By Ray Birch
ST. PETERSBURG, Fla.—Could a consumer movement as significant as that Bank Transfer Day happen again, but with a twist that isn’t to the advantage of credit unions?
One analyst believes it’s possible, but this time around it won’t be just bank customers exiting for another, more consumer-focused choice–it will be credit union members too.
Bank Transfer Day took place on Nov. 5, 2011 as the culmination of an angry Facebook post by Kristen Christian’s over her treatment by a large bank in which she urged people to move their accounts to credit unions. It received significant national press coverage and helped kick off an unprecedented decade of CU membership growth.
Now, nearly a decade later, a presidential election is approaching and Democratic candidate Joe Biden is among those who have expressed support for the U.S. Postal Services to provide banking services. What all that means, said Brian Scott, is it’s time credit unions step up their focus on the underbanked and unbanked.
The SVP and chief growth officer at PSCU said by getting refocused credit unions can strengthen their image as the financial institution for the underserved, a clear target of a Postal Services banking system, he said.
Scott noted the task force created by Biden, along with former presidential candidate Bernie Sanders (I-VT), issued as part of its recommendations a call for the establishment of a Postal Services banking system, as well as a public credit reporting system, plus a call to use the Federal Reserve for real-time payments.
“It sounded a lot like, ‘We want the government to be in banking’,” said Scott
Key Piece of Agenda
Scott noted Biden remains a proponent of “equitable access to banking.”
“Having the U.S. Post Office get into banking has been talked about for some time, but now we have a presidential candidate talking about this and seemingly making it a key piece of his agenda,” said Scott.
As CUToday.info has reported, both NAFCU and CUNA have expressed opposition to the U.S. Post Office entering into banking. JP Morgan Chase also reportedly had recent discussions about partnering with the USPS on banking services.
What Scott said concerns him is if a Postal Service banking system is established, credit unions may lose their status as the preferred, trusted financial institution for the average American.
“Credit unions are used to competing with banks, and now the fintechs,” said Scott. “But imagine if your local post office became another competitor?”
Big Effect in Small Towns
Such a move, said Scott, could have a dramatic effect on credit unions, especially in small towns.
“I live in a small town, and we have only one financial institution and it’s a credit union,” said Scott. “But we also have a post office. If a postal services banking system is built, they would no longer be the only game in town.
Brian Scott
“I think there’s a great opportunity, right now, for credit unions to really exert their mission and go purposely forward to support the underbanked—really make an effort over the coming weeks, months and year to go after that market so they own it,” continued Scott. “Because I tell you, if they don't, it sounds like the government is trying to head in that direction and they’ll be sorry that they didn't. And if this gets moving, it may not just be the underserved that are moving to the post office for banking, it could be a lot of CU members.”
Scott believes a message of equitable access to banking would be embraced, especially in the current environment.
“It could resonate and lead to a kind of Bank Transfer Day event,” he suggested.
Trade Group Opposition
As CUToday.info reported earlier, in August CUNA and NAFCU joined with seven other financial services trade groups to oppose the inclusion of a proposed amendment in the fiscal year 2021 Financial Services and General Government (FSGG) bill that would create a postal banking pilot program.
"Although we appreciate—and strongly support—efforts to increase financial inclusion across the country, we are deeply concerned that allowing the U.S. Postal Service (USPS) to provide banking services will be beyond the Postal Service’s core competencies, will raise a number of serious regulatory and consumer protection questions, and could leave consumers less protected than they would be at a regulated financial institution," wrote the trade groups.
In the letter sent to House leadership, the groups noted that postal banking would not address the USPS' core financial challenges, and instead could make them worse, pointing to written statements from the Treasury Department and the postal service.
Additionally, the trades urged Congress to address postal reform efforts by enacting legislation that would "reduce costs and increase efficiencies to put the U.S. Postal Service on a sound and sustainable financial path over the long run."