How USPS 'CPOs' Could Serve Banking Deserts

By Helen Mickel

Postal banking is not the answer to providing needed financial services in underserved and unserved areas, or “banking deserts.” But through the Community Post Office (CPO) or Contract Postal Unit (CPU) programs they already have in place, the USPS can be a collaborative partner with credit unions to provide postal services and financial wellness for all. 

The Campaign for Postal Banking states that “Postal Banking is simply the provision of low-cost, consumer-driven financial services.” They go on to say, “products and services could range from check cashing to bill payment to savings accounts to small-dollar loans.”  Credit unions are already providing these low-cost services, plus so much more, and many credit unions would partner with the USPS to provide these services. 

Postal banking is too limiting. Providing minimal services does not lift people from poverty or build economic stability.  Providing the very basics of services is not foundational to the economic empowerment and growth of the individual, local small businesses, or the community. 

Traditional Financial Institutions Matter for Long-Term Financial Inclusion

A white paper titled “Growing Up Without Finance” emphasizes the importance of traditional financial services in a local community. The authors note “Early-life exposure to local financial institutions increases household financial inclusion and leads to long-term improvements in consumer credit outcomes,” and go on to say, “Our work not only speaks to the long-term benefits of financial inclusion, but also suggests that traditional banking institutions matter through an underappreciated channel – early-life exposure to financial markets, which enhances financial literacy and trust in financial institutions.” 

Credit unions are committed to financial wellness for all, and economic inclusion. No postal service can bring the breadth and depth of financial services and education that is already provided by credit unions. 

A Credit Union Example

Credit unions such as Tongass Federal Credit Union (TFCU) are experienced in providing financial education and services in banking deserts. TFCU sees an important opportunity to partner with the USPS to strengthen local communities, provide living wage jobs with benefits, and offer the full suite of services needed for a community to grow and thrive. 

In 2006 representatives of the Thorne Bay Business Association asked TFCU to consider opening a branch in Thorne Bay, Alaska. Thorne Bay is a former logging camp with approximately 500 residents. They said part of their long-term strategic plan for the community was to have local financial services. TFCU worked with the community and opened a small, part-time site inside the local sporting goods store, which was in the basement of the owner’s home. Cash was kept in the gun safe. Thorne Bay had financial services for the first time in their history. 

Since that time TFCU has moved to the City of Thorne Bay office building with a small two teller office. Services are available three days a week for four hours per day. TFCU now provides part-time services with local ATMs in a total of four small southeast Alaska villages. Three are primarily Alaska Native communities. TFCU calls these “branches” Community Microsites. Each of these sites was opened in partnership with a local community organization (one with a local school district, the other two with local Alaska Native organizations), and each site is located within that organization’s building, rent free. 

Microsite, Macro-Services

With support from the main office these tiny microsites can provide a wide variety of services in the local community, including consumer loans, mortgage loans, and business loans and services. Members have access to modern technology with online and mobile banking including remote deposit capture and bill pay. Shared branching is available at over 5,000 credit union branches nationwide. These community microsites offer all these services and are supported by a federally regulated and insured credit union, with all the benefits that goes along with that.  Benefits that include provision for local financial literacy education in the forms of classroom presentations, financial realty fairs, and adult and senior educational workshops.

Financial wellness and economic empowerment are at the root of what TFCU and most credit unions offer. 

Employee Sharing and Retention is a Collaborative Benefit

Since the first community microsite was opened, TFCU has been seeking a way to create full time jobs in these communities. Thorne Bay does not have a United States Post Office, but it does have a Contract Postal Unit (CPU) inside a local convenience store. The CPU partner offers a full line of postal services, including post office boxes for this small community. As TFCU has opened community microsites we have visited the post offices in other communities, considering the benefits of a USPS CPU partnership.  Below is a list of these communities.

During visits to these communities, there is rarely a person in the post office and frequently the postal workers are not there. The CPU in Thorne Bay often has customers in their store and there is periodic activity at the postal counter. 

It is no wonder that the USPS has at least one full-time employee in these sites. Local job opportunities in small communities are limited and a full-time job with benefits is highly sought after. With a limited job market in a small village, finding a qualified and dedicated employee is much easier when they have access to full time work with benefits. TFCU hires local and adds to the economic stability of the community. 

The efficiency that could be created if the USPS partnered with credit unions would be beneficial to the postal service as well as the credit union partner.  The USPS already has a way for an outside partner to collaborate with them to provide services in small communities through CPU and CPO partnerships. Building a broad partnership with credit unions in the role of a Contract Postal Unit or Community Post Office would provide efficiencies for the post office while providing the important financial services that are essential in a community. 

Credit Unions’ Commitment to Communities

The Campaign for Postal Banking asks the question on its website, “Why Don’t Banks Fill This Need?”  Their answer: “The banking industry has changed. The number of bank branches in the United States is declining and low-income neighborhoods have been hardest hit. Since 2008, 93% of those closings have been in neighborhoods with a median income below the national average.  In addition, according to an annual survey by the FDIC, only 43% of banks actively develop products and services for the underserved.  And many of the services that are available are increasingly expensive.” 

We do not doubt their answer. When Wells Fargo left Annette Island, the only Native Indian Reserve in Alaska in 2005, TFCU was asked by community leaders to open a branch there to serve the 1,400 residents. We did that, and in 2012 built a new branch building to show our commitment to the community. 

We have also opened three community microsites in tiny villages in southeast Alaska in the last two years. Community Development Credit Unions (CDCUs) like TFCU aren’t leaving low-income neighborhoods, we are looking for ways to serve them. We also have the products and services to do that best, including credit building loans, savings building products, and financial education opportunities offered locally.

One Small Town’s Loss

The National Bank of Arizona closed its doors in Duncan, Ariz. in July 2016. In a 2020 American Bankers Association article, “When a Small Town Loses its Only Bank,” the author reported it has been a major blow to the residents. Business owners no longer had a place to deposit cash each night, and there was nowhere nearby to apply for a loan. Senior citizens uncomfortable with digital baking “felt an outsize impact.” Community leaders report it is harder to attract new residents to their town of about 745 residents. Community members use the local post office to get money orders and ask for cash back. But the real need is for a credit union microsite like a TFCU community microsite in partnership with the post office, where residents and small businesses can borrow and save with a full-service credit union partner. 

The bank left Duncan. One business owner had blunt words about the bank’s decision to close Duncan’s only branch. “They said, ‘We’re not making money.’ But I think what they meant was, ‘We’re not making enough money,’” he said. “What I got from them was, ‘We’re not interested in this little town – we’re sorry.’” 

CDCU credit unions are interested in little towns. We are not-for-profit financial cooperatives created to serve our members.

Credit Unions Stand Ready to Collaborate

Are postal banking advocates truly interested in the welfare of financially underserved banking deserts? Do they really want what is best for the people and businesses in communities and neighborhoods that are suffering from the lack of affordable financial services? Do they want people and businesses to have every opportunity for economic empowerment? If the answers to these questions are “yes,” terrific! Then partner with credit unions. 

We will ensure that financial education is provided. We will ensure that businesses will have the loans and services they need to succeed. We will ensure that people of all ages will have affordable basic services, as well as opportunities for homeownership and building wealth. We will ensure communities will have local financial opportunities to grow and thrive. The USPS partnering with credit unions and using something similar to the Contract Postal Unit or Community Post Office models already available through the USPS could bring broad and deep financial support to a local community. The USPS has a way to do this already in place.  

Credit unions stand ready to partner with the depth and breadth of service knowledge necessary to provide economic empowerment to individuals, small businesses, and communities. Let’s make it happen. 

Helen Mickel is president/CEO Tongass Federal Credit Union. She can be reached at hmickel@tongassfcu.com

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