A Mighty Task: What the Regional Banking Taskforce is looking at

If you walk down your local high street at the moment, chances are you’ll spot a CLOSED sign on at least one of the bank branches. In my local neighbourhood of Potts Point, at least two of the major bank branches have closed. But given that I live in the City of Sydney, I have a range of options available to me should I need to find an open branch. For those in regions, they may not be so lucky.

While use of bank branches has been falling over the past decade with the rise of online banking, the acceleration of their demise has been eye-watering in recent years, with COVID-19 being the final nail in the coffin. According to APRA figures, the number of branches in regional and remote Australia went from around 2,500 to 1,900 in the four years to June 2021 (a decline of almost a quarter) with a 5 per cent decline in branches in the past year. 

There have been similar declines at a national level with bank branches declining from around 5,800 to 4,500 over the past four years. The number of ATMs has also declined, with the total number of active ATMs nationally having fallen by around 20 per cent since its peak in late 2016.

The effects of these declines may be particularly felt in regional communities, where closures can affect the liveability of towns, especially for residents who are unable to use online services to do their banking.

As discussed by the banking royal commission in 2018, a lack of access to bank branches or alternative methods of withdrawing cash can result with some in regional and remote areas paying high transaction costs to obtain cash, such as ATM fees, and difficulties in accessing the internet can also lead to financial exclusion. Moreover, local community groups and organisations seeking cash and change for floats may experience negative impacts on key fundraising opportunities.

A larger issue could be the impact of financial literacy and education. For many Australians, local bank branches have helped answer questions around deposit and savings accounts and loan products, and have been the main point of contact to send and receive money.

Given the issue, on 22 October 2021, Michael Sukkar MP (the Assistant Treasurer and Minister for Housing and the Minister for Homelessness, Social and Community Housing) – along with senator Bridget McKenzie (the Minister for Emergency Management and National Recovery and Resilience and Minister for Regionalisation, Regional Communications and Regional Education) and senator Perin Davey – announced the formation of the Regional Banking Taskforce to examine the impact of bank branch closures in the regions and come up with solutions.

What the taskforce is looking at

The taskforce is analysing the trends and impacts of branch closures in the regions and assessing how communities may continue to access these much-needed services. 

Following meetings in November, the taskforce released an issues paper and invited the public to weigh in on the impacts of a 24 per cent fall in regional bank branches over the last four years. A final report is expected to be released imminently.

If the issues paper and rhetoric are anything to go by, it seems that the focus will not be on requiring banks to have a branch presence, or reversing closures of branches, but instead it will consider the alternative options and solutions that may reduce the risk of customers being left without any kind of banking support.

For example, the issues paper read: “Importantly, banking services are and can be delivered in a variety of ways in regional and remote Australia. A variety of approaches, with appropriate support, are likely to be important to provide the services that Australians need including those that are vulnerable and marginalised with less digital literacy or transport options.”

Indeed, it highlighted that while branch closures are impacting regions, more regional Australians are doing their banking online rather than visiting a branch. According to RFi research, 64 per cent of regional Australians did their banking with their main financial institution online via a computer or laptop in April 2021 and 61 per cent via a smartphone. This is compared to 32 per cent visiting a branch and 10 per cent using telephone banking.

Given that more than two-thirds of mortgages are now written by brokers – the closure of bank branches in the regions could also likely push more borrowers to the third-party channel for home loan advice.

A consequential consequence

As the taskforce sifts through consultation responses ahead of the release of its final report, its members have been visiting regional and rural communities to hear from residents of the real-life impacts of the closures. 

The feedback so far has highlighted the inconvenience, time and cost of having to travel long distances to access banking services – and the frustration that regional customers feel in being “abandoned” by their bank.

It’s also an issue that impacts local economies. “If a person or business is forced to travel to the next town to do their banking, they are likely to buy other goods and services in that town as well,” the issues paper read, noting the economic implications of that to small towns.

Similarly, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson, warned: “Branch closures increase small business administrative costs, the level of risk for business owners, and have a community wide economic impact caused by business patronage moving away, along with reduced community amenity, particularly if it is the last remaining bank in town.”

One of the perils of closing off access to banking services, Mr Billson proffered, was that SMEs also run the risk of unknowingly turning to unlicensed financial services/credit providers that may not be members of relevant complaints/ombudsman services or provide pathways to recourse.

“That is a bad outcome and there is more that can be done to support small businesses when a bank branch closes,” he said.

However, he suggested that more should be done to support those impacted by branch closures, such as being able to move to another bank that does have a local presence without being charged penalties/fees and expand the roll-out of NBN connectivity and support services to ensure they can access banking/finance services digitally.

“My office has long argued that access to banking and vital communications services are essential and a greater focus is needed to set and adhere to deliverable service standards. Where these standards are not met, impacting a small or family business, some consequences and remediation steps should apply,” Mr Billson said.  

THE QUESTIONS THE REGIONAL BANKING TASKFORCE AIMS TO ANSWER:

1. How are Australians changing the ways they are accessing banking services? What are driving these changes?
2. What banking facilities, services and products are used in regional bank branches?
3. Are there particular banking products or services that need to be delivered face to face or have support provided face to face? Are any of these particularly important for regional customers?
4. What are the impacts of regional bank branch closures on the banking needs of individuals?
5. What are the impacts on the banking needs of businesses, community organisations and communities?
6. Are there particular issues in the provision of banking services in regional Australia for specific vulnerable groups?
7. What more could banks do to help customers transition to alternative banking services that would enable them to do their banking in a timely, efficient and cost-effective way?
8. Are there facilities, services and products provided in bank branches that are not available through alternatives like ATMs, Bank@Post, phone banking, mobile banking, the telephone and the internet?
9. What are alternatives to bank branch models that would maintain or improve banking services and accessibility in areas where branches have been closed?
10. Are there any alternative models for the provision of banking services that could be considered for adoption by banks in Australia?
11. What are the lessons from Australian and international experiences that can help improve banking services and accessibility in regional communities where bank branches have been closed?

Written by Annie Kane

Last Updated: 30 June 2022

Published: 01 March 2022