Decline of regional banking, what’s the answer?

Article published 1 December 2021

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A GOVERNMENT Regional Banking Taskforce is attempting to bring banks and regional communities together to assess the impact of bank branch closures and to identify any solutions to the regional disappearing act put on by Australia’s retail banks.

Between 2017 to 2021 the number of regional bank branches Australia-wide has fallen from 2,500 to 1,900. That’s a staggering quarter of all branches.

If you expected the decline in branch numbers to lead to an increase in the number of ATMs, you were wrong. One-in-five regional ATMs operated by the banks has also disappeared.

Commercial ATMs, ones where you pay a fee to withdraw your own money, are now everywhere, but that’s hardly progress.

The driving factor behind the decline of regional branch and ATM numbers is the significant uptake of internet banking services.

More than 80 per cent of Australians prefer to pay bills, transfer money, or check account balances online.

At the same time, the use of cash in everyday transactions is declining.

The overall effect is that regional bank branches and ATM are used by less and less people. Proportionally the cost of maintaining regional branches and ATMs has gone up.

At the same time, banks face an additional, significant cost to operate their internet banking services.

All this spells trouble for regional older Australians.

According to the Australian Digital Inclusion Index (ADII) there is a significant drop in digital ability after the age of 55. Older people who live alone and do not have access to younger family members or friends are particularly affected.

Where regional branches close and where there are no mobility or transport issues, older people are travelling further or change banks.

They also switch to Bank@Post, which involves post offices providing banking services to customers of over 80 financial institutions.

Bank@Post allows people to withdraw and deposit cash, check account details, deposit cheques, pay bills, transfer money and pay off credit cards.

But you can’t open or close an account, activate a debit/credit card, report lost or stolen debit/credit cards, change your PIN number or apply for a loan or mortgage.

There are over 3,500 Australia Post offices that offer Bank@Post services, including 1,900 in regional towns, 1,145 of which operate in communities without a bank branch. ANZ does not participate, however.

For one solution of the problem, Australia could look to New Zealand. There six banks have pooled resources and created banking hubs in regional towns to provide all basic banking services.

Future older Australians will probably be happy to use online banking, but for the foreseeable future many older Australians will want face-to-face banking to continue.

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