In the past, every town no matter the size, was guaranteed to have two things: a pub and a bank. But in the last 25 years major banks have been leaving regional Australia in droves, devastating local communities, creating huge service gaps, and putting local economies under severe pressure.
On February 8, 2023, the Rural and Regional Affairs and Transport References Committee initiated an inquiry into bank closures in regional Australia, with a report due by December 1, 2023. The inquiry will examine regional bank closures, their impacts, and possible solutions.
On March 2nd, 2023, the Senate committee conducted its first hearing in Sale, Victoria, with the aim of examining the effects of branch closures. The FSU attended the hearing to advocate for the interests of our members, and to provide the inquiry with a comprehensive understanding of the real-world impacts that these closures can have on staff and the communities they serve.
At the Senate Committee's opening, Wendy Streets, Local Executive Secretary of the Queensland branch of the FSU, expressed FSU Member concerns about the closure of bank branches in regional communities. She rejected the notion that customer preferences for digital banking are driving these closures, instead attributing them to the banks' own business models.
Streets highlighted that not everyone can transition to digital banking, including individuals with disabilities, the elderly, and those with low digital literacy. She emphasized that branch closures disproportionately impact small business customers, Indigenous customers in regional and remote communities, and other vulnerable populations who rely on face-to-face banking services.
To address the issue, the FSU proposed several solutions: declaring banking an essential service, establishing a new code for branch closures, conducting community impact assessments, and implementing an appeal and 'right of review' mechanism. These measures aim to ensure fair and impartial processes for customers and stakeholders alike.
In her concluding remarks, Streets reiterated the importance of banks as essential community institutions. She argued that it is the responsibility of the most profitable financial institutions to provide accessible and secure banking services for all Australians, regardless of their location or ability to access digital platforms. By doing so, banks can continue to support small businesses, Indigenous customers, and vulnerable populations who depend on in-person banking services.
You can head the full transcript here
Ms. Myrna Ellery highlighted the challenges faced by the elderly, people with disabilities, and those with limited access to the internet. She emphasized that banks have a special obligation to their customers, particularly as bank accounts have now become a fundamental necessity.
Ms. Ellery also discussed the continued presence of targets in the banking industry, with staff members required to migrate customers to online banking. This has led to a reduction in branch services and closures, particularly in rural areas, where residents face increased difficulties in accessing essential banking services. The closures have a significant impact on local businesses and communities.
In response to banks claiming that Post Offices can fill the service gaps left their branches, Ms. Ellery noted that while some banking services can be accessed through Post Offices, they are not a comprehensive solution. Post Office staff lack the necessary training to identify issues such as money laundering, financial elder abuse, and fraudulent transactions.
You can read a full transcript of Myrna Ellery’s statement here.
An FSU survey of regional members found that 86% of respondents believe they will have difficulty finding a new job if their local branch closes. Respondents cited factors such as ageism, distance to the next nearest branch, and lack of job experience as reasons for their difficulty.
Between June 2017 and June 2022 over 1600 bank branches were closed, with a disproportionate number of these branches located in regional Australia. Furthermore, it appears that without intervention this trend is set to continue, leaving more regional communities in its wake.
The Regional is an independent news source that tracks bank closures across Australia. Click to learn more about which communities have been affected by bank closures.
The banking sector was deemed an essential service during the Covid shutdowns of 2020 and 2021, and bank workers were declared essential workers. Like energy and water, access to banking should be mandated as an essential service, for the financial accessibility and the health of regional Australia. To establish minimum service standards, an industry-wide group should be formed. Any future branch closures must be evaluated against these standards and not proceed if the standards are not met.
To remain financially viable in regional Australia banks should be focusing on innovation rather than cutting and running. Trials have demonstrated the effectiveness of the multi-branch approach, where banks have shorter trading hours and bank employees perform call centre duties. Additionally, deploying mobile branches that rotate through major towns can improve accessibility to banking services while reducing costs.
Members have told us they are trained to steer customers towards using ATMs and online banking to decrease in-person visits to branches. This approach leads to job insecurity as FSU members may face disciplinary action or termination if they do not meet the targets. If members do meet these targets, as they have been instructed, then the banks have the evidence they need to implement the branch closures.
The closing of regional branches in retail banking disproportionately affects women because they make up the majority of front-line staff. This results in a higher number of job losses for women, who already have less job security compared to men who our survey’s show are more likely to hold business banking and sales roles.
Banks often make the decision to close branches with a primary focus on financial gain – overlooking the negative impact it has on the local communities and customers who rely on those branches. The Royal Commission into misconduct in the financial sector uncovered instances where banks have not sufficiently considered the consequences of such closures on their customers. Banks are willing to cop the bad publicity from the closures because for most people it is too much of a hassle to switch their bank accounts in protest. Banks may argue that they are adapting to the digital banking trend, but the reality is that these closures cause significant hardship, especially for those who are older, less mobile, or lack access to technology.
When a branch closes, it can have significant negative effects on the residents and businesses. These effects can include feelings of anxiety and concerns about safety and security, as well as additional costs associated with having to travel farther to access banking services. Furthermore, the loss of a financial service can lead to a loss of economic opportunities for the community, resulting in job losses and a decrease in business for local retailers. This can have a cascading effect on the community, leading to population decline, the loss of skills and experience, and even the erosion of cultural activities like the local footy, cricket, and netball team.
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Finance Sector Union Submission to the Regional Banking Taskforce 2021
Australian Prudential Regulation Authority (APRA): Authorised Deposit-taking Institutions points of presence June 2017 to June 2021
Hansard – Rural and Regional Affairs and Transport References Committee: Bank closures in regional Australia – 2 March 2023
FSU Submission to Rural and Regional Affairs and Transport References Committee of the Australian Senate March 2023 – Bank Closures in Regional Australia