All four major banks have been questioned by a Senate committee inquiring into bank closures across regional Australia.
With over 1,200 bank branches closing across regional towns in six years and more shutdowns expected to come, industry representatives defended their positions as consumers transition to digital banking.
The inquiry, which featured senior executives from Commonwealth Bank (CBA), Westpac, NAB, and ANZ along with unions and other groups, comes after submissions closed in April after the investigation began on February 8.
NAB criticised for continued bank closures
While CBA and Westpac have committed to no bank closures while the inquiry continues, NAB has closed regional branches even while the Senate investigation rages on.
“You've announced or closed 30 branches since this committee has formed,” Nationals Senator Matthew Canavan said to NAB. “Why are you acting in this way and continuing to close your branches right across rural and regional Australia while other banks are pausing and taking a look at what they're doing?”
NAB managing director and CEO Ross McEwan (pictured above far left) maintained that the bank had continued to “do the right thing”.
In his opening address, McEwan said banks were experiencing rapid changes in how customers interacted with them and accessed their services and products.
“Digitisation has ushered in a new era of convenience, and we are all adapting to these dynamics,” McEwan said. “Today, 93% of interactions with our personal customers occur through digital channels – and this is growing – in fact, our data shows us that digital adoption is occurring at the same in regional Australia as it is in metro areas.”
“Only 3% of our personal banking customers do their banking exclusively through a branch and we now processing more than one billion payments online annually. In contrast, our Corrigin branch in regional Western Australia, for example, averaged only six transactions a day last year.”
CBA, Westpac and ANZ state their positions
In Commonwealth Bank’s opening statement, CEO Matt Comyn (pictured above second from left) said the bank, which has 728 branches across the country, had reduced its branch footprint over time due to “the way customers engage with banks continues to change”.
“As our branch footprint has reduced, we have chosen to skew closures towards metropolitan areas,” Comyn said. “Today, around 40% of our branches are in regional areas yet regional Australia only accounted for only 25% of closures over the past four years.”
Westpac CEO Peter King (pictured above second from right) said the bank had used technology to connect the group’s brands to regional customers.
“We've almost completed a national rollout allowing customers of any regional brand, that's St George, Bank of South Australia, Bank of Melbourne, can now use any Westpac branch,” King said. “This is increasing overall availability of branches for our customers.”
While King admitted that the use of cash was coming down and regional branches were being used “not as much as is the past”, he said the Westpac Group did not close a bank if there “is no alternative bank” in the community.
ANZ, which is the smallest of the big four, has 390 branches across the country – 140 of those in regional areas.
“We would love it if people would use our branches, but the reality in ANZ is that our customers are rapidly moving towards digital channels,” said ANZ CEO Shayne Elliott (pictured above far right).
Elliott said while most customers preferred digital channels for many of their transactions, branches “continue to be important”.
“We know that closing a branch can have a big impact on communities and we do not make that decision lightly,” Elliott said. “When we do make the difficult decision to close a branch, we work hard to support our employees and our customers.”
How do banks consult regional communities on bank closures?
A significant theme of the inquiry involved how banks consult communities about closures.
Canavan asked Comyn what the problems would be if the government mandated a provision that required consultation.
Comyn responded that he didn’t think it would have a significant impact and that CBA was moving towards the “most telegraphed consultation process in banking history”.
When questioned later on about what CBA is doing now to consult customers, CommBank’s executive general manager of retail Mark Jones (pictured below) said the bank had more than 750 regional and agribusiness bankers who can turn up and talk “face to face”.
Another point of interest was how banks decide to close a branch with Canavan asking whether it was based on the profit and loss of branches.
Comyn admitted that while there might have been a point in time when profit and loss were considered at an individual level, that was no longer the case.
“We think about serving customers holistically across segments and across regions, whether it's through digital, whether it’s through our contact centre, whether it’s through our branches.”
NAB executive general manager of retail Krissie Jones (pictured below) responded to this point, saying there was “not a formula” but a range of factors.
“We look at a range of factors, whether that's over the counter, the types of inquiries the customers coming in but also the way that they're banking,” Jones said.
Westpac’s King said in places such as Townsville where branches had closed, “education sessions” were run before the closure occurred.
“In towns where we're closing a branch, we have a fairly lengthy period where we’re consulting with our customers,” King said.
“We've enabled our call centres to be able to take calls from customers anywhere in Australia where they can continue that digital education with customers online.
“We would have had 340,000 of those conversations with customers since March this year.”
Are post offices the new banks?
An interesting undercurrent to the discussion throughout the session was the use of Australia Post as a viable alternative to regional banking.
Bank@Post gives access to over 80 banks and financial institutions, including CommBank, Westpac and NAB, and allows customers to conduct some banking processes through participating post offices across more than 1,800 remote locations.
For example, the Senate pointed out that research showed the closest NAB branch to Emerald is Longreach in regional Queensland – about a four-hour drive away.
In response, McEwan noted that there “are a large amount of regional post offices that will service those needs”.
King alluded to the impact regional branches had on shareholders, saying that the 10-year commitment to Australia Post was “very important because it's a scaled game”, with the amount of cash use shrinking fast.
“The shareholders will get the ups and downs particularly of an economic cycle,” King said. “We've been fortunate enough in Australia to have 20 years of growth. And that's seen good, profitable banking systems in relation to services in the region.”
However, the Finance Sector Union’s Myrna Ellery pointed out that there were some transactions that “cannot be done anywhere but at a bank branch”.
“They range from identity checks to cries for help from the most vulnerable in the community impacted by violence or misadventure,” Ellery said. “It includes loan applications, opening new accounts for children or community organisations.”
“All these interactions have one thing in common. They must be performed by a suitably qualified bank worker. They can’t be done in a post office. It is disingenuous at best to suggest that a post office branch can do the job of a bank.”
Elliott agreed that there were some situations where a branch was needed. ANZ does not use Bank@Post services.
However, he said ANZ would continue to reach a “fair and proportionate agreement” with Australia Post to use the services.
The final report is set to be published on December 1, 2023.