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.
4:15 p.m.
Conservative
4:15 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Thank you, Mr. Chair.
I will continue with my questions.
Mr. Hannah, as you were saying, there are already foreign banks in Canada that do good business.
In your opinion, how long would it take Canada Post to get into the Canadian banking market and comply with all of the rules and regulations of the banking system?
4:20 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
First off, I'd say that the question is best addressed to OSFI.
If you haven't spoken to them already, it's probably a good idea. They can explain the process involved in getting a banking licence. It's a multi-year process. You have to satisfy the regulator that you are sufficiently well capitalized, that you have put in place a management team and an operation that is able to be sustainable, that you have a business plan that looks like it will work, that you've put in place the appropriate risk management controls and the appropriate information security controls both to address your financial risk and also your operational risk. I want to point out the latter one and draw attention to that, because it's important. These days, given cybersecurity issues, technology risk is a big issue, and technology and information security is a big issue.
If Canada Post were to go into this space in a meaningful way, they would have to look very hard at what they need to do to secure customer information.
4:20 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Precisely, Mr. Hannah, and this leads me to my next question.
What physical changes would Canada Post have to make to its post offices, both in rural and urban areas, to convert them into banking facilities?
You make me think of the fact that this would surely require huge investments, because the current premises would have to be transformed. We are talking about a physical transformation. They would need a vault, and so on. I want to go back to the issue of banks' liquidities. It takes room to store money. It would be quite a job.
4:20 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
Yes, it would have to be reconfigured. You would have to reconfigure it both from a security point of view, as you've discussed, but also from a customer point of view as well, to recognize what an interaction would look like.
To try to do that over top of or in conjunction with maintaining the postal business would be no small undertaking.
4:20 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
You were also saying that we should not be mistaken: of course the banks like their clientele in the rural regions, and their objective is to have a good relationship with their clients and to meet the demand.
Has the banking sector ever considered sending representatives to people's homes, for example? Recently, a mortgage specialist came to my home. Does that exist for regular services?
4:20 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
Depending upon the product and the service, there are mobile banking representatives. You talked about it in mortgages, absolutely. We see it in small business and agriculture all the time. It really depends on the client relationship and on the product, but in selective areas and in selective products, that does happen.
4:20 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Very well.
My next question is addressed to Mr. Martin.
As you were saying, we are discussing a postal banking service for the purpose of resolving Canada Post's financial difficulties, that is to say the deficit projected by 2026. In your opinion, that is not necessarily the solution. So it may be somewhat awkward to talk about a postal banking service.
I would like to hear you on the 10 other suggestions that were made over the past few weeks, or months, regarding additional services Canada Post could offer. I am thinking of passports, for instance, or issuing driver's licences—even though this is a matter of provincial responsibility—and of assistance to the elderly. These are services that are provided in Switzerland, France, and elsewhere.
What do you have to say about that?
4:20 p.m.
Senior Policy Advisor, Canadian Credit Union Association
I think the key thing is whether these services align well with the skill set, with the labour complement they have, and with the technologies they have in place.
I think we've said that making the jump into financial services is going to require large investments. There's going to be training, security issues. There's going to have to be some change in labour management relations.
However, I can see moving into other areas, maybe like the passport office and these sorts of things, as being more in alignment with the service delivery model that Canada Post has. I couldn't go farther than that. It seems to make more sense.
4:20 p.m.
Conservative
The Chair Conservative Tom Lukiwski
Thank you very much.
Mr. Hannah, for your benefit, you said that perhaps it would be best that we talk to OSFI about a particular issue. They were invited to appear before this committee and they declined.
4:25 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
Oh, okay.
4:25 p.m.
Conservative
The Chair Conservative Tom Lukiwski
This will be the last round.
Mr. Weir will be after you and that will be it.
4:25 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
Okay, thank you very much.
Thank you all again for coming. As I mentioned before, we have had a number of representations across the country regarding the possibilities of postal banking. We were looking forward to an opportunity to test some of those assumptions and some of what we heard against people in the banking industry.
The banking industry has faced the same style of pressures that Canada Post has faced in terms of digitization and the pressures it places on industries with a large physical footprint.
Mr. Hannah and Mr. Martin, could you talk a bit about how your organizations have restructured their efforts and dealt with having such large real estate assets, whether or not to leverage them, whether or not to dispose of them, and how that has evolved over the course of the past decade?
4:25 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I'll start, Rob, and then you can join in.
As I mentioned, what happens in a bank branch now looks a lot different from what it would have 20 or 30 years ago. What have banks done? In many cases they've reconfigured the branch to recognize that you're getting less traffic necessarily going to the front desk, and adding more kiosks so they can provide one-on-one financial advice. In some cases the footprint of the branch is changed and made more compact to reflect traffic. The branch is still there, it's just smaller than it was.
There has been more integration of the front-line electronics, so you have the option to go in there and use the ATM right in front of you in order to deal with those one-off, relatively straightforward transactions. What they've done is they have tried to align the footprint with where it provides value for customers, recognizing that a lot of the transactional relationships are being done through electronic mechanisms.
4:25 p.m.
Senior Policy Advisor, Canadian Credit Union Association
I can't add much more to that, but the other thing we've done is we've tried to extend our ATM network. We are part of what's called the Exchange network, which includes credit unions and some banks that have committed to a surcharge-free exchange network. You can actually go and make deposits and do some beyond basic transactions at ATMs. That is at 4,200 ATMs in the country.
I'm a credit union member, of course, but I can deposit at National Bank and I can take out money at National Bank, too.
4:25 p.m.
Liberal
Nick Whalen Liberal St. John's East, NL
One of the things we've seen in the face of the rural moratorium on closing rural post offices across the country is that the time during which certain rural post offices are open has severely contracted from 40 hours a week down to 25 hours a week, down to 13 or 15 hours a week in some places. Is that something the banks have explored, or does it reach a point at which with minimal hours of operation it's just as well to close the operation's location?
What other types of factors do you consider, maybe the possibility of a temporary or a roving site, as some of the credit unions have talked about?
4:25 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
I'll start by saying that in general, if you actually look at the trend toward branch hours, it has been to lengthen them rather than to contract them to try to reflect when people are actually able and want to do banking.
Are adjustments made on a case by case basis? Sure, it can happen, but in general it's ultimately all driven by viability. Is this branch viable? Is there a way I can repurpose it or reframe it to make it viable? If there isn't, what's my alternative and what can I do to try to maintain some degree of service to people in the community while recognizing that the branch, as it exists, simply isn't economically sustainable anymore?
October 31st, 2016 / 4:25 p.m.
Senior Policy Advisor, Canadian Credit Union Association
Yes, and some of our credit unions, usually in very remote areas, have moved to some shorter-hour models to make them viable.
Of course, these decisions have to be made at the credit union level. It has to do with their business model and what's going on in their other branches.
Also, whenever we move to look at a branch and its viability, there is eventually going to be a membership meeting to talk about it. We always have to keep in mind, too, that it's what our members want in the end.
4:25 p.m.
Conservative
4:25 p.m.
NDP
Erin Weir NDP Regina—Lewvan, SK
Thanks a lot. It has been great having this panel with you, although I feel we must be nearing the end because members from all parties are starting to spitball about different options and asking you to respond to those.
In that same spirit, one of the reasons that letter mail volumes might be declining even a bit faster is that some companies are charging customers extra to receive bills or statements by mail. I wonder if your members are doing that and if you have any thoughts on that topic.
4:30 p.m.
Vice-President, Finance, Risk and Prudential Policy, Canadian Bankers Association
In the case of banking, it depends on the package you buy. As part of the low-cost account that banks have agreed to for $4 a month, you can get a low-cost account that has a number of transactions and includes also free mailed statements.
Are there other options where you pay for a statement by mail but get it electronically? Yes, those options are available as well. Typically they come with another package of services.
Really, you can purchase the package that suits your needs, and if paper statements are part of what you want, you can get that.
4:30 p.m.
President, Canadian Consumer Finance Association
Our members don't mail statements.
4:30 p.m.
NDP
Erin Weir NDP Regina—Lewvan, SK
Fair enough.
Another thing that's come up in the discussion is the fact that there are other federal entities in the financial sector. We had a bit of a discussion about Farm Credit Canada. CMHC obviously plays a big role in the mortgage business. What do you think about the possibility of Canada Post serving as a network of retail outlets to provide some of those financial services that already exist? For example, if people could connect with Farm Credit Canada through the post office, might that make sense, or if post offices were places where people could buy government bonds on a retail basis?
I don't expect you're going to be super enthusiastic about that idea, but I thought I'd bounce it off you.