Lawmakers have urged business owners across regional Australia to respond to a new Senate inquiry on bank branch closures, after the demise of Westpac in the South Australian town of Coober Pedy removed the only bank branch for hundreds of kilometres.
Westpac closed its Coober Pedy branch on Friday, marking the latest in a series of regional branch consolidations the bank, and its competitors, have undertaken in response to declining foot traffic and the rise of online banking services.
However, the closure defied community concerns in the opal mining and underground tourism hotspot, with residents fearing online banking and a limited set of banking services offered by the local post office are not suitable for all businesses in the region.
The Coober Pedy closure is the latest in a wave of regional bank branch closures across Australia, which led to the establishment of a new Senate inquiry last week.
Liberal National Party of Queensland Senator Gerard Rennick, who introduced the inquiry to the Senate and serves on the Rural and Regional Affairs and Transport References Committee, said the disappearance of bank branches from regional Australia poses major challenges for small businesses.
“The feedback I’ve got is that businesses will struggle with cash,” Rennick told SmartCompany.
While some regional Australia Post outlets offer withdrawal, deposit, and cheque services through the Bank@Post system, daily deposit limits are generally limited to below $10,000, and daily withdrawals capped around $2000.
“The post office can’t handle all of the services” for cash-intensive businesses in the regions, Rennick said.
Businesses will run the risk of robbery if they leave their cash reserves on-site, he added, and those which choose to travel significant distances to the next bank branch will lose out through the time and cost of spent on transport.
Those costs could have long-term implications, Rennick said.
“What might happen is they end up shutting up shop in that town and setting up in a town with a branch,” he continued.
“It will just become self-perpetuating, decline in businesses and decline in population size if branches close.”
Given the scope and pace of regional bank branch closures, Rennick said the inquiry was a chance for communities across the map to send a message to banking providers.
“The more we hear from, the better, because what that will do, even if we can’t get every submission published, it’s a signal in itself,” he said.
Submissions to the inquiry are open until March 31, with its report due by December 1.
A thousand kilometres away from Coober Pedy, the Queensland community of Cloncurry is calling on Westpac to avert the long-planned closure of its sole branch in the region on May 19.
Cloncurry Shire Mayor Greg Campbell said shuttering the branch will not just affect local businesses, but Indigenous Australian communities, the elderly, and community groups, for whom long drives to the next Westpac branch may not be an option.
And like Rennick, Campbell said the closure could alter the region’s economic fortunes.
Campbell told SmartCompany that Cloncurry is prospering through its cattle grazing, fertiliser, and irrigated cotton industries, among others, while boasting significant deposits of copper, zinc, lead, silver, and gold.
“We’ve got all the key indicators, and yet one of the Big Four [banks] is turning the back on us,” he said.
“It doesn’t make sense for a level of business confidence if a person looking to invest.
“It is all those good things. But then they see Westpac is walking away, that could make them wonder, ‘Well, is there something we’re not seeing?’”
“Which isn’t true, it’s just shortsightedness from Westpac.”
Beyond the Senate inquiry, the Cloncurry Shire Council has also launched a Change.org petition urging Westpac to reconsider.
Nearly 700 people have signed — a considerable number, given the region boasts a population of less than 4,000 people.
The response shows “our rural and remote areas matter, and that we’re prepared to stand up and make a difference, because our towns matter,” Campbell said.
The major banks have issued a mixed response to Committee Chair and Nationals Senator Matthew Canavan, who called for a moratorium on regional branch closures as the inquiry takes place.
“The CBA, to their credit, have paused closing branches,” Rennick said.
ANZ said it will postpone the announcement of any new branch closures, but ruled out the postponement of planned reductions.
The bank is nearing the completion of 14 regional branch closures announced in 2022.
“In response to your request, we reviewed whether we could pause these processes,” wrote Martin Joy, head of public policy at ANZ.
“On balance, we believe doing this would be more disruptive to our customers and staff than completing them as planned.”
NAB told the Committee its “branch reshaping process” will continue through the inquiry.
“The way customers are doing their banking continues to change, with the majority of customers accessing their money differently to how they used to,” wrote Krissie Jones, NAB’s executive of retail and personal banking.
“More than 93 per cent of NAB’s customer interactions now occur through digital channels.”
“We are changing the way we do business to adapt to this changing customer behaviour.”
“This includes reshaping our physical presence, to reflect how customers are using our branch network.”
Westpac itself said it would hold off on eight branch closures announced in February this year, but “further decisions on regional branch closures will be made while we engage with the Inquiry.”
Its branch “co-location program”, in which two branches are rehoused under the same roof, will continue, wrote Westpac’s government affairs director Richard Collyer.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
