How bank branches can avoid the fate of video stores
Bank branches will not disappear from shopping strips entirely in the way that video stores have, even as more customers ditch cash for digital banking, outgoing chief executive of the Australian Banking Association Anna Bligh says.
The number of bank branches around the country has tumbled by more than 40 per cent between 2017 and 2024, latest official figures show, and the trend has sparked intense scrutiny of the major banks’ physical footprint.
Anna Bligh, chief executive of the Australian Banking Association, is retiring from the peak body.Credit: Oscar Colman
Bligh, a former Queensland premier, is retiring from the ABA after eight years in the role, to be replaced by former Liberal MP Simon Birmingham. In an interview, Bligh said one key challenge for Birmingham would be changes caused by the “new world” of digital banking as many customers embrace digital channels and payments.
Cash has been in long-term decline, and Bligh said the Reserve Bank estimated only 4 per cent of transactions would be in cash by 2030, which she said was “getting pretty close to zero”. Cheques are also being phased out by 2030. Even so, Bligh said branches would not “disappear overnight” because they were still commercially valuable for many banks.
“The industry effectively still has one foot in the old world of banking and one foot in the new world. At some point, the weight of their customer behaviour and the customer shift is going to require them to put both feet in the new world. And it’s very hard to predict what date that’s going to happen,” Bligh said.
“I don’t think we’re going to see a world where we don’t have banks with a presence in the community in branches, but I can see a world where what happens in those branches is very, very different to what happens now.”
In a sign of how customers’ financial behaviour had changed, Bligh said the value of transactions on “mobile wallets” such as Apple Pay had soared from $7 billion a year five years ago to $160 billion now. She compared it with the rapid growth in video streaming but reiterated banks would not be wiped out as video stores were.
Bank branches can dodge the fate of video rental stores, the banking industry’s peak body says.Credit: Tamara Voninski
“The pace at which people moved from videos to streaming – the video store is no more. Now, I don’t think it’s going to happen that fast in banking, but I do think … it will look very different in five to 10 years’ time.”
The federal government this year announced a moratorium on regional branch closures by the major banks until 2027, citing a 36 per cent drop in regional branches since 2017.
Commonwealth Bank, Westpac and NAB also agreed to deals that give Australia Post more funding for its banking operations, while ANZ also signed up to Bank@Post. Those agreements followed discussions about a potential “rural bank levy” that could have penalised banks with a smaller presence in regions, relative to their deposits.
Payments expert Lance Blockley, managing director at The Initiatives Group, said the community pressure to keep branches open needed to be balanced with the “commercial reality” of declining branch usage as more banking was done digitally.
While Blockley said branch numbers would continue to fall, he said branches would remain in busy areas, and they were likely to focus more on financial advice and lending instead of cash and cheque transactions.
“You can imagine that in a number of locations, Bank@Post is going to become a more attractive way to service the population than having a branch of every one of the four major banks in town,” he said.
The nation’s largest bank, CBA, this week reported it had 659 Australian branches, down from 709 a year earlier. Westpac’s branch numbers had fallen to 620 in its first half, NAB had 609 branches or business centres, and a spokeswoman said ANZ had 383 branches, excluding branches of ANZ-owned Suncorp.
Bligh joined the Australian Banking Association the year before the industry was put under the blowtorch through the royal commission into financial misconduct, led by former High Court judge Kenneth Hayne.
Since then, banks have offloaded their more scandal-prone businesses in wealth management, and Bligh said the industry had been able to improve its reputation during the pandemic, when banks allowed hundreds of thousands of borrowers to defer their mortgage repayments. Even so, Bligh said criticising banks would remain a feature of public debate in Australia.
“One of the great national pastimes of Australia is bashing banks, has been for generations, and it’s likely to continue. But I think fundamentally, we do have a banking system that people trust. If we didn’t, we’d all be keeping money under the bed, but people do trust banks to look after their money,” she said.
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