Bank branches 'critical' for home finance, inquiry hears

The Senate committee on rural and regional affairs and transport heard from two customer-owned banks, including Hume Bank and Beyond Bank, on Thursday, 21 September, marking the final day of the third round of hearings.

The hearings took place in Junee, regional NSW, where the local LGA, councils, and the golf club emphasised the importance of access to cash services in a banking environment for daily banking needs.

The investigation continues into the widespread closure of regional banking services, with top executives from the big four banks facing tough questioning on Wednesday, 20 September, alongside banking associations and stakeholders.

The inquiry has revealed that more than 1,600 bank branches have closed nationally in the past six years, with a disproportionate amount impacting regional communities, leaving them with no choice but to transition to digital banking or utilise Bank@Post services.

Deputy chief executive of Beyond Bank, Wayne Matters, shared sentiments with other banks, stating that most customers prefer digital transactions for convenience.

However, he added that when customers have important matters to discuss, they come to the branch.

The majority of their customers still prefer in-person discussions, especially when it comes to financing a new home or more complex transactions like insurance and financial management.

“We find that many of our customers value that personal relationship,” Mr Matters said.

“They might also go to see their mortgage broker. We’re more than happy to deal with customers through a mortgage broker if that’s what they choose.”

Merger and acquisition strategy

CEO Robert Keogh also discussed the importance of merger and acquisition strategies to safeguard the customer-owned banking sector’s future.

He emphasised that mergers are their main focus at the moment “right across Australia”.

“Today we are in the midst of a merger within the central west of New South Wales and this will see an expansion of our branch and agency networks,” Mr Keogh said.

Looking ahead, Mr Keogh also hinted the bank was eyeing a presence in Queensland, while the bank is already represented in the state through the third-party channel.

Reducing red tape

Mr Keogh echoed sentiments from Michael Lawrence, CEO of the Customer Owned Banking Association, about the need to reduce regulatory red tape for customer-owned banks.

He stated that while regulation is necessary, it should be proportionate.

Currently, their regulatory requirements tie up 47 full-time equivalents, costing around $9.3 million annually.

He said this cost limits their ability to invest in their communities.

“For every dollar that we invest in the regulation that’s $1 that we cannot invest into the communities,” Mr Keogh said.

Commonwealth Bank halts bank branch closure

While the Commonwealth Bank (CBA) has put a moratorium on branch closures until 2026, it has reduced branch hours to three days in the regional NSW town of Junee.

Director of the Junee Cooperative Society Limited, Pamela Jane Halliburton, raised concerns about increased business insurance costs due to extra cash on-site and the potential need to travel 40 kilometres to Wagga Wagga for cash deposits.

While cash transactions have decreased since COVID-19, the Junee Cooperative Society has a yearly turnover of $19 million, with 5 per cent coming from cash transactions.

CBA’s CEO Matt Comyn explained that the use of cash in transactions has decreased significantly, making it unsustainable to maintain expensive services that fewer customers use.

However, he mentioned the bank’s willingness to remain in areas beyond 2026.

Hume Bank eyes opportunity

When asked by the Senate committee if Hume Bank would consider opening a branch in Junee if CBA exited, CEO Stephen Capello said “yes”.

Hume Bank has a lending book of $1.4 billion, with small-business lending of less than $100 million.

While Mr Capello stated there were no immediate plans for a new branch, he highlighted Hume Bank’s commitment to fair and accessible banking.

Drawing on an example when the NAB departed Holbrook and access to banking services was removed, Hume Bank seized the opportunity presented by the local council to fulfil the community’s needs.

He emphasised that “accessibility” was a founding principle of Hume Bank in 1955, which still holds true today.

He added that regional bank branches serve a greater role in communities beyond mere transactions.

“Regional [banks] are a place to get advice, it’s a place to do complex transactions, it’s a place to store your cash,” Mr Capello said.

“The original goal of a bank is for your ability to place your cash in a safe place.

“The bank branch serves a much greater role in regional communities than purely a bank transaction.”

As such, even with 95 per cent of Hume’s customers turning to digital banking, the role of banks in regional communities remains essential, he said.

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