Canada's Condominium Magazine
More people work in banks and other financial services in Toronto than have bank accounts in some of the world’s poorest countries. How can people live without a bank account, one might ask? Where do they keep their money? How do they pay their bills? The questions wouldn’t mean much, though, if you were one of the 2 billion or so, living in countries like Cambodia, the Democratic Republic of Congo, Turkmenistan and Yemen, who earn just $2 a day. The questions should be, “What money, what bills?” Even in this country, it is estimated that 13 per cent of Canadians either have no bank account or have no money in it if they have one. The link between poverty and being unbanked is particularly strong in the US. More than a quarter of the poorest 20 per cent of Americans have no bank account. It almost goes without saying that more women are in this predicament than men.
Being unbanked puts an individual or a household at a big economic disadvantage. For one thing, many come to rely on expensive cheque-cashing services, pay-day loans and income tax refund anticipation loans. It has been estimated that an unbanked individual would pay $40,000 more in financial services fees over an adult working life than a person with a bank account. That money could otherwise be spent on consumer goods, debt repayment, or wealth accumulation. Unbanked households also have significantly lower net worth, largely because they tend not to own their homes.
There are more and more Fintec services coming online to help, among other things, streamline the transfer of money from one country to another, a very big part of some third-world economies. Remittances to third world countries last year amounted to $431.6 billion, according to the World Bank.
One Toronto-based financial services company, Cambridge Global Payments, has partnered with Meed, a California mobile financial services company, to offer an app that Meed says will provide banking services to the unbanked. Users will be provided “socially conscious” services through the app, and access to Meed’s member banks, a network of banks that share Meed’s socially conscious approach to banking.
Beyond its direct footprint, the sector plays an important role as a facilitator in the economy. Key functions that the financial services sector provides that essentially all consumers and business require include access to credit, transaction processing, and risk management services. without these services, a modern, dynamic, and resilient economy is impossible. indeed, access to a diverse array of capital sources is an important driver of economic growth.
Meanwhile, here in Toronto the financial services sector continues to grow and increase in importance to the economy. The Conference Board of Canada’s latest report on the industry states that financial services accounted for 7.9 per cent of employment in Toronto, with 250,790 people working directly in that industry, and an additional 208,890 indirect jobs. Those direct jobs pay more than average as well; financial services workers earned on average $1,260 weekly, compared to $963 for all industries. The top five job areas (core strengths) in the industry are retail and corporate banking, investment banking, wealth management and pension fund/mutual fund management (the securities industry), and life and health insurance.
The city accounts for 31.7 per cent of all Canada’s financial services employment, and 43 per cent of head office employment. Employment has grown by 21 per cent over the past decade. The report says that the financial services industry is becoming more and more concentrated in Toronto. Its contribution to the city’s GDP was 13.1 per cent in 2015.
When we think of exports, we tend to think of manufactured goods, like cars and airplanes, and agricultural products. But financial services is now the fastest growing of Canada’s services sectors. Exports more than doubled in the years 2005–2015, reaching $11.7 billion in 2015. These exports consist mainly of banking, insurance, and other financial services provided by Canadian companies to non-residents of Canada.
Aside from its value as an employer and contributor to GDP, the main function of the financial services sector is to facilitate the economy, giving consumers and businesses access to credit, processing their transactions, providing risk management services. Without access to capital sources, economic growth is impossible, and Canada is ranked fifth in the world by the World Economic Forum for its availability of financial services.