A group of 21 regional mutual banks and credit unions have banded together to advocate to keep face-to-face branches open in regional towns.
The banks have formed the Regional Banking Investment Alliance and want essential bank branch services such as cash handling and fraud advice to be supported by a community service obligation on the wider Australian banking sector to share the cost burden.
Any community service obligation, presumably, would take the form of a levy on major banks.
Big banks have closed more than 90 regional branches since February 2022, including more than a dozen this year, the alliance says, while RBIA members “continue to open branches in towns like Wellington NSW and Capella, Queensland “with no support.”
In February, major banks said they had agreed to extend a moratorium on branch closures in regional areas for two and a half years, until mid-2027.
Alliance spokesperson and CEO of Queensland Country Bank, Aaron Newman said today that regional bank branches “often incur additional costs due to ‘pass through banking’, where customers use regional bank branches for costly services like cash handling and then transfer their funds to big banks who enjoy the profits.”
This is a longstanding beef and they have a point.
“We help these communities with fraud and scam advice, cash withdrawals and deposits, cash floats, and provide local jobs,” Newman said.
“Around 30% of transactions in our banks lead to pass through banking, seriously disadvantaging our ability to compete and expand. We just want the banks who are neglecting the regions to pay their fair share in keeping face-to-face services alive.”
A delegation of Alliance members recently travelled to Canberra to discuss a cost-sharing model where big banks whose regional branch investment falls short, continue to support regional communities.