ABA CEO interview with 2GB’s Michael McLaren on regional banking

E&OE
Radio Interview
Interview on 2GB
8 October 2026

Topics: Regional banking

Michael McLaren: You may have seen the story today, the Australian Banking Association has put forward an idea to address the declining presence of our top banks in rural Australia. In fact, regional bank branch numbers have declined by 38 per cent since 2017. So, there is a real issue here of presence. Of course, some areas no longer have access to any of the big four, and I would argue there are even areas that don’t have access to Bank@Post or alternatives either. As we know, when access to finance disappears, so too often does the rest of the town. The proposal here, their calling it bank in a box, it’s very similar to what is happening in the United Kingdom. It would involve lenders contributing to bring face-to-face banking to up to 10 towns currently without a branch. That would be the start, and if it works, they would go further.

There are other ideas doing the rounds as well. You might recall that Treasurer Jim Chalmers proposed a regional banking levy a couple of years ago to raise money to try to keep these things open. But of course, that would force some of the big banks to spend millions supporting regional competitors, so I don’t think they are too keen on that. But something’s got to happen, so we now have this proposal. The big banks essentially want to bring the issue back into their hands. It would allow them to continue operating in rural, certainly sparsely populated areas that aren’t otherwise commercially viable for them. How would it work? Well, we’ll find out because the ABA chief executive is Simon Birmingham these days, he’s with me on the line. Good to speak, Simon. Thanks for your time.

Simon Birmingham: Hello, Michael. Great to speak with you again.

Michael McLaren: Okay, so just in sort of layman’s terms, would this be like a building’s rented, or you’ve got a very sort of swish caravan, or something rolls into town? Westpac, NAB, Commonwealth and St George, or whatever, they’re all sort  of sharing the one location. Is that sort of what we’re talking about?

Simon Birmingham: Yeah. So, Michael, we’re seeking the ACCC’s approval to do a couple of things. The first is to develop what we’re calling regional service commitments. So, to be really clear about what commitments banks are making to maintain face-to-face services and other banking services in regional communities, and as you know, a number have different moratorium commitments that they are keeping their regional branches in place. Some of those stretch out for a number of years now, but we want to have a coherent industry position that can guarantee those continued services will be very much as people know them, bank branded and delivered. But we also want to trial these banking hubs, up to 10 locations in a trial format. And look, the delivery of them will take a couple of different forms we imagine. Some will look very much like a bank branch, just without the branding of an individual bank, and instead people from multiple banks will be able to get services and assistance in them. Others we envisage perhaps using existing local community partners like councils, libraries, or even Australia Post to provide an expanded service offering compared with their current Bank@Post in some of those trial sites.

Michael McLaren: Okay, so you’re in the middle of whoop whoop. The banks have gone years ago. This post office might still be there, but the idea is the big four, if they all agree, would have – is it a permanent presence under one roof, or they’d be there here and there? What sort of detail are we looking at here?

Simon Birmingham: So, firstly, we do need to have the ACCC’s authorisation to have some of these discussions. So, I can’t answer all the questions, but the intent is for this to be something that is open to all banks, not just the majors, but if smaller banks wish to have their services provided through these hubs, we absolutely intend for that to be the case, whether they are members or not. That it’s entirely voluntary, so some may choose to be in, some may choose not to be, and that will be up to all of them. Of course, we’re also seeking permission to work out how we fund this type of shared infrastructure and how those costs will be met across the industry, but from a consumer perspective, the intent really is very clearly that we’re maintaining some sense of face-to-face services, and we want to trial them firstly in communities that don’t have any bank branch presence at all. But of course, in those communities, this could give them the opportunity for face-to-face assistance and in-person support, not just for one bank but for multiple banks.

Michael McLaren: Yeah, all predicated again, I stress the point you’ve been raising on what the ACCC are going to say. We’ll deal with that in a second. Let’s assume they give you the approval, though. You said you’ll start it or you’ll trial it in areas that don’t currently have banks. Is that bank talk for well, you know, in a decade’s time, if this goes all right, we’ll start rolling this into the cities as well?

Simon Birmingham: Look, it’s hard to tell quite where it could go. You know, we definitely see this as at present a trial worth rolling out where there are obvious gaps. A couple of international examples: in New Zealand, it still remained really quite targeted and limited a few years after they started something similar. In the UK, it’s a little bit more expansive in terms of presence across parts of their network. We really want to test, as I say, different delivery models to see how it works in the Australian context, and we know that 99% of transactions are now done in different digital and online formats –  that use and interactions with regional bank branches has plummeted by more than 60%. But we know that there are customers who, either because of their circumstances or just at particular times, still value having some in-person assistance, and that’s the problem we’re really trying to solve for. That is as the way people interact with banking changes, and the economics of delivering those bank branches changes, how do we come up with a model that still means that there’s a real live person who can provide real live support when people really need it?

Michael McLaren: Well, look, I think we’ve got to look at something like this because, I mean, the fact of the matter is, we all want to see bank branches, and of course, in regional areas, that’s employment. It’s sort of the beating heart of a local community. You get other shops go up around it, so on and so on. So, they go a lot of the time, the town dies with it. It’s all sort of cyclical and linked. You know that from your days in politics, representing South Australia as well. But you know, equally, okay, the banks make huge profits, fine, but they also look at the economics of this, and if we’re looking at productivity, a branch in the middle of nowhere is not anywhere near as productive as it used to be because the transactions, the interactions, are as you say, way down, and in large part, that’s driven by consumer sentiment. So, we’ve got to be realistic and open-eyed in this big, wide, brown land of ours as to how we deliver frontline services like banking, right?

Simon Birmingham: There is a reality to it. You put that quite well. It’s a recognition not just that people have shifted the way they bank, but also the competition within the banking industry has shifted. The role of digital-only banks has increased, and we see more of those getting approval from overseas to compete against the traditional big Australian banks. And competition is good, and this doesn’t take away from that competition. Nothing that would be delivered through these services changes the fact that banks would still be competing in terms of the deposit services they offer, the loan services they offer. All of those things remain the same, but there are just those times, be it a scam event, needing to provide identity documentation, or for somebody who is just in quite vulnerable circumstances and doesn’t have access to or capability in terms of using the technologies of the day, where in-person support is still necessary, and that, as I say, is really the problem we are trying to solve for. Recognising that pretending that kind of old-style delivery can last forever would be to bury our head in the sand. What we need to make sure is we’ve got services and solutions fit for purpose for the future that still cater and deliver our responsibility as an industry to still service all Australians, whatever their circumstances and wherever they live.

Michael McLaren: Because I mean, there is, I know Australia Post has that universal service obligation. I mean, I’m not sure the banks have the same, but they are granted licences to operate by the government, and the government, I think, from both persuasions, are pretty open-eyed about this, and they understand that, you know, part of the obligation, I guess, to the community is to have a presence. We just got to make sure it’s fundable. To the ACCC, as you said, that could be the roadblock. I mean, I’m not sure it will be because, I mean, I’m looking at this, you’re looking at this, I’m sure they’ll look at this and say, “Well, this is better than nothing.” But their rules do state that the banks have to show that a plan like this would not substantially lessen competition. I mean, I guess the obvious answer to that is, well, ACCC, there is no competition in a town that doesn’t have any banks. So, you know, I guess that’s the rebuttal, isn’t it?

Simon Birmingham: Look, it is, Michael. That’s why we’ve been really careful to make sure that, in defining this, as I said before, it doesn’t change and will not change the products and services that banks offer. And arguably, in terms of these communities, some of them might have better competition in terms of being able to get service offerings from multiple banks than possibly somewhere that only has one branch remaining in it. But we want to demonstrate that this is ultimately for public benefit, public good, and it’s being done to really try to address and listen to the community who say, “Well, we do value face-to-face services. We do want those services to continue to be available in some form.” And so, how, as an industry, can we do it, even in the face of people really choosing to change the way they bank of their own accord?

Michael McLaren: Okay, just a couple of quick ones to finish, because I know you’ve got to go, and so do I. As you’ve already said, and I have, Australia Post also offer banking services in partnership with several institutions already. How would this be any different to what people can get at their post office?

Simon Birmingham: So we’re envisioning this as being a step above what are largely cash and very basic transaction services at post offices, and that here there will either be an ability of the individual to help with identity checks or the like in terms of the person in that branch, or if the person in the hub may not be able to solve everything for every bank, they can help provide a connection to your bank – to sit you down, make sure that phone connection is established, make sure a video connection is established to book those appointments. Or indeed, they may also be sites where banks choose to send mobile bankers who come and deliver services there. But importantly, we also see the possibility that these increased services above and beyond the existing Bank@Post model might be able to be delivered in some of those post offices, and so we are eager to sit down and talk and work with Australia Post about whether they might play a role in this trial as well.

Michael McLaren: Okay, and just finally, let’s say a Commonwealth Bank customer walks into one of these bank hubs you’re speaking about, bank in a box, their neighbour’s a NAB customer. What sort of, dare I say it, even uniform is the person at the door wearing? I mean, are they a Commonwealth employee, a NAB employee, or are they just an ABA employee representing all of them? How does that work, do you think?

Simon Birmingham: Yeah. So, look, I mean, it will be entirely voluntary as to which banks choose to participate, and obviously, CBA made an announcement last week, as Westpac has, extending their moratorium commitment for their branch operations across Australia. But in terms of where the hubs exist, they will be quite neutral, and so you won’t see individual bank branding unless a bank has a visiting banker who has decided to go in there. But it’ll be clear as to which banks are offering those services, and that neutral employee, if you like, will really be able to then say help with basic things, help people solve things that many of us would solve using online banking already. But you can have somebody who is trusted and able and skilled to help you solve that. But if they can’t fix it, then they’ll be able to connect you through to relevant bankers and give you a private space and set you up and just problem solve all of those connectivity issues that many people face and find as a barrier to sort of using those digital banking interfaces at present.

Michael McLaren: All right. Well, it was all lodged on October 2. Let’s see what the ACCC decide, and we’ll go from there. Thank you for your time, Simon.

Simon Birmingham: Thanks, Michael. My pleasure.

Ends