Australian consumers are rapidly shifting toward digital banking for convenience and speed, but physical branches remain a critical touchpoint—especially for complex financial products, according to new research from global consulting firm Kearney.
According to the Australian Banking Association (ABA), a staggering 99.1% of customer interactions now occur via apps or online platforms. Mobile wallet transactions have seen a dramatic rise, reaching $126 billion in 2023, up from $746 million in 2018—a 169-fold increase.
Kearney’s latest APAC Banking Radar report highlighted that while digital channels dominate for simple banking tasks, in-person services continue to play a key role in areas like home lending, financial advice, and community-based banking.
Australia has experienced one of the steepest declines in bank branches across the Asia Pacific region, on par with Thailand. However, the country still maintains one of the highest ratios of branches per 10,000 customers, underscoring ongoing community demand and regulatory scrutiny around branch closures.
Kearney suggested this represents a clear opportunity for banks to reimagine the role of regional branches—particularly in rural and remote areas, where branches often double as essential community hubs.
Australia’s major banks are heavily investing to meet rising digital expectations.
This investment is already paying off in straightforward banking categories.
Kearney’s data showed that 72% of Australians use online banking platforms to research financial products, and 79% complete purchases online.
In both Japan and Australia, customers often start their journey with price comparison websites before finalising purchases via online banking channels.
These trends align with ABA data, which showed that between 2019 and 2024, banking interactions rose 37%, driven by increased use of online platforms and mobile apps. Mobile wallet payments surged to $126 billion in 2024—up 35%—and, for the first time, have overtaken total ATM cash withdrawals.
Despite digital acceleration, Kearney warned that digital-only channels are not yet equipped to fully serve complex financial needs. In the mortgage market, for example, around 75% of home loans are still broker-originated.
While all four major banks now offer end-to-end digital home loan services, customer uptake remains limited due to gaps in online product flexibility and a strong preference for human interaction during major financial decisions.
“Banks in Australia have a major opportunity to capture a greater share of mortgage origination. To seize it, they must strengthen their digital platforms to better support proprietary channel mortgage sales,” said Robert Bustos McNeil (pictured), Asia Pacific lead for financial services at Kearney and author of the report.
“An improved digital experience can support expanded face-to-face and digitally assisted mortgage origination in the proprietary channel through in-house bankers.
“Although branch numbers are declining, branches could become important hubs for in-branch and mobile lenders, and for providing assistance to customers to move seamlessly between online and physical channels, helping banks win back share from brokers.”
Kearney’s findings suggested that future banking success in Australia will hinge on a hybrid model—one that blends digital efficiency with the personalised service customers still expect, particularly for high-stakes financial choices.
This comes at a time when regional branch closures are increasingly contested by policymakers, local communities, and regulators alike.
As of early 2025, the major Australian banks—Commonwealth Bank, Westpac, NAB, and ANZ—have agreed to a moratorium on regional branch closures, effective until at least July 31, 2027. Introduced in February, the agreement aims to halt the decline of face-to-face banking services in regional areas.
Rather than seeing branches as outdated infrastructure, Kearney argued they are a valuable differentiator for banks seeking to maintain trust, loyalty, and local relevance.
“Australia’s banking sector is rapidly evolving. While digital adoption is reshaping how customers engage, the demand for trusted advice, particularly for complex financial decisions, remains strong,” Bustos-McNeil said.
“Banks that genuinely listen to their customers and balance digital innovation with personalised service, especially in regional communities, will be best positioned to deepen customer relationships and stay competitive in a changing market.”
