27 June 2023
Tom Mann: You’re on ABC across the North and West Eyre Peninsula this morning, my name is Tom Mann. It’s twenty minutes past nine. Now there many empty or repurposed banks on your main street? Across regional Australia, there has certainly been a reduction in bank branches due to more branches closing. It’s something that the Australian Banking Association has been looking at, and have just taken on some recommendations from the Federal Government’s Regional Banking Taskforce inquiry into branch closures that finished up last year. CEO of the Australian Banking Association Anna Bligh joins me now. Good morning.
Anna Bligh: Good morning, Tom. How are you?
Tom Mann: Very, very well, thank you. Now Anna what is going to change around bank closures?
Anna Bligh: Well, thank you, Tom. As you said, there has been a government inquiry into this, which was put into this report released last year, and it made a number of recommendations. One of those was that there is an instrument called the Bank Closure Protocol that’s been in place for a number of years, which sets out the steps that banks should go through, and the Government made a number of recommendations for improvements. Banks supported these recommendations, and said they’d have that done by the middle of this year. The work on this has now been done, and it’s now live as a new protocol. There’s a number of things that will change; firstly, banks have taken on a commitment to do a lot more work with customers, in terms of the alternatives that will be available to them when a bank branch closes. Including helping them understand what they can do at Australia Post, where banks pay Australia Post to help in undertaking a number of banking services. It will also mean that banks will have to prepare and publish a document that explains why they’ve closed that branch, including some of the data about the usage of the branch. So it will help people understand more why they’re seeing a decline in bank branches. I should say we anticipate seeing branches as a part of Australia’s banking system for a very long time. It’s not about closing all branches, but we do expect from time to time, there will be some branches closing as more and more Australians choose to bank differently. So this is about helping people through that transition.
Tom Mann: So a vast majority of the country does use digital bank transfers, and the mobile user does a lot of their banking online. Why are bank branches still important, and something that will be part of the plan for the foreseeable future?
Anna Bligh: Well, you’re right Tom, Australians are jumping into the digital world at an unprecedented pace. We know that now we have 98.9% of all bank interactions are happening online, either on a mobile phone or a laptop or wherever it’s very convenient for people to do it. But we know that there are some people in our community for whom that is not easy or not possible, and we understand that for some customers face to face banking will remain an important part of how they do their banking. That’s why banks, as I said, are funding Australia Post where there isn’t a branch available in that town to do those basic services. But it’s also the case that for some functions that you do rarely, such as get a mortgage or those big decisions, those big life decisions, people who are very comfortable doing all their banking on their phone, often want to go into a branch to talk about such things like whether or not they should borrow money, what they are borrowing it for, and what it will cost them in a face to face conversation around these big life decisions. So there is an important role for branches, but less and less it’s going to be about withdrawing and depositing cash.
Tom Mann: CEO of the Australian Banking Association Anna Bligh is with me speaking about changes to regional banking, and details on how banks will be closed. Anna you mentioned cash there, what do you see the changes to cash will be in the future? That is also something that has seen a significant reduction in use.
Anna Bligh: Absolutely. Five years ago, 70% of all transactions were done with cash. In 2022, it dropped to 13%*1. We do expect to see cash continue to decline, but again, we would expect that cash is still going to play some part in the economy for quite a long time to come. Many of your listeners will tell you that they no longer carry cash and can’t remember the last time they paid for something with cash. But there’ll be other listeners who say no for me, I really liked the security of the bank note. I’m not sure at what pace it will continue to decline, but it is now only used by Australians for 13% of their transactions. You can see that when you go into a coffee shop you’ll see everyone using their phone, or you go into Bunnings you’ll see people using their phones, or in the supermarkets etc. So we do expect that cash will play less of a role, and I think it’d be a brave person to predict whether we’ll ever go without it but I would expect you’ll see it decline a bit further.
Tom Mann: And is this trend we’re seeing in Australia reflected internationally?
Anna Bligh: Yes, we are seeing these sorts of changes in customer behaviour all across the world, but particularly in countries that we would see as comparable to Australia, the OECD countries. But what is interesting is that Australians are in the top three or four countries for the speed at which we adopt our financial services digital capability, so we are very early adopters. We like the convenience. Recent surveys indicate that not only are Australians doing their banking like this, but they report satisfaction with this digital banking at higher levels than telephones, contacts, or branches. So those people who are doing it really like it, and when new ways of doing it come into the market such as smartwatches, or wallets in your mobile phone, the acceleration of those in the last three years in Australia is something like 8,000% – that’s how quickly we’ve adopted using a mobile wallet. So we are very early adopters, we like the convenience and I don’t think that’s going to turn around.
Tom Mann: To speak to those people who are dismayed at the reduction in bank branches, who have become reliant on it, are used to it or just prefer that personal touch. How can they find out more information about bank post services, and what the Australia Post services are able to do where bank closures are happening?
Anna Bligh: Australia Post is not a bank, and there are some things they can’t do because they don’t have a banking licence. But they can do 98% of what most people who still use branches like to do in those branches. So they can cash a check, they can deposit cash, they can withdraw cash, and they can transfer between accounts. The kinds of things that people typically go into a branch for, 98% of those functions can be performed at an Australia Post outlet, not just a post office, but in parts of regional Australia, as many of your listeners will know, something like the local newsagent will have the Australia Post function in town. These services are one of the things that helped those small businesses. I should stress too, this isn’t unique to regional Australia. There is actually twice as many branches closing in metropolitan and major regional cities than there is in rural and regional Australia. It is very much driven by customer preference. Where we see branches losing up to 50% of their foot traffic, like any other business they have to start thinking about whether they can sustain that in town.
Tom Mann: And I very much appreciate your time this morning. Thank you so much.
Anna Bligh: Thank you. Bye.
Tom Mann: Anna Bligh there, the CEO of Australian Banking Association speaking about the changes in communication around regional banking closures that has come from the federal government’s task force.
1The Bank On It – Customer Trends 2023 is available for download here. On page 25, the report outlines cash usage has declined from 70 per cent of consumer payments in 2005 to 13 per cent in 2022.
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