontario and Quebec), its history and progress; a paper read be- Library/CTC_AR_2012.pdf fore the economic section, British Association, at its meeting in Mont- 33 Dana Flavelle, “Wal-Mart Canada issues rewards-based Master- real, Gazette Printing Company, Montreal, August, 1884 http://archive. Card”, Toronto Star, June 15, 2012, http://www.thestar.com/business/ org/stream/cihm_28003#page/n5/mode/2up personal_finance/spending_saving/2010/06/15/walmart_canada_ 57 Dan Bunbury, Safe Haven for the Poor? Depositors and the Govern- issues_rewardsbased_mastercard.html ment Savings Bank in Halifax, 1832–1867, Acadiensis, XXIV, 2 (Spring 34 CBC News, “Scotiabank to buy ING Bank of Canada for $3.1B”, Au- 1995), pp. 24–48. gust 29, 2012, http://www.cbc.ca/news/business/story/2012/08/29/ 58 Canadian Postal Museum, Chronology http://www.civilization. scotiabank-ing-bank.html ca/cmc/exhibitions/cpm/chrono/ch1868be.shtml Dan Bunbury, “The 35 Paul Bowles, Keely Dempsey, Trevor Shaw, The Local Financial Public Purse and State Finance: Government Savings Banks in the Crisis, Canadian Centre for Policy Alternatives February 1, 2011, http:// Era of Nation Building, 1867–1900”, Canadian Historical Review, Vol- www.policyalternatives.ca/publications/monitor/local-financial-crisis ume 78, issue 4, 1997, pp. 566–599 http://utpjournals.metapress.com/ content/J782727641127461 36 List of Fringe Financial Institutions members of CPLA, http://www. 59 cpla-acps.ca/english/aboutmembers.php “Closing of Post Office Savings Bank”,The News, July 31, 1969 http:// news.google.com/newspapers?nid=173&dat=19690731&id=cTwwAAA 37 Canadian Payday Loan Association, About Us, http://www.cpla- AIBAJ&sjid=ySoDAAAAIBAJ&pg=2279,992160 acps.ca/english/aboutcpla.php 60 Michael Warren, Speech to the Rotary Club of Ottawa, June 21, 1982 38 DFC. Global Portfolio 2013, http://www.dfcglobalcorp.com/our- 61 portfolio\, DFC Annual Report 2012, http://ir.dfcglobalcorp.com/ House of Commons, Standing Committee on Finance, Monday, Nov- phoenix.zhtml?c=177357&p=irol-reports ember 16, 1998, http://www.parl.gc.ca/HousePublications/Publication. aspx?DocId=1039058&Mode=1&Parl=36&Ses=1&Language=E 39 Wonga, How it works, https://www.wonga.ca/how-it-works 62 Senate Standing Committee on National Finance, April 10, 2010 40 Note: in the UK, APR is calculated on a different basis which leads http://www.parl.gc.ca/Content/SEN/Committee/403/fina/04evb-e. to very high APR rates. htm?Language=E 41 Rosie Murray-West, “Five cities with fastest growing payday loan 63 Vijay Gill, Crystal Hoganson, and David Stewart-Patterson, The Fu- debts”, Daily Telegraph, June 25, 2013, http://www.telegraph.co.uk/ ture of Postal Service in Canada, The Conference Board of Canada, April finance/personalfinance/borrowing/loans/10141306/Five-cities-with- 2013 http://www.conferenceboard.ca/e-library/abstract.aspx?did=5443 fastest-growing-payday-loan-debts.html 64 Vijay Gill, Crystal Hoganson, David Stewart-Patterson, The Future 42 Peter Walker, “Archbishop of Canterbury embarrassed about of Postal Service in Canada, Conference Board of Canada, April 2013 church’s financial link to Wonga”,The Guardian, July 26, 2013, http:// http://www.conferenceboard.ca/e-library/abstract.aspx?did=5443 www.theguardian.com/world/2013/jul/26/archbishop-of-canterbury- 65 church-wonga Elina Piispanen and Jérôme Vercamear, http://www.parl.gc.ca/ content/lop/researchpublications/prb0514-e.htm#endnote30 43 Jerry Buckland, Hard Choices, University of Toronto Press. Toron- 66 to, 2012, p.24 Philippe Le Goff, Economics Division, Library of Parliament, “Can- ada Post Corporation as a Provider of Financial and Government Servi- 44 Jerry Buckland, Money Management on a Shoestring: A Critical ces: The Way of the Future?” July 2005, http://www.parl.gc.ca/content/ Literature Review of Financial Literacy & Low-income People, Finan- lop/researchpublications/prb0514-e.htm cial Literacy Task Force, 2011, http://www.financialliteracyincanada. 67 com/documents/research-reports.html CUPW, Stratcom Poll on the Future of Canada Post, June 12, 2013 http://www.cupw.ca/index.cfm/ci_id/14579/la_id/1.htm 45 Danielle Douglas, “More Americans opting out of banking system”, 68 Washington Post, September 12, 2012, http://articles.washingtonpost. CUPW, Urban Postal Unit Negotiations (2011) / Fact Sheet 2 — The com/2012-09-12/business/35497808_1_account-fees-overdraft-charges- future of Canada Post lies in expansion and innovation November 16, bank-account 2010 http://www.cupw.ca/index.cfm/ci_id/12549/la_id/1.htm 69 46 Paul Bowles, Keely Dempsey, Trevor Shaw, “The Local Financial Ibid. Crisis”, Canadian Centre for Policy Alternatives, February 1, 2011, http:// 70 CUPW, Urban Postal Unit Negotiations (2011) / Fact Sheet 2 — The www.policyalternatives.ca/publications/monitor/local-financial-crisis future of Canada Post lies in expansion and innovation November 16, 47 Gloria Galloway, “Aboriginal baby boom sees young, surging popu- 2010 http://www.cupw.ca/index.cfm/ci_id/12549/la_id/1.htm lation”, Globe and Mail, May 8, 2013, http://www.theglobeandmail.com/ 71 New Democratic Party, Government must reject reductions to post- news/politics/aboriginal-baby-boom-sees-young-surging-population/ al services, April 23, 2013, http://www.ndp.ca/news/government-must- article11778399/ reject-reductions-to-postal-services 48 RBC, Aboriginal Banking Services, http://www.rbcroyalbank.com/ 72 NDP, Conference 2013, Resolutions http://xfer.ndp.ca/2013/ aboriginal/init.html Montreal2013/Mtl2013_Resolutions_EN.pdf 49 BMO, Aboriginal Banking Services, http://www.bmo.com/aboriginal/ 73 Alexandre Berthaud and Gisela Davico, Global Panorama on Post- en/services.html al Financial Inclusion: Key Issues and Business Models. UPU Universal 50 Scotiabank, Aboriginal Banking Services, http://www.scotiabank. Postal Union, Postal Financial Inclusion Project, Berne, Switzerland, com/ca/en/0,291,00.html March 2013 http://www.upu.int/fileadmin/documentsFiles/activities/ financialInclusion/publicationGlobalPanoramaFinancialInclusiontEn.pdf 51 First Nations Bank, Fact sheet, http://www.fnbc.ca/fileadmin/user_ 74 upload/content/pdfs/FNBC_-_Fact_Sheet.pdf Ibid 75 52 CIBC, Aboriginal Services, https://www.cibc.com/ca/small-business/ Universal Postal Union, “Posts must exploit untapped potential aboriginal/index.html for financial inclusion”, Feb. 10, 2012, http://dohacongress.upu.int/ no_cache/cnd/article/posts-must-exploit-untapped-potential-for- financial-inclusion/

78 Canadian Centre for Policy Alternatives 76 Universal Postal Union, “Posts facilitate financial inclusion”, http:// 102 Urban Forum, “Government Response to Post Office Banking Con- news.upu.int/insight/backgrounders/postal-financial-inclusion/ sultation”, March 30, 2010, http://www.urbanforum.org.uk/briefings/ 77 http://www.syminvest.com/news/alexandre-berthaud-the-world- government-response-to-post-office-banking-consultation bank-what-role-do-posts-really-play-in-financial-inclusion/2013/3/18/3647 103 BIS, Department for Business Innovation and Skills, Post Office 78 Alexandre Berthaud and Gisela Davico, Global Panorama on Post- Banking: Government Response to Consultation, March 2010, http:// al Financial Inclusion: Key Issues and Business Models. UPU Univer- www.bis.gov.uk/assets/biscore/business-sectors/docs/10-733-post- sal Postal Union, Postal Financial Inclusion Project, Berne, Switzer- office-banking-government-response-to-consultation.pdf land, March 2013 p. 14, http://www.upu.int/fileadmin/documentsFiles/ 104 BBC News, “Royal Mail privatisation bill unveiled by Vince Cable”, activities/financialInclusion/publicationGlobalPanoramaFinancial October 13, 2010, http://www.bbc.co.uk/news/business-11526179 InclusionEn.pdf 105 BBC News, “Budget: Saving Gateway scheme is scrapped”, June 79 Ibid. 22, 2010, http://www.bbc.co.uk/news/10376543 80 Accenture “Achieving High Performance in the Postal Industry”, 106 Esther Addley, “Is it the last Christmas post for a state-owned Roy- Accenture Research and Insights 2012 http://www.accenture.com/us- al Mail?”, The Guardian, Dec. 18, 2012, http://www.guardian.co.uk/ en/Pages/insight-achieving-high-performance-postal-industry.aspx uk/2012/dec/18/last-christmas-post-royal-mail 81 Achieving High Performance in the Postal Industry, Accenture Research 107 BIS, Department for Business Innovation and Skills, Building a and Insights 2013 http://www.accenture.com/SiteCollectionDocuments/ Mutual Post Office: The Government’s Response, July 2012, https:// PDF/Accenture_Achieving-High-Performance-in-the-Postal-Industry- www.gov.uk/government/uploads/system/uploads/attachment_data/ 2013-Research-and-Insights.pdf file/31725/12-939-building-a-mutual-post-office-government-response.pdf 82 Japan Post Bank, Selected Financial Information for the Three 108 Ibid. Months Ended June 30, 2013, http://www.jp-bank.japanpost.jp/en/ 109 Post Office Limited, Annual Report 2011–12, http://www.postoffice. aboutus/financial/en_abt_fnc_financialdata.html co.uk/sites/default/files/Post_Office_Limited_2011–12_report_and_%20 83 Postal Savings Bank of China, http://www.relbanks.com/asia/ accounts.pdf.pdf china/postal-savings-bank-of-china 110 Interview with Nicholas Kennett, Director of Financial Services 84 Deutsche Post Bank, Profile, https://www.postbank.com/postbank/ Post Office Limited, May 2013 by author en/au_profile_the_postbank.html 111 Business, Innovation and Skills Committee — Third Report, “Post 85 In the UK while the Royal Mail is to be privatized, the Post Office Office Network Transformation”http://www.publications.parliament. will remain in public hands. uk/pa/cm201213/cmselect/cmbis/84/8405.htm 86 Global Finance, World’s 50 Safest Banks: April 2013, http://www. 112 Rupert Neate, “Post Office workers announce new strike over plan to gfmag.com/tools/best-banks/12326-worlds-50-safest-banks-april-2013. close 70 branches”, The Guardian, April 30, 2013, http://www.guardian. html#axzz2c8qrwOQ0 co.uk/business/2013/apr/30/post-office-strike-may 87 http://www.postalheritage.org.uk/page/savingsbank 113 Post Office, “Post Office Card Account”, 2013http://www.postoffice. 88 Larry Neild, “The end of an era as last Giro is cashed,” Liverpool co.uk/post-office-card-account Daily Post, July 7, 2003, http://www.liverpooldailypost.co.uk/liverpool- 114 Business, Innovation and Skills Committee, Third Report, “Post Of- news/regional-news/2003/07/07/the-end-of-an-era-as-last-giro-is- fice Network Transformation”, July 11, 2012, http://www.publications. cashed-99623-13150480/2/#ixzz2WJmGZACH parliament.uk/pa/cm201213/cmselect/cmbis/84/8405.htm 89 CWU, “Tony Benn calls for Post Office People’s Bank”, October 17, 115 Post Office, “Branch Personal Banking Services”, 2013 http://www. 2008, http://www.cwu.org/tony-benn-calls-for-post-office-people-s- postoffice.co.uk/branch-banking-services?intcampaignid=MNfinance bank.html?archive_page=149 perbanking#withdrawals_&_deposits 90 Ibid. 116 Post Office,HS “ BC customers to get access to their money at the 91 Tony Benn, “Girobank: The 40th Anniversary of the People’s Bank”, Post Office’s unrivalled network of over 11,500 branches”, September 17, podcast, 2008, http://www.postalheritage.org.uk/page/3839/Podcast 2012, http://www.postoffice.co.uk/news-hsbc-customers-to-get-access 117 92 Patrick Collinson, “Girobank brand laid to rest after 25 years”, Post & Parcel, “Post Office Ltd extends Bank of Ireland alliance to The Guardian, July 7, 2003, http://www.guardian.co.uk/money/2003/ 2023”,August 3, 2012, http://postandparcel.info/49670/news/companies/ jul/07/business.postalservice and Glyn Davies, National Giro: modern post-office-ltd-extends-bank-of-ireland-alliance-to-2023/ money transfer, Allen and Unwin, London 1973. ISBN 0-04-332054-6. 118 Rupert Jones, “Post Office unveils new current accounts”,The 93 The British Postal Museum and Archive, “150 years of the Post Of- Guardian, May 13, 2013, http://www.guardian.co.uk/money/2013/ fice Savings Bank”, Sept. 16, 2011, http://postalheritage.wordpress. may/13/post-office-unveils-new-accounts com/2011/09/16/150-years-of-the-post-office-savings-bank/ 119 Matt Scuffham, “Post Office takes on UK banks with current accounts”, 94 Light Straw, “Post Office Savings Bank... The organisational hist- Reuters, April 11, 2013, http://www.reuters.com/article/2013/04/11/ ory”, October 4,2012 http://www.lightstraw.co.uk/gpo/posb/posb1.html post-office-banking-idUSL5N0CY1WQ20130411 120 95 NS&I “What we do”, http://www.nsandi.com/about-nsi-what-we-do Rupert Jones, “Q&A: Post Office current accounts”,The Guard- ian, May 18, 2013, http://www.guardian.co.uk/money/2013/may/18/ 96 Santander, “Alliance & Leicester historic financial results”, http:// post-office-current-accounts www.aboutsantander.co.uk/investors/results-and-presentations/ 121 santander-uk-plc/alliance-and-leicester.aspx http://www.guardian.co.uk/money/2013/may/13/post-office- unveils-new-accounts 97 Light Straw, “National Giro”, October 4, 2012, http://www.lightstraw. 122 co.uk/gpo/giro/ Payments Council, “Payments Council board endorses plans to make account switching easier”, September 15, 2011, http://www. 98 Santander, “About the Group”, http://www.santander.com/csgs/ paymentscouncil.org.uk/media_centre/press_releases/-/page/1618/ Satellite?appID=santander.wc.CFWCSancomQP01&c=GSInformacion 123 &canal=CSCORP&cid=1278687785447&empr=CFWCSancomQP01&le Interview with author, May 2013 ng=en_GB&pagename=CFWCSancomQP01%2FGSInformacion%2FC 124 Post Bank Coalition, The Case for a Post Bank, March 7, 2009, FQP01_GSInformacionDetalleSimple_PT08 http://dnwssx4l7gl7s.cloudfront.net/nefoundation/default/page/-/ 99 Interview by author with Nicholas Kennett, Director of Financial files/The_Case_for_a_Post_Bank.pdf Services, Post Office Limited, May 2013 125 Ibid 100 Finextra, “Bank of Ireland to partner UK Post Office in financial 126 Ibid. services JV”, October 8, 2003, http://www.finextra.com/news/fullstory. 127 Ibid aspx?blogview=recent&newsitemid=10163 128 La Banque Postale Group, Business Report 2012, https://www. 101 Ibid. labanquepostale.fr/dam/Groupe/English/LBP_RA-GB_2012.pdf

Why Canada Needs Postal Banking 79 129 La Banque Postale Group, Registration Document and annual 153 Post & Parcel, “Much maligned Italian postal service posts first prof- financial report 2012 financial year, https://www.labanquepostale. it in 50 years”, April 8th, 2003, http://postandparcel.info/8086/news/ fr/dam/Groupe/Communication-Financiere/english/Regulated_ much-maligned-italian-postal-service-posts-first-profit-in-50-years/ information/20130328_Doc-de-ref-2012-GB_LBP.pdf 154 Poste Italiane Group, Investor Presentation, June 2013 http://www. 130 La Banque Postale Group, « Il y a 130 ans, le 9 avril 1881, la loi posteitaliane.post/resources/english/editoriali/pdf/PosteItaliane_ dote la Poste d’une caisse nationale d’épargne », http://www.laposte. InvestorPresentationJune2013.pdf fr/chp/mediasPdf/anniv/anniv_19.pdf 155 Ibid. and Poste Italiane Group, Annual Report 2012, http://www. 131 Ibid. poste.it/resources/editoriali/azienda/pdf/Annual_Report_2012.pdf 132 La Banque Postale Group, L’essentiel du développement durable, 156 Kristian J. Sund, Middlesex University Business School, “Trans- April 2013 https://www.labanquepostale.fr/dam/Groupe/Engagements/ formation and diversification in the context of regulated industries: Developpement-responsable/pdf/LEssentiel-du-Developpement- The case of Poste Italiane and PosteMobile,” International Journal of responsable_02042013.pdf Management Education 9(4), 2011 133 Post and Parcel, « La Banque Postale to introduce loans service 157 Poste Italiane Group, “Company profile 2013”,http://www. in local branches », Feb. 10, 2012 http://postandparcel.info/45524/ posteitaliane.post/english/press-room/press-kit.shtml news/markets/la-banque-postale-to-introduce-loans-service-in-local- 158 Poste Italiane Group, “Investor Presentation”, June 2013 http:// branches/, Friday, February 10th www.posteitaliane.post/resources/english/editoriali/pdf/PosteItaliane_ 134 La Banque Postale Group, Rapport des activités 2012, http:// InvestorPresentationJune2013.pdf banquepostale.publishpaper.com/rapport_dactivite_2012/#/44 159 Ibid. 135 La Banque Postale Group, Création d’un Fonds d’Investissement 160 Poste Italiane Group, “Company Profile 2013” http://salastampa.poste. Durable et Solidaire, May 24, 2012, https://www.labanquepostale.fr/ it/resources/salastampa/pdf/company_profile_eng_maggio_2013.pdf collectivites/bailleur_social/actualite/habitat_reuni.html 161 Poste Italiane Group, “Social Report 2008” http://www.posteitaliane. 136 Service Public, « Prêt d’accession sociale (PAS) », January 1, 2013, post/resources/english/editoriali/pdf/social_report_2008.pdf http://vosdroits.service-public.fr/F22158.xhtml 162 Poste Italiane Group, “Company Profile 2013” http://salastampa.poste. 137 Prêt Accession Sociale, La Banque Postale Se Lance Seule Dans it/resources/salastampa/pdf/company_profile_eng_maggio_2013.pdf L’accession Sociale, Dec. 14, 2012, http://www.pret-accession-sociale. com/la-banque-postale-se-lance-seule-dans-l-accession-sociale.php 163 Kiwibank, “More About Us”, 2013, http://www.kiwibank.co.nz/ about-us/more-about-us/ 138 La Banque Postale Group, “First meeting of La Banque Postale’s Social Home Ownership Policy Committee”, April 25, 2013, http:// 164 New Zealand Post Group, Annual Report 2012 http://www.nzpost. legroupe.laposte.fr/content/download/19766/151331/version/1/file/ co.nz/sites/default/files/uploads/shared/annual%20reports/annual- CP_2013_04_19.pdf report-2012.pdf 139 La Poste, La Banque Postale’s 2011 Results and Business Review, 165 Kiwibank, “More About Us”, 2013, http://www.kiwibank.co.nz/ April 20, 2012, http://www.laposte.com/Everything-about-La-Poste/ about-us/more-about-us/ Press-releases/Latest-articles/2012-press-releases/La-Banque-Postale- 166 Interview by author with Bruce Thompson, Director of Communi- s-2011-Results-and-Business-Review cations, Kiwibank, May 2013 140 Ibid. 167 Ibid. 141 La Banque Postale Group, Registration Document and annual 168 Encyclopaedia of New Zealand 1966, “The Post Office Savings financial report, 2012 financial year, https://www.labanquepostale. Bank”, http://www.teara.govt.nz/en/1966/post-office/page-7 fr/dam/Groupe/Communication-Financiere/english/Regulated_ 169 New Zealand Post, “History of New Zealand Post”, Sept. 26, information/20130328_Doc-de-ref-2012-GB_LBP.pdf 2006, http://www.nzpost.co.nz/about-us/who-we-are/history-of- 142 Ibid. ere/english/Regulated_information/20130328_Doc-de-ref- new-zealand-post 2012-GB_LBP.pdf 170 ANZ, “History of ANZ”, 2013 http://www.anz.com/australia/ 143 La Banque Postale Group, Business Report 2012, https://www. aboutanz/corporateinformation/historyofanz/default.asp labanquepostale.fr/dam/Groupe/English/LBP_RA-GB_2012.pdf 171 New Zealand Herald, “Elliotts’ suffering shook me — Power”, 144 La Banque Postale Group, Registration Document and annual Oct. 6, 2011, http://www.nzherald.co.nz/nz/news/article.cfm?c_ financial report, 2012 financial year, https://www.labanquepostale. id=1&objectid=10756872 fr/dam/Groupe/Communication-Financiere/english/Regulated_ 172 Ibid. information/20130328_Doc-de-ref-2012-GB_LBP.pdf 173 Green Party, New Zealand “Aussie banks continue to post record 145 PostFinance, History, https://www.postfinance.ch/en/about/ profits (and send them offshore)”, Nov. 2, 2011, http://www.greens. company/history.html org.nz/press-releases/aussie-banks-continue-post-record-profits-and- 146 Ibid. send-them-offshore-0 147 Matthew Allen, “Post office ‘bank’ inches closer to dream”, swis- 174 Christian Mahne, “New Zealand: The People’s Bank”, BBC News, sinfo.ch , January 7, 2013, http://www.swissinfo.ch/eng/business/Post_ May 3, 2002 http://news.bbc.co.uk/1/hi/business/1963655.stm office_bank_inches_closer_to_dream.html?cid=34578908 175 From a paper on the Kiwibank by Paul Frampton sent to the au- 148 Tim Devaney, “Global crisis squeezes Swiss banks”, The Washington thor by the Kiwibank Director of Communications, Bruce Thompson Times, November 4, 2012, http://www.washingtontimes.com/news/2012/ 176 Kiwibank, “Welcome Home Loan”, 2013, http://www.kiwibank. nov/4/global-crisis-squeezes-swiss-banks-as-regulations-/?page=all co.nz/personal-banking/home-loans/home-loan-options/welcome- 149 Deborah Ball, Paul Sonne and Carrick Mollenkamp, “UBS: Rogue homeloan.asp Trader Hit Firm Swiss Bank Says It Lost $2 Billion On London Employ- 177 Kiwibank, “Kainga-Whenua Loan Program”, 2013, http://www. ee’s Unauthorized Bets”, Wall Street Journal, September 15, 2011 http:// kiwibank.co.nz/personal-banking/home-loans/home-loan-options/ online.wsj.com/article/SB10001424053111904060604576571931690088 kainga-whenua.asp 522.html and Lisa Jucca, “UBS loss biggest in Swiss corporate history”, Reuters, February 10, 2009, http://www.reuters.com/article/2009/02/10/ 178 David Stewart-Patterson, Vijay Gill, and Crystal Hoganson, The us-ubs-results-idUSTRE51918R20090210 Future of Postal Service in Canada, Conference Board of Canada, 2013 150 From PostFinance, https://www.postfinance.ch/ 179 Relbanks, “Top Banks around the World”, http://www.relbanks. com/worlds-top-banks/assets 151 Matthew Allen, “Post office ‘bank’ inches closer to dream”, swissinfo.ch , January 7, 2013 http://www.swissinfo.ch/eng/business/Post_ 180 Strategic Review of the Canada Post Corporation, Report of the Advis- office_bank_inches_closer_to_dream.html?cid=34578908 ory Panel to the Minister, December 2008, http://www.cpcstrategicreview- examenstrategiquescp.gc.ca/finalreport/rpt-eng.pdf 152 Ibid and interview with Alex Josty, PostFinance by author May 2013

80 Canadian Centre for Policy Alternatives 181 RateSupermarket, Credit Card Rates, 2013 http://www. 191 EDC, Annual Report 2012, http://www19.edc.ca/ ratesupermarket.ca/credit_cards/ publications/2013/2012ar/english/11-2-4.shtml 182 Liam Lahey, “Canadians pay $185 a year in banking fees among 192 John Greenwood, “How Export Development Canada is the next world’s highest”, March 20, 2012 http://smallbusiness.yahoo.com/ big bank in waiting”, Financial Post, Feb. 22, 2013, http://business. advisor/blogs/insight/canadians-pay-185-banking-fees-among-world- financialpost.com/2013/02/22/how-export-development-canada-is- highest-191158887.html the-next-big-bank-in-waiting/ 183 CBC, Busting the Banks, (video), Market Place, January 25, 2013 http:// 193 http://www.parl.gc.ca/Content/LOP/ResearchPublications/2012- www.cbc.ca/marketplace/episodes/2013/01/busting-the-banks.html 80-e.htm 184 Dr. Paul Bowles, Keely Dempsey and Trevor Shaw, Fringe Finan- 194 Post & Parcel, “Canada Post extends fund transfer alliance with cial Institutions, “The Unbanked, And The Precariously Banked: Survey MoneyGram”, July 14, 2011, http://postandparcel.info/40801/news/ Results From Prince George, B.C.”, report prepared for the Aboriginal canada-post-extends-fund-transfer-alliance-with-moneygram/ Business Development Centre, September 2010, http://www.nccah- 195 Catherine Tomasko, “MoneyGram must pay $100 million to vic- ccnsa.ca/docs/nccah%20partner%20documents/ABDCReportOct15.pdf tims of fraud scheme”, Thomson Reuters, Dec. 3, 2012, http://blog. 185 Kiwibank, Kainga-Whenua Loan Program, 2013 http://www. thomsonreuters.com/index.php/moneygram-must-pay-100-million- kiwibank.co.nz/personal-banking/home-loans/home-loan-options/ to-victims-of-fraud-scheme/ kainga-whenua.asp 196 Canada Post, Annual Report 2012 http://www.canadapost.ca/ 186 Canada Post Corporation Annual Report 2012, http://www. cpo/mc/assets/pdf/aboutus/annualreport/2012_AR_complete_en.pdf canadapost.ca/cpo/mc/assets/pdf/aboutus/annualreport/2012_AR_ 197 Rhéal leBlanc, “Getting strategic with money transfers”, Union complete_en.pdf Postale, March 2013, http://actualites.upu.int/uploads/media/union_ 187 Strategic Review of the Canada Post Corporation, Report of the Advis- postale_1_2013_en.pdf ory Panel to the Minister, December 2008, http://www.cpcstrategicreview- 198 Interview with Dr. Paul Bowles June 2012 and Dr. Paul Bowles, examenstrategiquescp.gc.ca/finalreport/pt1-eng.html Keely Dempsey And Trevor Shaw, Fringe Financial Institutions, “The 188 BDC, Annual Report 2012, http://www.bdc.ca/EN/Documents/ Unbanked, and the Precariously Banked: Survey Results from Prince annualreport/annual-report-bdc-2012.pdf George, B.C.”, Report Prepared for the Aboriginal Business Development 189 FCC, Annual Report, 2012 http://www.fcc-fac.ca/en/AboutUs/ Centre, September 2010 http://www.nccah-ccnsa.ca/docs/nccah%20 Profile/pdf/AR2011-12_LO_full_e.pdf partner%20documents/ABDCReportOct15.pdf 190 CMHC, Annual Report 2012, http://www.cmhc-schl.gc.ca/en/corp/ about/anrecopl/anre/2012/upload/CMHC_2012_Annual_Report.pdf

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