ABA CEO interview with ABC Illawarra’s Stefan Posthuma on regional banking

E&OE
Radio Interview
Interview ABC Illawarra
8 October 2026

Topics: Regional banking; Card Surcharging ban

Stefan Posthuma: You might have heard that the Commonwealth Bank has announced it’s closing its Albion Park branch next month. That’s despite its recent commitment to not close any regional branches until 2030. You know, this might be a common issue we’re seeing, you know, in regional areas, banks just not having the will, I suppose, or doesn’t make sense for them to keep their branches open, and so this has seen a new development today. Big banks are seeking an exemption from competition laws to allow them to share regional branches. So, what might this look like? I was sort of, you know, theorising before, it might be like the car rental spot at an airport where there’s one area with, you know, similar looking counters and just different logos above them. What might these regional banking hubs look like? Simon Birmingham is the CEO of the Australian Banking Association and joins me now, hi, Simon.

Simon Birmingham: Hello, Stefan. I’m glad to be with you.

Stefan Posthuma: Have I got that right? Is that what this might look like? Under one roof, a whole bunch of branches, different logos. You just kind of go to the counter of whatever bank you bank with and do your business, you know, next door to the other branch.

Simon Birmingham: Look, not quite. So, what we’re asking the ACCC for is authorisation to do a couple of things. The first is really to cooperate as an industry around some service commitments to regional Australia, so that just as we’ve seen those moratorium commitments exist, and we’re actually able sort of frame that in a way that ensures collectively the industry is delivering regional services across Australia, and that we aren’t seeing gaps emerge that create vulnerabilities for communities or people. And then obviously as part of that, we’re looking to trial a different delivery model, which are these hubs. And the hubs might take a couple of different forms. We want to test different versions. So, one could be a standalone, its own sort of building site that, in a way, is like a traditional bank branch. The other might be using council chambers, an Australia Post site, or the like, as a partner to deliver, because we want to test those different models. In either case, what you’re talking about more is having a real live person – this is about providing face-to-face support and assistance – who can help people in terms of either using technology and facilities that are there, or with kind of practical things like ID checks and verifications and documentation or the like, not that you’re walking into sort of a lineup of different banks all standing behind the one counter.

And our initial ask of the ACCC is to approve us trialling this in 10 different towns across the country that don’t have any bank branch at present. So, this is really about ensuring we’re testing it, trialling it, and trying to find the best pathway to maintain that in-person, face-to-face service and support for Australians.

Stefan Posthuma: I mean, why is this sort of competition law – why does this not allow, you know, banks to share one location in order to service these regional communities?

Simon Birmingham: So, I mean, our competition law is rightly in Australia designed to really ensure that particularly big businesses are operating in ways where they don’t collude and are fully competitive in the services that they undertake. So, we’ve been really careful, obviously, in framing this application to the ACCC. And firstly, what this doesn’t do, and it doesn’t change, any of the products that banks offer. So, you want to go and look at the best mortgage terms, or the best deposit terms, or loans, or otherwise, shop around, compare the field. There’s lots of competition out there, and this won’t change that at all. And that’s why I expect that hopefully this will get approval, because it’s a much more practical point, and also by ensuring it is only operating in communities that don’t have a bank branch, it doesn’t change the viability or threaten any of those other operations for banks, but really is looking at where there could be gaps, could be vulnerabilities, and testing, say, a new model that can ensure people do get that face-to-face support.

Oftentimes, what we see nowadays, more than 99 per cent of transactions and interactions happen digitally, and the actual use of regional bank branches has plummeted by more than 60 per cent in terms of interactions between staff and customers. So, we know that’s changed a lot, but not everybody can use those digital tools, and sometimes they have reasons why they need face-to-face support. And so, providing essentially a neutral staff member, if you like, who can help people often resolve their issues using the same types of technology, but with somebody who is skilled and able to help do it for them or with them, as well as, if it is a more complex matter, setting them up in a private room with a direct connection to their bank, able to resolve their issues as best they can.

Stefan Posthuma: Who would employ these people who are going to sort of work on behalf of all banks?

Simon Birmingham: Well, once we’ve got the ACCC authorisation, we will work through that. It is entirely possible that that might fall on the shoulders of my organisation, the Australian Banking Association, but we will step through that. Once the staging of this is – we’ve presented the concept, the arguments for it, some international examples around New Zealand and the UK, and how it fits into the broader framework of commitments. I want to reinforce that overwhelmingly, regional bank services will continue to be delivered by proprietary banks under their own brand and their own banner and their own activities. And this is just one part of what we’re asking.

But we’ve put the case to the ACCC. We hope that they will give us some interim authorisation in the coming months to really further develop that, give us a sufficient green light that as we go into next year, we can both develop those commitments and also then start to work out the precise locations for the hubs, how they’ll be delivered, and ideally have some of them operational before next year is out.

Stefan Posthuma: So, we’re talking about 10, you know, sort of potential pilot locations around Australia, and you mentioned these are places that don’t currently have any bank branch. Should this be successful, would you look to extend this idea, extend this idea, extend this model into other places, perhaps like regional places like the Illawarra or the Shoalhaven or the Southern Highlands, where we’re seeing, like I mentioned earlier, the Albion Park branch close? We’re seeing bank branches close. Would this potentially extend to service areas that may have some banking services, but not all branches that are necessarily required by residents?

Simon Birmingham: Look, we’ll be open-minded in terms of – we’re doing this as a genuine trial. We want to see which models work best for the Australian context. Is it best done through an expanded Bank@Post service through the Australia Post network, or is it best done by banks through those standalone sites, and how does it intersect with what will continue to be the overwhelming pathway, which is banks delivering their own services and funding and competing with those services on their own? So, anything in a sense is possible for the long term.

What this really is, is a recognition that as an industry, we might be confronting and dealing with this huge change that’s happening around the world as people do move to overwhelmingly using digital services, and that changes the economics and viability of traditional services. But we know there’s still a place for face-to-face support, and we want to make sure that we find a way to try to ensure that communities know that they will still have that in some form, and that where there are gaps, we find a viable pathway to fill them.

Stefan Posthuma: The one concern people may have is that if a proposal like this one gets across the line, it then serves as a reason, an excuse, or an option for banks to actually shut down standalone branches in certain areas because this cheaper option is available. Is that a valid concern?

Simon Birmingham: That is something I am sure that will be raised partly through this ACCC process, but even more particularly if we were looking longer term – that we will have to address that and it’s why that intersection with what broader industry commitments look like becomes important. That if we were looking to make this a permanent feature of how banking operated in Australia in terms of the hub piece, it would need to be part of a really coherent framework of regional commitments that demonstrated how banks were still continuing to meet those responsibilities themselves and why this was really filling that identified service need and gap.

And we will test different sites in terms of selecting these initial 10 locations, partly based on population size, partly based on distance to the nearest branch, but also around some factors like the extent of economic activity or different conditions of vulnerability, such as the age profile and demographics of a community, potentially some more remote Indigenous communities. We want to really make sure that we’re looking at the model for delivery, but also the different needs of different communities.

Stefan Posthuma: Okay, and finally, Simon. While I have you, big news in banking in the last week or two is the credit card surcharge ban. There’s been significant outcry from small businesses saying this is just another cost that they now have to absorb. What’s the stance from the banks?

Simon Birmingham: Yeah, so when the Reserve Bank made the decision to put in place a framework that would end credit card surcharging, they also cut quite significantly the fees that banks can charge through credit card transactions. So, there used to be a cap on that, that was 0.8 per cent. That’s now been reduced down to 0.3 per cent. So that cap has been more than cut in half, and in total over time, over the next year, that’s estimated to take around $900 million out of payments that would have gone to banks. Not saying that for anybody’s sympathy, because nobody offers sympathy to banks. It’s just a fact that alongside the end of surcharging, small businesses should expect to see some reduction in the fees that flow through to banks, because certainly the Reserve Bank has cut that.

But we understand very much a lot of small businesses are doing it tough. They face the same inflationary pressures, and frankly, I’m not surprised that, having known for a long time that the surcharge ban was coming into effect, some small businesses are deciding to adjust their prices, partly to make up for the loss of the surcharge, partly to make up for all of the other inflationary pressures they’re facing. And when it comes to the debate around the tax office and the like, I think government agencies, in particular, would be well advised to make sure they’re providing plenty of notice to people, so that there was lots of notice that this surcharge ban was coming. And if you’re going to change what payments you accept, then it’s not unreasonable for your customers to expect to have a reasonable period of notice, or in this case, your taxpayers, that those changes are coming.

Stefan Posthuma: All right, Simon Birmingham, thanks for joining me.

Simon Birmingham: Thanks, my pleasure.

Ends