Canada Post – TD Bank partnership opens door to public postal banking

Last month, Canada Post made what was, to many, a surprising announcement. In an effort to expand Canadians’ access to financial services, particularly in rural, remote, and Indigenous communities, the crown corporation has entered a strategic alliance with TD Bank. By launching a new personal loan product, Canada Post had, as the Toronto Star put it, “quietly moved towards banking.”

The announcement raised more than a few questions among allies of the Canadian Union of Postal Workers (CUPW) campaign for postal banking. After all, the postal banking campaign has always been about building alternatives to the existing banking ecosystem, not shoring it up with partnerships.

And yet, far from putting an end to our campaign, the partnership opens new space for us to push it to our ultimate goal—creating a publicly-owned postal bank that offers a competitive alternative to Canada’s predatory banking sector.

A successful six-month market test has proven there’s real public interest and need in accessing banking services through Canada Post. And postal workers’ jobs now involve talking to customers about loans and other financial services in the post office, every day.

Postal banks abroad

We should be clear, too, about the path other postal services have taken to achieve postal banking.

Internationally, partnerships are the most common way for postal services to enter the banking space. A 2016 study by the Universal Postal Union—an agency of the United Nations that specializes in the postal sector—showed that of the 183 postal services which offer some form of financial services, 76 per cent do so in partnership with a private bank, insurance company, or other non-bank financial institution. In other words, when it comes to postal financial services, partnerships are the norm, not the exception.

And some independent postal banks—including France’s La Banque Postale—started off by forming partnerships with established private sector players. Partnerships to “share skills whilst reducing the cost of operations” formed one of the pillars of the bank’s early strategy after its founding in 2006. La Banque Postale signed different agreements to launch its personal loan, insurance, and asset management services.

Today, La Banque Postale stands as one of the most successful postal banks in the world, offering hundreds of thousands of French residents access to low-cost retail banking, while taking bold action to combat climate change and ensuring the stability of the French postal system.

More recently, in 2020, Austria Post established an independent banking subsidiary—Bank99—after ending its partnership with the private bank BAWAG PSK. With more than 1,800 service points throughout the country, Bank99 offers personal loans, credit cards, mortgages, and low-cost transaction accounts, including some entirely online.

It is worth noting, too, that CUPW has identified positive social and economic outcomes from postal partnerships with banks in other countries. Brazil’s “Banco Postal” offers a good illustration. While the Brazilian Post’s 2002 decision to partner with the country’s biggest private sector bank, Bradesco, instead of a public bank sparked much controversy, the country’s most marginalized benefited more from Banco Postal services than anyone else.

When the ten-year contract with Bradesco ended, Banco Postal had established banking services in more than 1,500 previously unbanked municipalities, opened more than 10 million new bank accounts, and drove regional economic growth. One Universal Postal Union study found that job growth was 14 per cent greater in municipalities with a Banco Postal outlet than in those without one.

The struggle continues

Building a low-cost, publicly owned postal bank that puts people before profit remains CUPW’s goal. The current partnership with TD won’t change that. But it provides a starting point that will help many in the interim. As the union’s slogan reminds us, “The struggle continues.”