26 September 2023

Sweeping for new banks as branches close

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Melbourne-based Journalist Elena Couper can see a grim banking service future as Australians change their ways to use less old fashioned cash and adopt the growing replacement of move away from banks

Tough new rules are coming into effect in Australia’s banks, just as the peak trading association for banking reveals the huge scale of branch closures across the country.

Australians are beginning to move away from cash and are instead opting for digital payments.

Official new figures reveal a 53 per cent decline in ATMs in the five years to June 2020, spearheaded by the pandemic as retailers knocked back physical cash.

Around 6,400 machines are active nationwide, down from more than 31,000…

According to the Australian Banking Association (ABA) new rules are being imposed on banks across the country as branches continue to shut down amid an accelerating “digital revolution”.

The ABA’s new Branch Closure Support Protocol will be in force from 1 July and comes after more than 1,600 Australian bank branches closed between 2017 and 2022.

Just under 99 per cent of all customer interactions with banks now occur digitally, according to the ABA.

The protocol will govern the steps banks must follow when closing branches, such as providing customer support when the closest branch is at least 10km away, half the current threshold of 20km.

More than 20 banks are signed up to the Protocol, including the big four, Bank of Queensland and Bendigo Bank.

More than 20 banks are signed up to the new protocols, including the big four.

Notably, there are no requirements to consult the community prior to a closure nor to raise the threshold for when a branch can be closed.

Chief executive of the ABA, Anna Bligh said branch usage has been in “sharp decline for many years”.

“While overall customer preferences have shifted to digital, Australian banks know that some will need greater assistance during this transition,” Ms Bligh said.

The Rural and Regional Affairs and Transport References Committee initiated an inquiry into bank closures in regional Australia on 8 February 2023.

At the committee’s first hearing in March the Finance Sector Union (FSU) accused banks of closing branches, particularly those in regional areas, to suit their own business models.

The union rejected suggestions put forward by the banks that customer preferences for digital banking were driving the closures, arguing there are many Australians who are unable to transition to online banking.

Under the new rules banks are required to provide customer support when the next branch is at least 10km away, half the current threshold of 20km.

The union said those with disabilities, low digital literacy and the elderly would be disproportionately impacted, as would small business customers and Indigenous customers in remote communities.

The Protocol’s new Customer Care Standard, announced last Friday, will require banks to offer education and assistance to customers of a closing branch to transition to other banking options.

Banks will also have to provide language support where appropriate and provide additional assistance to vulnerable customers, such as older Australians and those with disabilities.

Key local stakeholders such as local government and community representatives must also be notified of closures while support obligations will no longer be limited to regional branches.

Unions say bank branches provide essential services, particularly for regional and vulnerable communities.

While Ms Bligh conceded branches nationwide had decreased over the past 20 years, she emphasised Australia also has a higher branch density (24 branches per 100,000 adults) than comparable OECD countries, such as New Zealand.

The FSU considers in-person banking to be an essential service that many small businesses, Indigenous customers and vulnerable populations rely on.

The Protocol follows recommendations made from last year’s Regional Banking Taskforce while the federal government is due to deliver its report on regional branch closures on 1 December 2023.

*Elena Couper is a News Corp reporter covering general news with NewsWire in Melbourne. She is a Law (Hons)/Arts graduate from the ANU and has previously worked at Vogue, GQ, The Australian and the Herald Sun as a News Corp Australia cadet journalist.

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