Research 2009 - 2011
Banking in the Community
Jerry Buckland Ph.D.
Professor, International Development Studies
A number of non-profit organizations working in a low-income area of Winnipeg noticed the phenomenon of mainstream banks closing their operations in these neighbourhoods and fringe banking operations entering the community. They began hearing concerns from residents about the affect this was having on their finances. This gave birth to a network called the Alternative Financial Services Coalition, which caught the attention of Dr. Jerry Buckland, an interdisciplinary economist who worked for many years in Bangladesh where micro credit was successfully extended to the poor, lifting them from poverty. Dr. Buckland noted that such programs did not exist in Canada and embarked on a study of the experiences that lower-income, inner city Canadians have with a variety of financial services: banks, cheque cashiers, payday lenders, and others, often referred to as fringe banks. These provide transactions services, at a high cost, and no other investment services with any long-term benefits.
Fringe bank services tend to be expensive and can be manipulative of certain human behaviours. Banks also aim to maximize profits from their relationships with consumers. Behavioural analysis reveals that people will make decisions that are sometimes not in their best interest. Dr. Buckland is focusing his research on low and modest income inner city residents in three inner city neighbourhoods in Toronto, Winnipeg and Vancouver, each of which has a unique community banking project. He is undertaking mixed method (qualitative and quantitative) resident surveys, collecting financial life histories, and financial diaries. A mystery shopper component is also included. Through these means he is analyzing the nature of people's choices in financial services, their life goals and their financial goals. The project is also extensively mapping the banking locations in those cities over the past 25 years, to illustrate where change has occurred. These maps will be overlaid with neighbourhood income data obtained through Statistics Canada.
Policy has not kept pace with the rapidly swelling numbers of fringe bank services being introduced across the country but Manitoba has played a catalytic role in promoting regulations for payday lenders. As Dr. Buckland's study continues it is providing a greater understanding of the social and economic interface between financial services and modest income Canadians. This information will be valuable to policy makers as they enact improvements to the services offered to an often-marginalized segment of the population.