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It’s back to closing branches to cut costs..it’s the repeat cycle ‘for shareholder profit’ and big bonuses - new technology mixed with old ideas!
Branch closures leave banks out on a limb
The Australian 12:00am December 29, 2017
Michael Roddan
The banking sector is on a collision course with regional Australia and Nationals MPs, with the rapid closure of bank branches in the least populous states expected to accelerate this year.
An analysis of official figures by The Australian has found more than one in 10 bank branches in South Australia closed between mid-2014 and mid-2016.
The 11 per cent decline in the state over the two years — with more than 50 branches shut — outpaced the rate of branch closures across the nation over the same period, where 7 per cent were closed.
The South Australian government recently abandoned plans for a controversial bank tax, which would have piggybacked on the federal bank levy.
State Treasurer Tom Koutsantonis’s tax was opposed by the banks, the business community and the South Australian opposition, with the Australian Bankers’ Association waging an intense media campaign with the slogan “Jobs. Not Taxes.”
Over the last two years, regional Australia was hit the hardest by lenders pulling up stumps from areas other than the powerhouse economies of NSW and Victoria and growth corridors around Sydney and Melbourne.
Over the two years to mid-2016, Queensland suffered a 9 per cent fall in the number of bank branches. There was an 8 per cent decline in branches in Western Australia.
Westpac, which owns the Bank SA brand, closed 35 branches in South Australia over the two years — a decline of nearly 25 per cent. ANZ shut 12 per cent of its WA branches over the same period.
Figures for the most recent financial year, soon to be released by the Australian Prudential Regulation Authority, are expected to show a continuing trend of closures in regional Australia.
While banks have faced tougher regulatory controls, the industry is also under pressure from technological disruption and the digitisation of financial services.
Population growth is falling in regional centres, and fewer people are using cash and visiting bank branches to do their business.
The big four banks have been targeted over their allegiance to regional Australia by politicians including the Nationals’ Kevin Hogan, the Liberals’ Scott Buchholz and Labor’s Matt Thistlethwaite during the twice-yearly review by the House of Representatives Standing Committee on Economics.
Nationals MPs have applied continual pressure on big companies to continue services in regional areas, such as bank branches and ATMs.
Westpac boss Brian Hartzer recently told MPs he was “very conscious of the concerns in regional Australia around branches” and the bank had struck a deal with Australia Post to open 3500 new transactions locations around the country.
“We have also put video-conferencing capabilities into many of our regional branches,” he said. ANZ chief Shayne Elliott told the economics committee the bank also had a venture with Australia Post. He said that where branches were no longer seeing foot traffic, ANZ was “generally leaving ATMs in those towns”.
However, the pace of closures by the big four banks has been varied. ANZ closed more than 6 per cent of its national branch network over the two-year period covered by the APRA data — the fastest of the four majors. The big four banks announced collective profits of $31.5 billion in 2017.
Commonwealth Bank shut 2.3 per cent of its branches, while Westpac closed just under 3 per cent, and NAB lost just 0.5 per cent of branches across the nation.
However, NAB recently announced it would shed 6000 staff and replace them with 2000 workers with expertise in digital technologies, artificial intelligence and robotics.
At the time, NAB chief executive Andrew Thorburn said the bank closed 18 sites during 2017 and that this faster rate of closure would “probably” continue.
A Westpac spokesman yesterday confirmed 39 branches were closed over financial 2017 “out of a network of over 1000”.
Research from Citi estimates about 30 per cent of bank branch staff will be phased out by technology, potentially threatening 50,000 employees.
The banking lobby recently announced a group of 15 banks would continue to provide fee-free ATM services in some of Australia’s most remote communities, with 85 selected ATMs in remote parts of the Northern Territory, Queensland, WA and SA.
Whos’ Listening
Letters to the Editor SMH
3 September 1999
There’s to be another round of branch closures in the countryside (Herald 3 September 1999: “Westpac plans to lop off more bush branches”) and patently, this will lead to a lessening of services to any bank customer.
But let’s not forget that the banks are quite unashamedly run for the shareholder, not the harried customer. With all but guilt-edged Government guarantee and open slather with the dividend like ‘safe’ low-return Government Bonds they most certainly are not!
Isn’t it about time that PM Howard looked at this dream-quality guilt edged guarantee that’s given to the banks whereby (concommitently with inexorably raising costs and charges to the customer) these banks all can show an equally guilt-edged return to the shareholders? And so conveniently those wonderful rising share prices!
Great returns, fabulous security, ecstatic shareholders, but thousands of cranky put upon customers. Talk about service to the customer.....that poor mug comes a very poor second indeed.
All in all it’s another example of weak government dishonestly favouring one sector of the public against each other, with no sense of national priorities, and, in this instance, with a nice element of cruelty thrown in.
Chapter 2 - Bank branch closures in rural, regional and remote Australia