Commonwealth Bank to Pause Regional Branch Closures, but Says Customers Going Online Fast

A Senate inquiry is examining the impact 600 bank closures in regional communities have had since 2017.
Commonwealth Bank to Pause Regional Branch Closures, but Says Customers Going Online Fast
People queue for ATM machines outside a branch of the Commonwealth Bank in Melbourne on August 8, 2018. - Australia's biggest bank, the Commonwealth, posted a slide in annual profits on August 8, capping a tumultuous year for a troubled lender which has been rocked by scandals and board upheaval. (Photo by William WEST / AFP) (Photo by WILLIAM WEST/AFP via Getty Images)

A Senate inquiry is examining the impact 600 bank closures in regional communities have had since 2017.

The Commonwealth Bank’s CEO Matt Comyn spoke at the inquiry on Sept. 20 saying Australia's largest bank allocates $1 billion annually to maintain its physical branches, an expenditure that could become challenging as digital banking gains traction.

Nevertheless, Mr. Comyn said the bank hopes to maintain the most extensive branch network in rural Australia while striving for the highest market share.

In a statement, he said that the Commonwealth Bank recently decided to pause all CBA regional branch closures until the end of 2026, with around 40 percent of the bank's 728 branches located in regional areas.

Customers Shifting Online

Although the Commonwealth Bank remained dedicated to facilitating cash transactions, the pattern of customer engagement with its services was evolving.

Five years ago, cash accounted for 43 percent of point-of-sale transactions, but that figure has since declined to just 15 percent.

The bank's online transactions have surged to $18 billion weekly, reflecting a remarkable 64 percent increase over the past two years.

"As time goes on, it becomes unsustainable to invest substantial resources keeping expensive services that fewer and fewer customers use,” said Mr. Comyn.

Increasing frustration has become evident, however, with customers apprehensive about potential ripple effects.

In April 2023, over 200 individuals gathered in the Victorian town of Cohuna to protest against the impending closure of a Bendigo Bank branch.

Communities in north-west Victoria united by signing a petition to preserve the ANZ Bank's presence in Robinvale.

What the Other Big 4 Banks Are Doing?

None of the other Big Four banks have made any commitments to pause regional bank closures, according to their statements to the Senate inquiry.

Peter King, CEO of Westpac, said there was fierce competition for customers in the banking industry and that managers faced tough choices regarding under-utilised legacy branch locations.

He highlighted that just 3 percent of their customer base, about 13 million, exclusively relied on branch services.

Meanwhile, NAB has continued with its closures.

The bank's CEO, Ross McEwan said that a moratorium on branch closures would merely postpone inevitable change.

He also noted that the majority of affected staff have been successfully redeployed to other roles within the bank and that NAB should stay committed to making the necessary business decisions in line with customer behaviour.

ANZ's CEO Shayne Elliott said that the process of determining branch closures was not a rigid formula but rather a sensitive matter and was done on a case-by-case basis.

He refuted claims that the bank offered incentives for branch closures but stressed the bank's responsibility to its shareholders as well, indicating that it needed to remain profitable.

The inquiry has found thus far that closures were having a negative impact on regional communities and could leave some customers isolated and facing financial hardship.

It also found closures could have an outsized impact on vulnerable groups like the elderly or disabled.

Andrew Stacey is a reporter based in Melbourne, Australia. He has extensive experience in market and data analytics.