Back in the 1970s, the Bank of New South of Wales, had a slogan: “You can bank on the Wales”. Even then it was probably a tired pun, but it reflected the reality of the time.
The major banks were considered trustworthy and reliable. That reliability extended to being there for you in person, in your local suburb or country town. But as bank branch closures continue unabated, that sense of reliability has dwindled.
For most suburban customers who have lost their branch, it is an inconvenience, though one that can be overcome relatively comfortably. But for many regional customers, it’s a very different story. When the last bank in town closes, a visit to their ‘local’ branch suddenly entails a long road trip.
Earlier this year, some parliamentarians decided to challenge the banks on this tactic. Liberal senators Gerrard Rennick and Slade Brockman successfully campaigned for a senate inquiry into regional bank closures. The inquiry began in March and this month banks themselves have been called to explain branch closures.
All is not what it seems with bank branch closures
NAB chief executive Ross McEwan was questioned about the practice of bank branch closures. One of the justifications for closures was, he said, “the use of the service is dropping and not being used”.
But Senator Rennick was ready for that rhetoric and challenged Mr McEwan directly. “I dispute that. You just announced the closure of Ocean Grove.” The NAB branch, located south-west of Melbourne in regional Victoria had, in fact, registered rising transaction numbers, Senator Rennick said.
The revelation forced NAB executive general manager for retail, Krissie Jones, to make a small concession. There were, she said, “a small number of instances where that has occurred, and Ocean Grove is one of those.”
Exceptions such as Ocean Grove aside, the implication is that branches are being closed because fewer customers are using them.
ANZ CEO Shayne Elliott highlighted that point. “The reason the branches are struggling in regional Australia is because customers aren’t using them,” he said. Mr Elliott said customers “vote with their feet every day choosing to go online at a rapid rate.” They are also “choosing to move away from cash, to use digital services,” he continued.
But is there ambiguity in Mr Elliott’s use of the word ‘choosing’? When faced with a ‘choice’ of having to pay a fee or travel further to use a preferred banking method, is that really ‘choosing’?
Justifying closures with reports of falling numbers is somewhat dubious if the banks’ tactics have contributed to that fall.
NAB goes it alone
Interestingly, since the senate inquiry was announced in February, three of the ‘Big Four’ banks have paused regional bank closures. ANZ and Westpac have suspended closures while the inquiry continues, and CBA has committed to a three-year pause.
But NAB is holding out. Since the inquiry opened, it has closed more than a quarter of its branches in towns when that was the last bank standing. That’s according to Senator Rennick, who hammered home the point by highlighting that period covered only about 200 days.
Although the CBA has agreed to a pause, CEO Matt Comyn acknowledged a certain inevitability about bank branch closures. “The more we have services that either we don’t charge for, or that are used by a minority of customers, the more we are challenged to sustain these services,” he said.
Those challenges are no doubt genuine. So are the challenges facing regional residents – especially older ones – who have lost, or will lose, their local bank branch.
Has your local community been left without a bank branch? What impact has that had? Let us know via the comments section below.