Regional banking inquiry to probe big 4 banks

The Senate committee on rural and regional affairs and transport is continuing its investigation into the widespread closure of regional banking services, with the top executives of the big four banks set to face tough questioning today (20 September).

This inquiry comes in the wake of over 450 regional banks shutting down in the past five years, leaving communities grappling with the absence of dependable banking services.

The third round of hearings for this inquiry commenced this week in Launceston, Tasmania, on 19 September, hearing from MyState Bank and local councils.

Today, the focus shifts to the big four major banks as they face the committee.

The sessions will culminate in Junee, regional NSW, where Beyond Bank and Hume Bank will provide their insights.

The committee aims to assess the economic and welfare consequences of branch closures in regional Australia as well as seeks to unravel the processes employed by banks to shutter branches and the justifications behind these actions.

Previous hearings have witnessed testimony from Westpac and the National Australia Bank on 2 March, the Australia and New Zealand Bank (ANZ) on 18 May, and Bankwest on 16 August, alongside representatives from the mutual banking sector.

However, this will mark the first instance of the Commonwealth Bank of Australia (CBA) addressing the inquiry.

In its submission, the major bank underscored that “39 percent of CBA branches are based in regional Australia, supporting the 28 per cent of Australians who live outside capital cities.”

The CBA further explained its decision-making process regarding service changes, stating that it considers various factors to ensure customers’ continued access to suitable banking services, either through its own channels or via Bank@Post.

Like its peers, CBA acknowledged a “clear shift in customer preferences towards digital and phone-based banking channels over many years”.

The bank said: “We have seen a sustained increase in demand from our customers preferring to complete their banking over the phone and online”, with over 8 million customers utilising its digital platforms.”

This preference has led to a noticeable decline in over-the-counter banking transactions, impacting both regional and metropolitan areas.

Similar to the decline in face-to-face banking services, CBA reported a decrease in ATM withdrawal volumes as more individuals opt for digital and card payment methods. Additionally, labor shortages have posed challenges in maintaining a sustainable branch network.

In addition, labour shortages have contributed to a “challenge in maintaining a sustainable branch network.”

In October 2021, CBA adopted a multichannel branch operating model across 90 regional branches. Under this model, staff serve local customers in-branch from 9:30 AM to 1:00 PM and then shift their focus to assist customers using CBA’s contact centers.

Following this week’s public hearings, the committee is expected to deliver a report by 1 December 2023.

[Related: Digital banking is paramount regional bank closure inquiry hears]