TD Bank to offer new personal loan product at Canada Post outlets in rural and remote communities

Article content

Toronto-Dominion Bank plans to offer a new loan through Canada Post offices in underserved rural, remote and Indigenous communities as the COVID-19 pandemic forces customers online, widening the gap for those without access to brick-and-mortar branches.

Article content

The personal loan pilot project, which launches this fall, will focus on remote communities, which typically have poor access to physical branch locations and lack internet services to connect with digital banking tools.

When a customer visits a Canada Post location, postal employees would help them apply online or over the phone. TD’s new loan product — which is intended to help customers with simple personal lending needs, including emergency home or car repairs — will be offered in smaller amounts, starting at $1,000.

Many remote, rural and Indigenous communities across Canada face long commute times to reach the nearest bank branch, and some are left without access to lenders entirely — making it difficult to secure products like loans and mortgages that typically require customers to visit a branch in person. More than 1,200 rural communities in Canada have post offices but no banks or credit unions, and only 54 of 615 Indigenous communities have access to local bank branches, according to Canadian Union of Postal Workers.

Article content

The pandemic has accelerated the transition to digital banking as branch closures and restrictions redirected customers to accessing financial services online — prompting speculation on whether the big banks will close brick-and-mortar locations.

While the Big Six banks have been quiet on whether branches will be shuttered in Canada after the pandemic unwinds, closures have already happened south of the border. TD shut 82 branches in the United States in February to reallocate resources to digital banking alternatives, and all of Canada’s largest lenders temporarily closed certain branches during the pandemic due to restrictions.

Article content

Even before COVID-19 devastated global economies and incentivized customers to adopt digital banking tools, branch closures had accelerated. Canada’s lenders operated 5,820 branches in 2019, 483 fewer than in 2015.

Rural and remote towns and communities have in many cases been left with few banking options, according to Xan Moffatt-Toews, president of the Canadian Postmasters and Assistants Association’s Alberta, Northwest Territories and Nunavut branch.

“In rural areas, the big banks like TD or RBC set up satellite locations in little towns — like setting up little huts to do simple transactions,” Moffatt-Toews said in an interview. “Those satellites have largely closed.”

In many cases, these communities are not connected with reliable broadband and internet services, making even digital banking or financial technology startups — or “fintechs” — a flawed solution.

Article content

“Internet and broadband issues are a big part of the problem,” said Moffatt-Toews, adding that even “Canada Post still has lots of manual offices that do no have connectivity, so they still use old cash registers and figuring everything out with pen and paper.”

TD declined a request for comment.

Canada Post has been searching for ways to boost its balance sheet. The beleaguered Crown Corporation’s losses increase fivefold in 2020 compared to the previous year, as the pandemic put pressure on operating costs and rising courier competition dampened the increase in parcel deliveries.

The concept of postal banking services has existed for decades. Canada Post offered banking services up until 1968. Earlier this year, the Canadian Union of Postal Workers launched a campaign, advocating for Canada Post to provide financial services in its locations. Other countries also offer banking services through post offices, including New Zealand, France, Germany, Italy and Brazil.

Canada Post employees currently handle limited financial service transactions, including sending money through prepaid reloadable cards, gift cards, digital vouchers and remittance payments.

“TD is the first bank that Canada Post has partnered with on a loan product,” Canada Post spokesperson Phil Legault said in an email. “However, we have partnered with other financial organizations to offer services such as MoneyGram, and we have partnered with a major Canadian bank to offer our customers access to order foreign currencies.”