‘Digital banking is paramount’, regional bank closure inquiry hears

Speaking to the Senate rural and regional affairs and transport references committee hearing in Ingham, Queensland, on 18 May 2023, ANZ’s general manager retail branch network (NSW and ACT) Michael Wake explained branch transactions had halved over the past five years and 1 per cent of the bank’s transactions were now being made over the counter in branches.

“Similarly, 8 per cent of our customers use only our branches and 81 per cent of our customers haven’t visited a branch in the last 12 months,” Mr Wake said.

The second day of the two-day hearings invited representatives from Australia and New Zealand Bank (ANZ), Bendigo and Adelaide Bank and Suncorp Bank as well as the local councillor and community members.

The inquiry drilled down on the issues facing regional communities following bank closures, such as the social and economic costs to small businesses, agribusinesses, and the wider community.

It also sought to understand the communication process by the banks to the community when the decision to close had been made, noting — several times — the failings of banks to communicate with community members, as addressed in the Coalition’s Regional Banking Taskforce.

The Senate called out ANZ as showing “more of a trend in being the first major bank to leave town”, in addition to slashing around 60 per cent of ATMs nationally with two-thirds removed from Queensland.

Since the start of 2021, ANZ had closed 56 regional branches: 21 in NSW, 19 in Victoria, eight in Queensland, four in Tasmania, and two each in South Australia and Western Australia.

ANZ’s Mr Wake explained the bank has 40,000 customers a month joining its app, thus its investment into digital banking “is paramount” to remain competitive.

When a branch closure was planned, customers over the age of 65 were invited for a face-to-face consultation in the branch to discuss the process, before a follow-up call to check if they had made an online transaction.

“In most instances, 70 per cent of [clients over 65] are very interested in learning digital banking things so that they don’t have to go out,” he said.

“We know however that we need to support those who want to have a conversation about their banking.”

In considering alternatives, Mr Wake explained “ANZ continues to have regular dialogue with Australia Post”, which offers the banking service Bank@Post for participating banks.

However, ANZ remains the only major bank, yet to participate in the program.

Weighing in, ANZ’s strategic solutions director Tony Tapsall added that some regional branches are working on a “hybrid model” where it’s open for a fair part of the morning and then in the afternoon - to do other customer-focused work, such as helping people with their home loans and helping people with their banking in a different manner.

ANZ-Suncorp merger probed

On the back of the ANZ-Suncorp proposed merger, which would see ANZ acquire the banking arm of Suncorp, the Senate asked what guarantees have been made to ensure where there are both branches in a regional town both would remain.

Mr Wake said there will be no Suncorp Bank branch within the three-year transition period.

However, he added that there were “no plans” regarding ANZ branches or beyond the transition period.

The Senate said ANZ’s “no plan” of closures inherently could mean a “plan is hatched out tomorrow” and continued to push the subject with Suncorp Bank, asking whether Suncorp was “concerned in the merger”, given the low representation of ANZ branches in regional markets and its “overwhelming view of cutting regional banks”.

Suncorp Bank’s chief executive Clive van Horen reiterated that Suncorp would keep Queensland branches open for at least three years if the proposed merger gets the green light, however, noted the bank had axed 10 branches in the first six months of 2022 and none since.

“We’ve also committed that there’ll be no net job losses as a result of the transaction for at least three years in Queensland,” Mr van Horen said.

“For every branch closed in the last five years by Suncorp, there has been a Bank@Post service out there within an average of only 500 metres of our branch location,” Mr van Horen said, adding that the most common transactions can be completed at the post office.

“We do believe that Australia Post is an important part of the future. That was part of the regional banking Task Force recommendations, and the ability for customers to do more and higher value transactions,” Mr van Horen said.

In addition, Suncorp bank told the Senate mortgage brokers were “far in excess of our footprint, or ever has been or will be”, and that was true in both the consumer and the business space.

Bendigo and Adelaide Bank chimes community bank model

While the bank had axed 12 community branches in the last financial year, it shared with the Senate how community banking can help regional communities.

“From a community bank perspective community bank branches are the majority of our branches today. Of the around 430 branches, we operate around 300,” Bendigo and Adelaide Bank’s chief customer officer Richard Fennell said.

“We provide all of the revenue to community bank branch operations. It is a shared revenue model, where the business comes in through a community bank branch.”

He said the bank then shares the revenue with the community bank, which is 50/50 in some instances.

“The reality is 100 per cent of the revenue generated by community bank comes from Bendigo Bank, but it then provides revenue to support the community bank to pay for the costs that they incur in running the physical branch and employing the staff in that branch,” Mr Fennell said.

Bendigo’s community banking model came into effect in the late 1990s and Mr Fennell said expanding its physical footprint was the future.

A similar model was shared with the Senate by Heritage Bank and People’s Choice Credit Union on the first day of the latest inquiry, where it tipped start-up costs by the community can be in excess of $500,000.

A final report by the rural and regional affairs and transport on the regional bank closures is expected to be handed down on 1 December 2023.

[Related: Mutual bank addresses Senate Inquiry into bank closures]