Postal Banking – New Life for an Old Idea
Postal banking – say what?
Last year, I read about an effort to bring basic banking services back to US post offices. There have been efforts in Canada in the last few years to re-introduce postal banking here as well.
Postal banking is not a new idea. According to Wikipedia, the Brits introduced the first postal bank in 1861. That article listed postal banks in 31 countries around the world. While some of those services are not running anymore, many are still serving their communities.
For instance, postal banking was introduced in Canada in 1868 and then dissolved in 1968-69.
Bringing postal banking back in the US
While introducing the Postal Banking Bill last fall, Senator Gillibrand cited the problem of banking deserts across the United States. She described the impact the lack of basic banking opportunities has on almost 10 million American families, especially as stimulus cheques and child support payments begin rolling out.
In many neighbourhoods and communities in the United States, there are no banking options available. Instead, residents have to go to a cheque cashing operation charging usurious rates just to cash a cheque. These fees roll over into the income tax applications that could provide additional support, costing the taxpayer as much as 25% of their refund.
At the same time, the US Postal Service is running into financial difficulties. Regular mail is being replaced by email, and FedEx and Amazon handle more package deliveries. A return to postal banking offers the beleaguered postal service an additional source of revenue while providing vital service to the community.
Postal banking is an issue in Canada too.
And none of this is new to Canada either. The Harper government tried to cut back services offered by Canada Post, citing cost overruns and inefficiencies. In the end, very little changed.
But in 2016, the Canadian Union of Postal Workers (CUPW) and the Canadian Postmasters and Assistants Association (CPAA) started a campaign to bring postal banking back in Canada. Many of the reasons for restarting postal banking in Canada mirror the ones described in the United States.
Good economic and social policy serves people – not faceless financial institutions. While banks may not benefit from maintaining branches in marginal neighbourhoods, it does not mean that people in those neighbourhoods don’t need banking services.
Providing postal banking provides basic banking services in settings and communities where full-service bank branches don’t make sense.
Like banking, everyone deserves good internet access – even in the country
These are the same concerns that drive the need for a national broadband internet strategy – being slowly adopted here in Canada and proposed through the current infrastructure bill in the United States. Everyone deserves fair and equal access to public resources and services. Heck, that was the argument for rural electrification under Franklin Roosevelt in the 1930s.
As society becomes more global (as witnessed by the rapid expansion of COVID-19 and each successive variant), it becomes increasingly local. Work from home means being at home. Being at home means being in your neighbourhood, talking to your neighbours and using local resources. Postal banking, both in Canada and the United States, is a great way to promote the social community cohesion we are all looking for these days.
Postal banking played a vital role in societies in the past and has the opportunity of playing a vital role in today’s society.
It’s time to make an old idea new again.