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Banks closing branches

According to the Finance Sector Union, Australia’s central banks closing branches in the coming months will result in at least 182 staff losing their jobs.

Background – banks closing branches

The union says that the Westpac Group will close 24 branches, CBA will close five, and the NAB will close eight banks.

“This latest list of closures means the Big Four have closed more than 550 bank branches across Australia since January 2020,”  Julia Angrisano, the union national secretary said.

Westpac Group confirmed closures of NSW branches at Queensland branches at Ashmore, Lakemba, Engadine, Corrimal, Kingscliff and , Nerang and Rockhampton.

Victorian branches at Whittlesea, Werribee and Lilydale, Braeside, will shut, along with West Australian branches at Mandurah, South Perth and the Northern Territory’s Berrimah.

Additionally, the group’s St George’s Five Dock branch in NSW will close, and bank of Melbourne branches in Fitzroy, Sunbury, Footscray, Croydon, Coburg, William Street Melbourne and Mornington will close.

Furthermore, Bank SA branches will also close in Munno Parra and St Peters.

NAB said it’s shutting some less visited branches in Lavington, Cronulla, Narrandera, Corrimal, Figtree and Maroubra. As well as branches in NSW, Wynnum in Queensland and North Melbourne in Victoria. The union says the Commonwealth Bank will shut NSW branches at Annandale, Toongabbie and Lindfield and Victoria’s Drysdale and Woodend.

Ms Angrisano said the situation had reached a crisis point and urged the government to intervene to protect local economies. She said that if the current trend continued, no branches would be left.

“The banks notify the FSU about upcoming closures,” she said.

“We must act to stop the banks walking away from communities in our suburbs and towns.”

A Westpac Group spokesman stated that fewer people were attending  branches.

“Declining customer use of branches means that in some instances, we may take a difficult decision to leave a branch location,” he said.

“In these instances, we continue to support our customers by expanding access via Bank@Post, telephone, mobile and virtual banking.”

The “majority” of impacted employees would secure a new position within Westpac Group.

Krissie Jones, a NAB retail executive,  says Aussies were increasingly utilising online banking.

“We’ve made the difficult decision to close some branches that receive fewer customer visits,” Ms Jones said.

“While these branches will no longer be there, we will still be there for our customers in different ways.”

NAB claims there will be no job losses and there will be  other opportunities made available to staff. CBA says intricacies of its closures would feature in its annual report.

Cost Savings

It would seem that Banking Executives are always considering ways of reducing costs and maximising profits for shareholders. It appears on paper that the cost of running a local branch is not a profitable proposition for the bank compared to other banking channels – such as online applications, referrals from Equipment Finance Brokers or Home Loan Brokers.

Some costs relating to running a branch would be rent, wages, superannuation, holiday pay, sick leave and extended service leave, commercial cleaning, telephone/internet, council rates and signage. If the bank can source customers from self-employed finance brokers or from a centralised hub within the bank that has lower running costs than a local branch, they will.

Amalgamation of Branches

Banks are trying to hide that they are closing branches by closing one branch and communicating to customers that they will now be managed by a Bank Manager nearby. In short, fewer bank branches servicing a more extensive geographical location.

The banks are not isolated in closing facilities

In defence of the Big Banks, other businesses are also deciding to forego brick and mortar locations as the trend towards online service increases across the sector.

The emergence sophisticated interno\et computer software allows businesses to rapidly shift the delivery of products and services from bricks and mortar locations to a sophisticated online platform.

Many big businesses are following this trend within Australia as it reduces costs to bottom-line profits and maximises shareholder returns.

What do online financial services mean?

Over time, the distribution of physical cash to pay for goods and services has diminished. Many consumers make payments via credit card or internet banking or using EFTPOS and other payment methods. Subsequently, the need to have bank branches open to withdraw and deposit cash also reduces demand.

Additionally, clients can call a centralised call centre to complete transactions that are also completed by the branch. However, some companies choose to set up these call centres offshore that may do Australian workers out of paid employment.

Consumers can now apply for finance online with a company specialising in finance, such as personal loans, business loans, and equipment finance. Hence mitigating the obligation to speak to a Bank Manager at the local branch.

Will there be savings for the consumer?

If banks can increase their net profit by closing branches, one would think that the big banks will be able to pass these cost savings to their customers. Whether these cost savings will be passed on to the consumer is yet to be seen. However, in theory, it should happen.

Who will be the worst impacted by banks closing branches?

People residing in rural communities are most likely to be impacted, because they need to travel greater distances to seek financial services. Unless they embrace the transition towards online purchases of financial services.

Those with limited knowledge and understanding of the banking system will also be disadvantaged. They will have fewer options and less access to financial service companies when looking to borrow for a home or a business loan. For example, suppose a rapidly growing transport company is looking to purchase an additional truck but cannot source suitable truck finance. In that case, they might lose out on a work contract or jeopardise existing work agreements.

Consumers who are not technologically savvy or do not have sufficient financial resources to access online services may also be adversely affected. If the banks are encouraging consumers towards online lending and banking services, and customers do not have access to the internet, they will have no option but to seek out these services at their nearest branch – which could be 100 km away.

Will there be benefits for the consumers?

Online service delivery should increase customers’ turnaround times, saving them time and money. For example, customers can apply for equipment finance loans online and have the deal approved and finance documents emailed within a couple of days.

How can customers access financial services with banks closing branches?

As the big banks continue promoting their online banking platforms, they are encouraging customers to use internet banking or centralised call centres based in Australia or offshore.

Big banks might consider broker-generated business to be more favourable in the future, as the brokers are the ones that bear the majority of the costs that the big bank have required in the past. Such costs for brokers include; risk and compliance, recruitment and human resources renting of business premises, advertising and wage costs.

Risks to the community with banks closing branches

As additional financial services transition towards online delivery, the incidences of fraud and identity theft might increase. Organised crime is directly defrauding businesses and citizens within the community. Therefore, banks and consumers must be vigilant with how they use and store private data and ensure that security systems are kept up to date.

Big banks are spending millions of dollars on online security systems to ensure their online banking profiles are secure. In addition, they only accept finance broker applications that meet stringent compliance, training and regulatory guidelines.

It is not all negative for the consumer

As time progresses, more consumers will have no option but to start sourcing loans from online sources such as specialist financial providers and brokers. However, either way, there will be pros and cons relating to online loan products.

Consumers must adopt the change and adapt to the emerging technologies to have ongoing access to banking products. Unfortunately, those with restricted resources or financial means could get left behind.

Those that can keep up with the change will have a wider choice of lenders, as well as faster turnarounds for loan approvals and hopefully source loans at a lower cost than previously obtained at the branch level.

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