Government Operations Committee on Oct. 31st, 2016

[Darren Hannah]

One-third of Canadians pay nothing at all for their account.

[Erin Weir, NDP, Regina—Lewvan, SK]

They pay nothing at all in terms of monthly fees.

[Darren Hannah]

One-third pay no monthly fees, and the remainder pay between $1 and $15, and anybody through the low-cost account agreement can get an account for $4 a month. Seniors can get—

[Erin Weir, NDP, Regina—Lewvan, SK]

There are other costs in addition to monthly account fees, though, aren't there?

[Darren Hannah]

For your typical client, it really depends on how you conduct your banking and what kind of relationship you have.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, fair enough.

I suppose one of the questions with Canada Post is, what other lines of business could they get into to make better use of their infrastructure? We've heard strongly from this panel that you don't think postal banking is the main option. Are there other lines of business that you think Canada Post should be exploring instead?

[Darren Hannah]

I can only speak of banking, unfortunately, so I don't know the answer to that. I'd certainly encourage the committee to look at that issue because I think that's an important point, and one that in some respects we've made here. This is probably not the best alternative for Canada Post. But I'd certainly encourage the committee to look at what other ways you may be able to leverage that asset.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay.

Mr. Irwin or Mr. Martin, do you have preferred alternatives to Canada Post? It does face this challenge of declining letter mail. On the other hand, it has this great network of assets out there. As a committee we're interested in other innovative and productive things they could do with those assets. We're very seriously interested in postal banking, but if not that, then what?

[Robert Martin]

It's difficult for me to pronounce on how Canada Post should reform itself or evolve, not being as close to that issue, not being close to Canada Post in any institutional way.

That said, I think that if you're facing issues—everything from the pension issues, to declining core services, to labour relations issues, all the things we see rear their head around Canada Post—I have a very difficult time thinking that jumping to a whole new line of business is the way you address those core issues. It just seems like a high-risk strategy. It's one, as I indicated in my remarks, that would have unintended consequences in the market, and even the panel report was indicating that it probably wouldn't succeed.

I think they can't just ignore dealing with those core issues and rationalizing their service offering to Canadians. That's really difficult to do because you have to challenge your employees, and you have to challenge your management structure, but I don't see an easy way around that by finding another magical stream of revenue.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Monsieur Drouin.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I want to thank the witnesses for being here.

We've touched on a few points. It's true that the access landscape has changed over the past, I'd say, 30 years. It has changed for banks. It has changed for gas stations. It has changed for grocery stores. Banks and credit unions are still present in rural communities, but not so much in T-shaped communities, where one street crosses the other, and I think that's where we're getting some heat or some comments from certain constituents. Then again, you ask them where they get their gas, and they say they get it in town. It's just a matter of everybody getting used to changes.

The other point I have is about access to the Internet. That's a problem. I wasn't expecting you to come out in support of postal banking. I think we've heard your positions in the previous testimonies. If there was a role to play—I think what the task force came up with is maybe there could be a potential partnership for....

I think of my grandmother, who needs a place to deposit money and take out money. That's all she needs. If she wants a loan, she will drive to town. She still has about 15 to 20 years to go, hopefully. She will be over 100 by then.

Do you see a role for a potential partnership like that, where all major banks and all major credit unions could be part of that banking system?

[Robert Martin]

I can't speak for the credit unions. We have 290 of them, and they all have their own business models.

I suspect you would find a core group of credit unions that would be interested in this, and it would probably be coming out of some of our larger credit unions that would be interested in a dialogue with government. As I indicated before, possibly Canada Post, though not necessarily Canada Post, defines modalities to deliver.

I know Vancity is one of our credit unions that already has some engagement with Canada Post, so we could build out from there, but I can't speak for the whole system beyond that.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Hannah, do you have comments?

[Darren Hannah]

I have a couple of comments.

I don't want to leave people with the impression, and I don't think the impression should be left, that somehow access is diminishing. I'll give you a personal anecdote.

I grew up just north of Highway 7, If anybody knows where Madoc is, about 15 or 20 minutes north in a small town of I think 50 to 75 people. Of course, there was never a bank branch there, nor could there be. In fact, at only varying times was there even a store there.

If you grew up in Madoc, there was always an expectation that if you were going to do any kind of banking, then you went into Madoc and went to the TD Bank branch, which is still there. When I was a kid, that meant you went there, and it was open from nine until three and part of the day on Saturday. You had to transact in person. There was no ABM. You had a certain number of hours to do a certain number of transactions, and that was that.

My parents still live there, and they can bank online. They can go into the branch that has extended hours, and there's an ABM if the branch isn't open.

Has access improved for them or diminished? I dare say for them it has improved. I don't want to leave the impression that somehow all Canadians in rural Canada have experienced diminishing access from changes in the environment, because I know that's not true.

There are circumstances, as you're saying, where change has happened. Do we all try to find ways around that? Yes, we try to find ways of addressing it, but I don't want to leave anyone with the impression that there aren't circumstances on the other side of this as well.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I agree with you. It's maybe transportation, where it used to take you five minutes to access a bank or a credit union, and now it takes you 10 to 20 minutes. I agree that banking has changed over the last 20 years so much. I remember a bank being a nine to five operation. Today they meet consumer demand.

I completely agree with you about that, but just the travelling time for some rural communities has changed, and that's where we're getting some heat.

[Darren Hannah]

I get that, and I understand that. I felt the need to make that point.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay.

You touched on an important point previously and it's with regard to when people do step into a bank for more complicated transactions, such as for a loan or if they want to buy mutual funds, and whatnot.

It's one thing I did ask the union a few months ago with regard to training. How much training goes into each person to require that? I know from personal experience, because I almost went into banking at one point. I was all trained, and I was almost ready to pass my licences, but then I found out I had to spend about 2,000 to 3,000 hours of being a bank teller, for instance. I had already gone toward my political career, so I didn't want to do that.

That would require all Canada Post employees, if we were to go into more complicated transactions, to do that rigorous training. Does it vary from province to province?

[Darren Hannah]

It depends on the product you're selling. In some cases it's national. In some cases it's provincial. It's substantial in all cases, I can tell you that first-hand. My wife works in the financial planning business and to see what she goes through from a training perspective between the Canadian securities course and the wealth management essentials course, and the practice standards course, and the number of hours one goes through both to obtain licensing and then to be able to maintain it because there's a continuing education requirement is enormous. It's no small undertaking on the individuals or their spouses.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I'm not sure if you're able to answer this question, but when banks and/or credit unions look at opening a branch and some of the economics they look at, return on investment, how fast do they want that return on investment? Do they say they're going to be profitable in five or 10 years? Is that confidential, or can you share that in terms of how long it takes a branch generally to be economically viable?

[Darren Hannah]

I don't know the answer to that question. It probably depends on an institution by institution basis. A number of metrics go into that decision. I don't know that there is one answer.

[Robert Martin]

I don't necessarily have an answer. I have the same issue that Darren has. I know that credit unions tend to be able to survive in lower profitability areas. Just because we're owned by our members there may not be the pressures, though of course we have to earn a profit, and every branch has to pay its way, but maybe not as much as a bank branch.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

How much time do I have , Mr. Chair?

[The Chair, Conservative, Tom Lukiwski]

You have no time left.

Mr. McCauley, you're up for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Hannah, I want to thank you for bringing that up. I recall a time when banks were open 9:30 to 3:30, and if you were lucky, they were open until 4:30 on Thursday. Now where I live, five or six banks within a five-minute walk are open on Sunday, and ATMs are everywhere.

I was referring to the village of Chipman where the mayor had offered free space to a bank to keep open even one day a week, and the bank said that wasn't financially viable, but the bank ended up offering a full-service ATM, one where they take deposits as well as cough up...and then change came up. A private vendor would do a change machine as well, and someone else, but not Brinks, would do armoured car for pickup.

Do you see banks being open to that kind of thing for the smaller communities, or do you push it off on one of the ATM specialists?

[Darren Hannah]

Banks want to serve their clients. Ultimately these are customers, and they want to find a way to service them. Can they put ATMs in those locations? They probably can. It depends on the individual circumstance. Certainly to collect deposits it has to be an ATM of the bank. A white-label one only provides cash; it doesn't accept deposits. One thing that does help a lot is remote deposit capture where now I can deposit a cheque remotely.

From the bank's point of view, these are ultimately customers and they're customers they want to retain and they want to find a way of making this relationship work commercially and feasibly for both the client and the bank.