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Bank Branch Closures

I read a recent article in one of our industry magazines which tweaked my interest. The general public have been invited to submit their insights into regional bank closures to the recently established Regional Banking Taskforce over the coming weeks.

‘’The taskforce is aiming to understand the impacts of branch closures and how customers are accessing banking services, as well as to help improve services and accessibility where branches have closed. As set out in a newly released issues paper, the group will analyse the trends in bank branch closures across regional Australia, assess the impacts on individuals, businesses, community organisations and regional industries, & assess how banks have transitioned their services and identify alternatives. Concerns have been raised around regional branch closures since the 1990s and 2000s, when banks were pressured to reduce their networks due to shifts in electronic banking and demographic shifts towards larger cities and towns. But the fall in branches has escalated more recently, the information paper noted, with the number of branches in regional and remote Australia falling from around 2,500 to 1,900 in the four years to June 2021. At a national level, total bank branches have declined from around 5,800 to 4,500 over the last four years, while ATMs have also dropped, down by around 20 per cent since hitting a peak in 2016.’’

Now having worked in this industry for in excess of 42 years I can confirm this is not a new phenomenon. The delivery of banking services in the face to face format has over a number of decades, become less cost efficient for banks. This has also impacted credit unions & building societies, many of whom have continued to merge in order to gain economies of scale. It’s gathered pace as newer generations further embrace online banking technology. The banking and finance sector is often at the forefront of technological change. Another factor that has contributed to the speeding up of these branch closures is the thinner margins that banks are able to work on, in what has essentially been a lower interest rate environment for some years. The article went further to say, ‘’while banking via Post Offices can be done , offering services such as cash withdrawals and deposits, account and balance checks, credit card repayments, and cheque deposits, customers can’t apply for a loan or open or close an account at their Post Office. The effects of these declines may be particularly felt in regional communities, where closures can affect the liveability of towns, especially for residents who are unable to use online services to do their banking. There were a number of impacts found in the 2004 parliamentary inquiry into branch closures, which included inconvenience, worry and extra costs involved in travelling to the nearest branch or learn new ways of banking; and the safety, security and savings implications when customers withdraw larger amounts of cash to tide them over until the next trip to a branch. Further, lack of competition in the local area could force limited choices onto customers, which could lead to saving or investment losses, as well as further impacts from lack of readily available advice from local bank staff who understand the community. However in saying all this, the majority of Australians (72 per cent) were reported to have not visited a branch of their main bank in the month leading up to September 2021.’’

Now there are some solutions that can be explored to address this decline for regional communities to be able to maintain good ‘face to face’ banking connections . Some of these might involve franchise operations and local government community business hubs as examples, but I’ve highlighted three points that were raised in this article that carry great significance for our clients.

Our COMPASS lending business model will continue to offer :-

  • Face to face banking in terms of loan applications

  • Choice

  • Experience & expertise


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