A blow to Bay Street, a boon for cooperative banking

Photo: Toronto's Bay Street financial district

Photo: Toronto's Bay Street financial district

Ever since postal workers launched our campaign to bring back #ABankForEveryone, we've heard from many Canadians expressing their support, encouragement or skepticism. We also heard  lots of questions: Who is going to foot the bill? What would this mean for postal workers? And, a really common one: "Wouldn't a postal bank compete with my cooperative bank?"

The case for postal banking really resonates across Canada. Outside of large cities, bank branches are few and far between, and in some remote areas, people are even forced to book a helicopter ride to get to their bank (how much would that cost?). The numbers speak for themselves: in the decade preceding 2012, over a thousand bank branches closed nationwide with Ontario and Quebec suffering the highest number of closures.

It's clear: Canada's big banks are more interested in increasing their profit margins than they are in serving people living and working in rural communities.

Many such communities are left to rely on credit unions and Desjardins, Quebec's cooperative bank. According to the Credit Union Central of Canada, the Caisse Populaire was the only financial institution for 388 Quebec towns in 2012. These institutions play a much larger role in people's everyday lives than traditional banks. Because they don't follow the big banks' profit-gouging imperative, they tend to invest back into communities. Credit unions and Caisses Populaires sponsor a variety of local initiatives, from partnering with Quebec's Fête Nationale to sponsoring community forums and conferences across Canada.

Yet it's not all sunshine and roses. Last month, Desjardins announced it would close three service points in three Basse-Côte-Nord communities. Longue-Rive, Portneuf-sur-Mer and Colombier are all on Quebec's list of struggling communities. For people in these towns, bad banking news could be what tips them over the edge, financially.  These closures, part of a broader downsizing in the last few years, expose the Achilles' heel of credit unions and cooperative banks: any decline in membership can have grave consequences for customers.

No coast-to-coast credit union exists in Canada: while 5.3 million Canadians belong to a credit union, their membership numbers are incredibly uneven from province to province. Where the Caisse is almost everywhere in Quebec, only 11% of Ontarians are members of a credit union. This is one of the many reasons why a national postal banking system makes sense. Countries around the world have adopted a variety of postal banking models. We should look at partnership opportunities with credit unions as one possible option.

Canada's own postal bank would do a lot more than simply fill the gaps left behind by credit unions and Desjardins. It would spark a national conversation on the values and motives of our financial institutions. With membership in credit unions declining, the postal banking debate might spark a renewed interest in a more responsible, accessible and ethical model for banking. That's something we could all benefit from.

Postal banking can provide fresh competition to Canada's big banks and extend a helping hand to rural communities. And it would give fresh impetus to an old but vital idea: financial services should contribute to the public good.