TD Bank launched a product Wednesday in partnership with Canada’s postal service, aiming to give rural, remote and Indigenous Canadians access to personal loans as small as $1,000.
"Financial service is an essential service, and this alliance enables TD to play a meaningful role in helping to expand access to banking to more Canadians," said Michael Rhodes, TD’s head of Canadian personal banking.
The launch comes after TD and Canada Post conducted a three-month market test, which saw consumer demand exceed expectations, Michael Yee, vice president of financial services at Canada Post, told American Banker.
The U.S. Postal Service rolled out a pilot program last September allowing post office locations in Washington, D.C.; Baltimore; Falls Church, Virginia; and the Bronx to offer expanded financial services such as check cashing, bill pay and ATM access, as well as upgraded money orders and wire transfers.
Under the pilot, customers could bring payroll or business checks up to $500 to participating post offices to buy single-use Visa gift cards.
The program, however, spurred arguably dismal interest. A regulatory filing seen by American Banker showed the pilot generated $35.70 in fees for the Postal Service from six customers over five months.
Trade groups including the Consumer Bankers Association (CBA) railed against the pilot last fall, saying the financially struggling agency is not equipped to provide such a service.
“Policymakers should be focused on encouraging banks to innovate and build on longstanding efforts to increase financial inclusion, not deferring to a federal agency without the capacity to safely provide millions of American families the reliable products and services they have come to expect from their bank,” Bill Rielly, a spokesperson for the CBA, said in October 2021.
For that matter, some trade group representatives have said, efforts to offer checking accounts through the Federal Reserve also won’t solve for banking access issues.
Individual banks in the U.S. such as Wells Fargo have launched efforts aimed at giving unbanked people — especially Black, Brown and Indigenous communities — more access to affordable mainstream accounts.
In the Canada program, post office employees are trained to direct customers on how to apply for the TD small-dollar loans online or by phone.
Flexible repayments can be spread over one- to seven-year terms and can be made weekly, bi-weekly, monthly or semi-monthly. Customers are not charged unless they miss a payment and are eligible to pay down the loan amount any time without additional fee, the bank said.
"We're focused on meeting the changing needs and expectations of Canadians and believe expanding our financial service business will help us to further connect and strengthen the country,” Doug Ettinger, Canada Post’s CEO, said in a release Wednesday.