Evidence of meeting #53 for Government Operations and Estimates in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was post.
A video is available from Parliament.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Mr. Hannah, my question is for you once again.
You are certainly aware that Canada Post once had a banking service system. This was before 1968. You undoubtedly know how this system functioned. Could you talk to us about it briefly? Did it offer the same type of banking services as a traditional bank?
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I can't speak to what Canada Post looked like in 1968. That would have been before I was born. However, I can also say with a lot of certainty that the way a banking interaction would have worked in 1968 and what you would have experienced when you went into a bank branch would look very little like what you have today.
The way Canadians bank has changed so profoundly. I think this ties in with my earlier point, that what a transaction would look like in a branch today and the type of transaction you would do there on an in-person basis would be very different from what it would have looked like at that time.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Yes, but history books exist. That is why I was asking you.
How did the banking sector do at the time, since Canada Post was an additional competitor? That is what I would like to know. What was the competition exactly? Did the Canada Post Corporation function well in that environment? Did it suspend its banking services because they were not profitable, perhaps? That was what I was trying to get at with my question.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I want to answer your question, but I want to address a point in there that I think is implicit but needs to be understood. The way you framed it, it's as though banks as a group compete with credit unions as a group, which compete with caisses populaires as a group, which compete with crown financials as a group. It doesn't work that way. Each individual institution competes with each other institution.
What did the world look like in 1968? Well, there would have been banks that wouldn't have necessarily been exactly the same ones as you see now, competing with credit unions that wouldn't have necessarily been exactly the same ones as you see now, competing with government agencies that wouldn't have been exactly the same ones as you see now. So how Canada Post's operation would have fit into that is hard to say because the environment has evolved broadly.
Conservative
Conservative
Kelly McCauley Conservative Edmonton West, AB
Great. We don't have much time.
Gentlemen, witnesses who have appeared before us who are proponents of postal banking, when asked about the difficulties of how they are going to repossess granny's house if the loans aren't paid—I guess Revenue Canada would come after them—but when confronted with the difficulties of everything with banking, their fallback was that they'll make a lot of money doing cheque cashing.
Mr. Irwin, we've heard that even companies with the same infrastructure and expertise as Money Mart have very, very slim margins. Do you think Canada Post could make money by offering their banking services in the relatively small rural areas that aren't served by banks?
President, Canadian Consumer Finance Association
The short answer is I don't know whether they could or they couldn't. I think it's important, though, to note that—
Conservative
President, Canadian Consumer Finance Association
I will beg your forgiveness not to answer that.
President, Canadian Consumer Finance Association
I guess so. I mean, I think it's important to note that—
October 31st, 2016 / 3:40 p.m.
Conservative
President, Canadian Consumer Finance Association
Right. Perhaps in some remote areas that don't have services today, maybe it would be. But from our perspective, in terms of what our industry does, it is complicated. There are a lot of moving parts to it—technology, collections—as you've spoken about, not to mention risk and other things. I think all areas would have to be really considered.
Conservative
Liberal
Alexandra Mendes Liberal Brossard—Saint-Lambert, QC
Thank you very much, Mr. Chair.
Thank you very much to all of you.
I am very happy to be here with you today.
We organized consultations in our ridings on Canada Post services. I represent a suburban riding, the riding of Brossard—St-Lambert, close to Montreal. We aren't exactly in the wilderness. Forty minutes from my riding there is a well-known ski resort, in Bromont. Right next to it, there is no access to either the Internet or a cell phone network. And I repeat: this is 40 minutes from Montreal. There are all sorts of constraints that prevent citizens from having access to the Internet.
That is why we need to consider whether Canada Post could offer banking services. Several regions in this country that are not so remote do not have broadband access. People thus cannot do their banking transactions online, as many other Canadians can. I am myself a big consumer of Internet products. I love doing all my transactions online. I have no problem with that.
Some credit unions in Quebec are closing. Many of them are in remote areas and citizens can no longer cash cheques. Making a remote deposit with an image capture won't work if you don't have Internet. How do you do that? If you can't go to a bank machine or a credit union to deposit a cheque, what do you do? These are some of the constraints linked to the geography of our country and the challenges it poses.
I have not heard the banks talk about participating in the implementation of a broadband network in our country. That could be one national initiative to further develop access for everyone. I think those are options that could be looked at if we are to solve the accessibility problem for people who live outside large urban centres.
I would like to hear your thoughts on accessibility.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
Again, I'll start by saying that 99% of Canadians have an account, so access to—
Liberal
Alexandra Mendes Liberal Brossard—Saint-Lambert, QC
But that's not the question. It's not about having the account.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I understand that, and I'm getting to the answer.
There's a couple of points in here that need to be brought out because I think they're important.
First , I'll start with one disclaimer. We don't represent the caisses populaires. That's a different group. Setting that aside, a number of issues were raised there, and I want to pull them apart.
In terms of things like cashing cheques, the biggest and best solution from our perspective is making sure that people, to the extent they can, sign up for direct deposit of anything. If they do that, they get funds put directly into their account. They don't pay a fee. They don't—
Liberal
Alexandra Mendes Liberal Brossard—Saint-Lambert, QC
I agree, but that isn't always possible. A farmer who is getting paid for selling his feed or his stock, whatever, he cannot necessarily get that directly deposited into his account. How does he or she solve that?
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
Then, having looked at that, I come back to the fact that at the end of the day, while banks have a large footprint across the country, every branch still has to be financially viable. Are there instances where a community cannot be served by a full service branch? Absolutely. This happens. Where that happens, do banks try to find alternatives to the extent that they can? Yes, but alternatives don't always present themselves.
Certainly, when a branch closes, there is a well laid out process that a bank has to go through. There's a notice requirement with a certain amount of time involved, depending on proximity to another branch. There's a consultation requirement, whereby the institution has a consultation with the community. There's a discussion involved about what the bank might be able to do in the alternative, but can every community be served by an in-person presence? There will be instances where it can't happen, so the alternative—
Liberal
Alexandra Mendes Liberal Brossard—Saint-Lambert, QC
On the second part of the question about banks maybe thinking of eventually partnering with government for the broadband investments that are needed in this country, would that be something you would consider?
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I can't speak about partnering with government, but I will say generally that I think the point is well taken. I'll quote Wayne Gretzky, since it's always a good thing for a Canadian to quote Wayne Gretzky—
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
—and say to skate where the puck is going, not where it is.
If people are moving to it and have expressed a desire to interact and transact online, and if the limiting factor is in some cases that online isn't available, then, from a public policy perspective, it's certainly something that I'd encourage the government to look at.
