Can AI and Postal Banking Give Canada Post a Future Beyond Its Shrinking Mailbag?

The research presents a future in which the postal network earns money from more activities and continues serving communities that depend on it.

A trip to the post office could someday involve renewing a passport, accessing banking services, or arranging insurance alongside sending a parcel. That possibility sits at the heart of Ehsan Jozaghi's study, "Canada Post: A Scenario-Based Net Present Value Model for Public Enterprise Restructuring in the AI Economy," published in Economies, which explores how Canada Post could rebuild its finances through automation and a wider range of services.

The research presents a future in which the postal network earns money from more activities and continues serving communities that depend on it. Its calculations suggest that this approach could become financially sustainable under certain conditions, with lending emerging as the biggest driver of success and uncertainty.

Fewer Letters, Fiercer Competition, and a Costly Delivery Network

The paper describes a business losing the income that once supported its nationwide reach. Annual letter deliveries fell from approximately 5.5 billion two decades ago to around 2 billion by 2025, despite growth in the population and the number of delivery addresses.

Canada Post's reported parcel-market share dropped from 62% in 2019 to below 24% by 2025, as competitors expanded delivery networks supported by automated warehouses, robotics, and sophisticated planning systems. The study reports accumulated losses exceeding CAD $5 billion between 2018 and 2025.

Delivering fewer letters does not make the cost of reaching every community disappear, because vehicles, facilities, staff, and delivery routes still need support across a vast country. Private companies can concentrate on profitable urban deliveries, leaving the public postal operator responsible for expensive rural and remote routes. Community mailboxes, reduced delivery standards, and other cost-saving changes address parts of this problem. The study argues that Canada Post needs a broader redesign capable of generating income beyond its shrinking traditional business.

A Post Office That Offers More Than Postage

Japan Post provides the main inspiration for the proposed approach, combining postal delivery with banking, insurance, and other services that help support its extensive network. Experiences in Italy, Switzerland, and New Zealand show different ways postal organizations have developed additional income streams, including financial services introduced gradually over several years.

For Canada Post, the proposal includes everyday banking, lending, insurance, and passport and driver's-licence processing. Existing branches could become community service hubs, giving residents more reasons to use facilities already maintained for postal access.

The paper discusses digital identity verification, secure document delivery, telehealth support, and access to online government services as possible extensions of that role, beyond the activities quantified in its financial model.

Robotic sorting could speed up parcel processing, route-planning software could reduce unnecessary travel, and predictive systems could improve delivery scheduling. The model assumes a 28% reduction in the portion of operating costs affected by automation, drawing on reported experience at UPS.

Building financial services would require regulatory approvals, sufficient capital, deposit protection, cybersecurity, specialist staff, and customers willing to trust a new provider. Partnerships with established financial institutions could offer a gradual entry into the market. Japan's postal banking system grew from an established savings network, so its scale cannot be transferred automatically to Canada's competitive banking market.

What the Financial Scenarios Actually Show

Jozaghi uses a Scenario-Based Net Present Value model to bring projected revenues, operating costs, automation savings, and restructuring investment into a single calculation. Future cash flows are converted into present-day values, making income received decades from now carry less weight than income received sooner.

The model starts with annual revenue of CAD $6.33 billion and estimated operating costs of $7.90 billion. It assumes $2 billion in initial restructuring investment plus $2 billion in annual implementation spending, covering activities such as technology upgrades, service expansion, regulatory compliance, and workforce retraining.

Calculations use constant Canadian dollars and a 3% real discount rate. Letter-mail revenue declines by 2.5% annually; parcel revenue follows different paths in each scenario.

The reported results are:

Scenario	Period	Net present value	Benefit–cost ratio
Low	20 years	−CAD $52.12 billion	0.65
Base	30 years	CAD $15.98 billion	1.08
High	40 years	CAD $383.26 billion	2.66
Automation only	30 years	−CAD $56.45 billion	0.71

A benefit–cost ratio above one means the modelled financial benefits exceed costs. The base case offers a modest positive margin, with new services reaching their assumed mature scale over ten years and parcel revenue growing by 2% annually.

The low case combines limited expansion, a fifteen-year service ramp-up, and declining parcel revenue. Its negative result shows that introducing new activities does not guarantee enough income to sustain the organization.

The high case assumes faster adoption, stronger parcel growth, and financial services reaching a population-adjusted Japanese benchmark. Its enormous return is explicitly an upper-bound test, carrying ambitious assumptions across a longer period.

These figures represent the modelled finances of the restructured organization, rather than savings measured against a separate continuation of today's business. Different time horizons and assumptions explain part of the gap between scenarios. Automation alone produces a negative result under the study's specified costs, reinforcing the importance of new revenue streams within this model.

The Biggest Gamble Is Lending and the Stakes Reach Beyond Profit

Lending contributes CAD $57.54 billion in discounted revenue in the base case, compared with $17.34 billion in automation savings. That outcome depends on developing a $105.7 billion lending portfolio over ten years.

Reducing the mature lending portfolio to $21.14 billion, keeping other base assumptions unchanged, turns the net present value negative at −$30.06 billion. Raising the discount rate from 3% to 10% reduces the base result from $15.98 billion to just $0.52 billion, showing how much the outcome depends on benefits arriving later.

The lending model does not separately account for funding costs, required capital reserves, potential loan losses, or other financial limits. Customer demand, competition, regulations, and automation results could change the estimates, so stronger predictions need detailed operating data and evidence from actual service launches.

Rural, northern, Indigenous, and remote communities rely on postal services for medicines, small businesses, emergency communication, and government access, especially where transport or internet access is limited. The study recognizes these benefits without giving them a dollar value.

Any changes would need staff planning, retraining, union consultation, and public accountability, with access for everyone remaining a priority. Canada Post could offer more public services, supported by realistic financial plans, achievable customer growth, and careful consideration of community needs.