Enterprise consultancy The Initiatives Group’s managing director Lance Blockley stated whereas there would proceed to be discount within the variety of ATMs and branches, it will probably decelerate over the following yr or two. “For the forseeable future, there’ll all the time be ATM and financial institution department networks,” he stated.
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Nonetheless, Blockley stated as fewer folks visited branches, it was comprehensible banks have been reviewing the extent of their bodily presence.
“COVID accelerated it, however even earlier than the pandemic, there was a transfer to do banking via cell apps, web sites and distant digital channels,” he stated.
“Banks have fairly a little bit of capital and departing prices tied up in branches and working prices, and they should steadiness that towards the service their prospects need to use.”
Blockley famous whereas the federal authorities had dedicated to phasing out cheques by 2030, there was nonetheless an acknowledgement by authorities – and impartial our bodies such because the Reserve Financial institution – for the necessity to orchestrate widespread entry to money.
“The Reserve Financial institution is ensuring nobody is greater than a sure distance away from an ATM,” he stated. “I believe there could also be some comparable necessities put round banking amenities. In some unspecified time in the future, authorities will step in to make sure entry, too.”
Whereas most banks have preparations for Australia Publish to supply a few of their providers, particularly in areas the place bodily branches have declined, UBS head of Australian financial institution analysis John Storey stated there was nonetheless worth for banks in having branded bodily factors of illustration.
“The storefronts of banks provides them visibility, and whereas it comes right down to price effectivity and altering shopper preferences over time, it additionally is dependent upon what shopper base they’re serving,” he stated.
Department presence might be particularly necessary for enterprise banking in rural areas the place relationship managers have been key to serving purchasers in sectors akin to agriculture, Storey stated.
Whereas Storey stated CBA’s resolution to shut Bankwest branches was “strategically on level” with what the financial institution was making an attempt to attain, he stated the financial institution had additionally given assurances to authorities about sustaining factors of illustration in rural areas.
In June 2023, the variety of branches had dropped 11 per cent over the yr and 35 per cent over 5 years, in accordance with information from the Australian Prudential Regulation Authority, and the variety of ATMs had greater than halved in 5 years.
It’s partly a mirrored image of a transfer away from money in favour of digital banking. In 2022, about 13 per cent of all funds have been made utilizing money – down from 27 per cent in 2019 – in accordance with a survey by the Reserve Financial institution.
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Nonetheless, Blockley stated extra folks have been beginning to discover surcharges on card funds. “To a point, there’s been a backlash into money as a response to the endemic use of surcharges by retailers,” he stated.
“You would argue that accepting a debit card in retailer is not any extra price to the service provider than accepting money.”
Financial institution department closures will probably proceed, Storey of UBS stated, including although {that a} bodily presence could be largely preserved in rural areas.
“Shrinking of bodily infrastructure will not be one thing new,” he stated.
“Banks have been closing branches for quite a few years, and people closures coincide with banks shifting to digital channels the place purchasers can typically do extra. Nonetheless, Australian banks are nonetheless dedicated to department presence.”
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