Bank loan

Postal banking takes a step forward in Canada with TD Bank loan program

The news: TD Bank has launched a new program that will Canadian post office users to obtain a small loan of up to $30,000.

Canada Post gets an upgrade: The MyMoney program is launched after a success pilot which started last year. It currently operates in 6,000 post offices across the country.

  • Borrowers can access loans for amounts between $1,000 and $30,000.
  • TD Bank is responsible for setting interest rates. Citizens do not need to have a bank account or prior credit to apply for a loan.
  • Applications are submitted online or by phone, and a TD Bank representative is available to assist you with the application process.
  • Throughout the pilot project, citizens took out loans for reasons ranging from emergency coverage to loan consolidation.

The program aims to bring credit services to rural, remote and indigenous communities, and TD Bank and the Post Office hope to expand the program to offer other financial products in the near future.

Canada Post already offers products and services such as international remittances, money orders and prepaid gift cards which together account for five million transactions worth $2 billion per year.

Financial exclusion in Canada: Postal banking existed in Canada until 1968, when folded program due to intense lobbying by the banking industry. But talk about bring back the postal bank stirred.

  • According to Prosper Canada, 3% of the Canadian population is unbanked, meaning they don’t have a checking or savings account. 15%, or five million Canadians, are considered underbanked.
  • One of the main obstacles to obtaining the necessary financial products is weak or bad credit. Only 16% of lenders have a system in place to provide loans to customers with poor credit. And a third of these lenders admit that customers with bad credit will not receive any service.
  • As a result of these exclusionary behaviors, nine million Canadians are considered unserved or underserved creditby TransUnion.
  • Additionally, Canada is home to more than 700 Indigenous communities. But only 66 bank branches serve these communities, which means that 90% of them do not have access to a local bank.

Postal bank in the world: Postal banking existed in the United States from 1911 to 1967, but the program ended due to lack of use. American consumers have preferred to do their banking in the private sector. But successful postal banking systems exist across much of Europe, with the UK system developing rapidly.

  • The cost of living crisis in the UK has caused people to turn to cash for help with budgeting and current expenditure management. But the sheer number of bank branch closures in recent years has made it harder for citizens to access cash. As a result, many people turn to Swiss Post for cash withdrawals.
  • The British Post has also partnered with Western Union in May to extend in person remittances.