The bosses of the big four banks are facing a grilling from Senators at an inquiry into rural and regional branch closures, amid accusations they are abandoning country Australia.
The chief executives of Commonwealth Bank, ANZ, NAB and Westpac are appearing before the inquiry, which is being run by the Senate committee on rural and regional affairs and transport, at Parliament House in Canberra on Wednesday.
CBA branch network “unsustainable”: Comyn
Commonwealth Bank boss Matt Comyn kicked of proceedings, claiming that the cost of running its 728 branches – at a cost of $1bn a year – to sell loans and manage cash transactions was becoming increasingly unsustainable as customer demand diminished.
“Transporting and making cash available around our vast country involves the considerable expense of logistics and security,” Mr Comyn said.
“We estimate that continuing to support distribution and availability of cash costs CBA approximately $400 million each year – which works out to roughly $40 for every one of our 10 million customers. Many of our customers don’t use cash though – and these customers cross-subsidise those that do.”
Cash transactions have plummeted across the CBA network in recent years, falling from 43 per cent five years ago to 15 per cent today.
At the same time, customers transact more than $18bn through the CBA app, an increase of 64 per cent.
In response to the inquiry, CBA paused all regional bank closures until the end of 2026.
“As time goes on, it becomes unsustainable to invest substantial resources keeping expensive services that fewer and fewer customers use,” Comyn said.
Mr Comyn also issued a plea for rural and regional customers to bank with CBA if they valued the service in their local communities.
“Our decision to pause rural bank closures is predicated on customers and communities valuing our decision to stay,” Mr Comyn said.
“So for other local councils, small businesses, farmers, homeowners and regional areas, if you value CBA supporting your communities, we will be delighted to serve you.”
Effects of branch closures
According to estimates from the Financial Sector Union, in the five years to June 2022 over 1600 bank branches were closed across Australia, with a disproportionate number of these branches located in regional and rural Australia.
Without government intervention, it appears that this trend will continue as customer demand switches to online banking.
The big four banks have previously argued that online banking and their service offering through Australia Post are adequate replacements for the closure of bricks and mortar branches.
The inquiry has previously heard from community leaders, small businesses and councils in regional rural areas.
Witnesses have told the inquiry that regional banking is crucial for small business and community organisation operations.