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Small communities need better access to financial services

After a year of delivering financial literacy workshops, some in small communities, I’ve really become aware of the lack of access to financial services in much of the NWT.

Without a bank in your community it’s difficult to impossible, for example, to set up a Registered Education Savings Plan to save for your child’s education.  Without a bank, you end up paying higher fees for cheque cashing services at a local business and to access cash.  Or, like many people in the NWT, you may not have a bank account at all. Sadly, it is often the people who can least afford it that pay higher fees and can’t afford regular trips to larger centres to do their banking.

Today, access to financial services is more important than ever. Many government payments involve direct deposits -- everything from pay cheques, to social assistance, to pension payments and GST rebates.

When it comes to Registered Education Savings Plans, or RESPs, most banks insist that people open them in person.  That is a huge barrier for low-income families to access the Canada Learning Bond, which is up to $2,000 of free money for their child’s further education.  Currently in the NWT, only 8% of families that are eligible access this money.

The recent talk of changes to Canada Post focuses largely on increased fees and stopping home mail delivery.  However, as part of the discussion, I was interested to hear the suggestion that Canada Post should start to provide financial services. This could really help people in small communities without banks, especially remote First Nations, Metis and Inuit communities where people can’t just get into a vehicle and drive to a bank in a nearby centre. 

In fact, post offices provide this kind of service in Japan, Australia, New Zealand and several European countries.  In the United Kingdom, post office closures hit the poor and elderly the hardest because these are the people who depended most on them.  The idea of post office financial services has been around for a while in Canada too, judging by a background paper on the pros and cons of a postal bank that appears on the Parliament of Canada website. In a National Post article in December, one Canadian journalist linked Canada’s high bank fees, at least in part, to the lack of competition from post offices. 

If not postal banks, how can we help people in small NWT communities without banks access financial services?  How can we make sure that those who can least afford it are not paying the highest fees for financial services?
 
I welcome your thoughts on this.

-- Katie Randall

Comments

Hi Katie. I think low-income people in the NWT don't so much need more "financial literacy" as better services. It's like offering people lessons in nutritious and economical meal planning, when they have no access to supermarkets. You can add the lack of local financial services to the continuing lack of broadband internet and cell phone services in many small NWT communities. Hopefully, broadband will improve soon, allowing more people in small communities to access financial services remotely. I suspect that, as in third world countries, the cell phone will become the main way low income people do their banking in the future. The RESP issue is a typical case of federal officials in the south with no understanding of or consideration for rural and northern realities. "What, there are no banks??" There were similar problems when the feds decided to require people to appear in person at a Service Canada office for passport applications: there aren't any SC offices outside regional centers. The Parliamentary Library research paper on post offices is very interesting - thanks for posting the link. Unfortunately, it's clear that adding financial services to Canada Post would be a complex and controversial move. Final comment: having a low income doesn't mean you're stupid or ignorant. For an interesting urban example in your field, see http://www.theatlanticcities.com/jobs-and-economy/2013/09/why-poor-choos...

 We agree that access to services is as important as knowledge and understanding about financial literacy.  And, there are lots of barriers to acting on financial knowledge.  Certainly low income doesn't mean being stupid.  Interesting thought that mobile banking may be the way lower income people in small communities gain access to financial services.  Thanks for the link to that interesting article

In response to the announced move to mandatory direct deposit of Income Security and Old Age Security/Pension payments, The Community Government of Whatì has invited BMO to send a representative to help people open accounts without leaving the community. BMO has scheduled the visit to Whati for Feb 19, 2014. I believe they will also be bringing bank cards to issue while they are here.

It remains to be seen whether this is successful enough that we can expect follow-up visits to assist with other types of accounts customers may want to add.

At first look, it appears one can open accounts online. On closer examination though, there are many barriers. Things may have changed, but at the time I researched it a few years ago, one was not able to open an account online if one had never had a bank account before. At that time BMO had a account manager in Yellowknife who worked with me to open accounts by phone and fax contact with clients in Whati. Once that manager moved on, we were no longer able to open accounts this way. I applaud BMO for being willing to move toward accommodating the needs of our remote community.

 It appears that most banks still need you to sign up for a bank account in person. We'll let you know if we hear different.  Maybe more communities can get BMO to visit them too!

I am particularly concerned that in my community there is no free access to filing taxes for people who are below a certain income bracket. In other places I have been.. small communities in other territories, rural centres down south in a variety of provinces.. there has always been someone supporting services to come in for a couple of days for low income residents. I am shocked that people on SA have to pay money to H&R block who conveniently set up shop in town and process people over the counter. I cannot believe there is not some way to support this kind of service, but I am new to the Territory and really do not have a good handle on what options there might be... welcoming a brainstorm here..

Sandra, this seems very unfair to us too!  The CRA used to train volunteers in Yellowknife but I don't think they do that any longer, and we don't know of anyone in other communities. The Tree of Peace and some other helping agencies here help low income people and seniors with their returns.  It would be great if there were volunteers in every community to do that.  Perhaps training and supporting volunteers to do tax returns could be a proposal for a project under the anti-poverty action plan. 

I see that First Nations bank is opening in Yellowknife & a small NWT community. I am interested in how they are thinking of being better able to serve the customers they hope to support.

We'll be interested in seeing how this bank serves people in
small communities too, especially those on lower incomes.

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