Why we need Postal Banking

pb-feature-enBy Christo Aivalis
Over the past months, the dispute between Canada Post (CP) and the Canadian Union of Postal Workers (CUPW) has garnered attention, both for how a labour stoppage will effect Canadians, as well as how the current negotiations form a bellwether for the future of good jobs. But what has perhaps slipped to the wayside are discussions around modernizing CP without succumbing to precarity, service reduction, and gradual privatization. In my view, no single proposal is stronger in this regard than Postal Banking.

In simple terms, Postal Banking is the use of CP’s infrastructure to provide a myriad of banking services across the country. This can range from basic chequing and savings accounts to microloans to individuals and small businesses at low interest rates.

The potential benefits of postal banking are far reaching: it can provide good jobs, accessible public services and pose a challenge to predatory loans.

1. Postal Banking will benefit small, isolated, and marginalized communities.

Ultimately, the primary benefit of postal banking is providing services to the hundreds of communities that have a postal outlet but no bank. For these communities, getting routine financial services is difficult. Online banking options have somewhat mitigated these barriers, yet many isolated communities have spotty internet service. Postal banking thus unleashes CP’s vast retail network in the interest of Canadians.

And this doesn’t only apply to far-flung Canadian towns, because while major cities aren’t lacking in banking options, many marginalized Canadians suffer unreliable access to banking for a variety of reasons. For poor and homeless Canadians, a client-centred model of banking will increase access to financial services.

But this goes beyond logistical convenience; it offers a bulwark against the increasingly pervasive market-centred ethos that defines Canadian society.

2. Postal Banking provides services where profit-motivated bodies won’t.

While Postal Banking could be a lucrative addition to an already profitable crown corporation, the objective isn’t profit. In fact, crown corporations are predicated on providing services to Canadians, and will operate in ways that might lose money. This directly applies to the operation of rural banking outlets. Whereas major banks don’t have outlets in many communities, CP banking would use more profitable outlets in major cities to support smaller branches.

In addition, a non-profit model would boast many other services that are not provided by banks or are only available at niche institutions. Perhaps the most important factor is easier access to credit.

3. Postal Banking can offer financial liquidity at fair prices.

One of the chief concerns with traditional lending is that the profit motive makes credit inaccessible, expensive and susceptible to cyclical indebtedness. As comedian John Oliver—among many others—has shown, payday loan businesses charge extremely high interest rates, often targeting people without savings, lines of credit or traditional credit cards. This means that the poor are often saddled with inescapable debt loads.

The reason these people often lack access to reasonably priced financial liquidity is because banks and other lending institutions refuse to provide them services, leaving predatory payday outlets as the only option.

This is where Postal Banking can have a major effect: by offering Canadians short term loans at low interest rates, CP can help people with emergency financial crises, without those people becoming trapped in a debt spiral. There are examples of such programs existing, such as within Italy’s postal banking system.

4. Postal Banking can provide good jobs.

One of the key values of public services is how they can set a strong example for labour conditions. By providing good wages, adequate benefits, unionized environments and reliable employment, they demonstrate how happy workers are productive employees, strong consumers and engaged citizens.

While public service workers may have issues obtaining fair contracts, the reality is that unionized public services are a beacon for what all Canadians should expect at work. But beyond more good jobs for more Canadians, the symbolism of expanding public services will be a poignant feature of our contemporary political context.

5. Postal Banking, at least in part, reverses the neo-liberalization of Canadian society.

Since at least the 1980s, Canadian governments at all jurisdictional levels have made cuts to public services and social programs, arguing that fiscal and economic realities mean that we need to rely on the virtues of the free market. In some cases, public corporations have been sold to investors, while in others, government services have been contracted out to companies. While Canada doesn’t have the private prison system of the US, the trend may well be in that direction.

But while privatization and contracting-out has been sold to voters as good for the economy, they often lower the quality of services while lining the pockets of elites. And while those in the left and labour movements have tried to resist privatization over the past decades, the act has been largely defensive. Simply put, we rarely talk today about creating new crown corporations to provide service to Canadians.

But with Postal Banking, the process can be reversed. Canadians don’t need to rely on capitalists to provide social necessities; Canadians don’t need to accept the erosion of economic democracy; and Canadians don’t need to accept a system of economic organization that provides basic services only when they are profitable.

Ultimately, Postal Banking has practical value in its own right. In the longer term, its greatest value might be how it represents a change in how Canadians view their economy.

This piece was first published by Canadian Dimension 

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