Banks could join forces to save regional branches

The Australian banking industry is exploring the possibility of regional branches joining together to save face-to-face services, according to a plan submitted to the competition watchdog. The Australian Banking Association's (ABA) chief executive, Simon Birmingham, stated that some customers still prefer in-person banking, despite a sharp decline in transaction volumes.

Birmingham noted that "everyone's banking needs are different," and this proposal aims to cater to those who prefer traditional banking methods. In recent years, in-branch interactions in regional Australia have plummeted by 63% since 2019, while cash payments have dropped to 15% of total transactions, down from 70% in 2007, according to industry and government data.

The proposed plan includes a funding model for shared costs of supporting multi-bank branches and hubs in rural and regional areas. Similar hub models already exist in the United Kingdom and New Zealand. Birmingham emphasized that branches will remain an option for regional customers but that the trial aims to explore new ways of delivering face-to-face banking services in communities currently devoid of bank branches.

Since mid-2017, nearly 850 banks have closed in regional, rural, and remote Australia, leaving an estimated 600 towns without a local bank. The impact of a moratorium on regional branch closures, introduced by the federal government, will only be known once the 2026 financial year data is released.