It is a stark assertion – nearly three quarters of Australians still believe a physical banking branch is necessary, even though 99 per cent of customer interactions are now being conducted online.
This statistic came about following the Australian Finance Sector Union’s research, which revealed that close to 1600 bank branches have closed across the country between June 2017 and June 2022. These closures have been felt most profoundly in regional areas of the country.
In light of this, the financial comparison website Finder undertook a survey of 1100 Australians to gauge their opinions on the matter: 73 per cent of respondents stated how important they believe it is to have physical branches in their area.
43% expressed they prefer personal conversations over the phone or online, while 30% confessed they find comfort in having the option available.
18% declared they are satisfied with virtual support while 9% acknowledged they do not visit a branch regardless.
A total of 55% of people have been to a location over the last half-year, while one out of four Australians have not been to a bank in more than 12 months.
Many respondents also noted the convenience of being able to talk to someone in a physical branch, and the feeling of knowing that the branch was a place they could go to if they had any banking problems.
Another important factor was the level of trust that physical branches were able to create. Some respondents noted that being able to walk into a physical branch and speak to people, as opposed to being forced to communicate with a chatbot or a call centre, gave them a feeling of security and trust.
Alison Banney, an expert on finances, asserted despite the banking sector’s efforts to urge transitioning to digital formats, the findings indicated that Australians were not yet prepared to make the full switch.
“In spite of the prevalence of digital banking, customers are inclined to converse with bankers personally about difficult money matters such as scams and financial hardship. Furthermore, in certain situations, consumers would rather do banking face-to-face,” she said.
82% of Baby Boomers prefer to go into a bank branch if they have an issue, as opposed to 69% of Gen Y, which is not surprising given that access to a bank branch, is of more importance to older Australians.
“Many Australians are familiar with the convenience offered by electronic banking such as direct debits and tap-and-go. Despite this, there can be frustrations in having to wait on hold or when messages become lost in online messaging services. As more bricks-and-mortar branches are set to close, it is important to consider which bank meets your needs and make sure you vote with your wallet,” Ms Banney said.
From July 1, the Australian Banking Association’s (ABA) new Branch Closure Support Protocol will be effective, with almost 99% of customer interactions with banks now happening digitally, as reported by the ABA.
By reducing the threshold to 10km, the protocol will dictate the procedure banks must follow when closing branches, such as offering customer support if the nearest branch is further than 10km away.
At least 20 banks have signed on to the Protocol, which includes major players such as Bank of Queensland and Bendigo Bank. There is, however, no provision that requires the community to be engaged before a closure happens or for a certain threshold to be met in order to close a branch.
Anna Bligh, the Chief Executive of ABA, noted branch usage has been diminishing steadily for many years.
“Australian banks are aware that some customers may require additional support during the move to digital as a result of overall customer preferences changing,” she said.
The FSU accused banks of closing branches, especially in regional areas, to fulfill their own business models at the committee’s inaugural hearing in March. The union staunchly refuted the idea proposed by the banks that customers had a taste for digital banking, arguing that many Australians are not able to migrate to Internet banking.
The union asserted those with disabilities, the elderly, those with low digital literacy, small business customers, and Indigenous customers in remote communities would suffer disproportionate impacts.
With the 16 hundred bank branches that have closed in the past five years, many of which are in regional areas, the need for accessible brick-and-mortar banks is becoming increasingly urgent.
The findings of this survey are a clear indication of how important it is for major bank branches to remain available to the public to ensure Australians have sufficient access to their financial services.