05 December 2023

Originally published in The Daily Telegraph

By Bruce Billson.

Banking is an essential service with a privileged position in the economy, and our small, family and farming businesses depend on having a close and reliable relationship with their bank. But when the bank leaves town, it can have a shocking effect on those businesses, jobs, liveability and prosperity. 

Since 2017, there’s been a reduction in bank branches throughout Australia of one-third and the number of automatic teller machines has been cut by two-thirds. 

In regional Australia, Bruce Billson the banks have closed 218 branches and removed 566 ATMs in just the past two years, according to APRA. Some 30 per cent of small businesses are based in regional Australia and when the bank leaves it can be devastating.

 Access to cash and deposit services are diminished and bank customers must commute to other centres for service or engage with metropolitan-based bankers, who may not understand the regional small business customers’ investment potential, operational environment or business challenges. 

What options does a farmer have if they want to have a face-to-face chat with the bank manager about sensitive and personal hardship provisions? I met a rural accountant who has a client that had a payment for $60,000 intercepted by the invoice substitution scam and lost their money. 

The banks recently promised to finally match BSB and account numbers with names to help prevent the scam, and I welcome that. But this customer now wants to go into the branch to make any transaction above $10,000 – except there’s no longer a bank in town. I acknowledge that several customer-owned banks are opening branches in regional communities, including locations where larger banks have left. 

It’s also suggested the post office can fill the void, but they often don’t offer the full range of services a small, family or farming business needs, and the fees and charges can be higher than the same service provided by the bank. Plus, post offices don’t want to handle large amounts of cash. And what’s to stop the same issue occurring with growing pressure on post offices to also close? 

The Australian Banking Association is updating its bank closure protocol, but I find it laughable in that it implies a degree of consultation when it is nothing more than a notification after the decision has been made with no genuine opportunity for a community to influence that decision. 

Why not give the local council, the water authorities and other businesses in that area the chance to make a judgment about whether they want a business banking branch to stay in their community and reward it with their business. Banks are doing nothing more than a driver putting on the indicator to change lanes after they have already moved. And when the banks do leave town, often all that’s left is a boarded up building. 

They should be made to provide individualised support for small business customers, including adequate and durable alternative access arrangements. At the very least, they should keep “folks in the field” with local knowledge so existing banking relationships, and small businesses seeking finance, are supported and given fair treatment. I know many would rather the banker visit their farm or business and learn more about how they operate. 

Let’s not forget it is the bank that is breaking trust and removing a point of contact and an aspect of service that businesses were relying upon. Banks actively compete for small business customers by claiming they know the challenges faced and what they need. Well, many are saying they want the branch service to stay.