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Are we facing a new round of mass bank closures?

Are we facing a new round of mass bank closures?

News that Bankwest will soon close more than two dozen branches has stoked fears of a new wave of branch closures similar to those that devastated particularly regional communities in the 1990s.

The Perth-headquartered bank announced that over a three-week period from 17 August this year, it will close a total of 29 branches along the east coast – amounting to a cut of two-thirds.

Around 200 employees will be affected by the decision.

Bankwest’s managing director, Rowan Munchenberg, cited technology as the reason for axing the branches.

“Many people still value face-to-face interactions, but customers increasingly expect seamless self-service options that allow them to do their banking when and where they choose,” he said.

“We’re seeing a consistent trend of customers choosing mobile banking over in-branch options for their transaction needs, with an 88 per cent rise in app logins over the past three years.

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“So, we’re transforming our organisation to respond more rapidly to these changing customer needs by adopting new ways of working and embracing new technologies.”

Many customers weren’t so enthusiastic about the change.

“This as well as the 7-Eleven ATM changes - what the heck happend [sic] BW? It would be nice if you made the effort to talk with your customers instead of us reading about these changes elsewhere,” one wrote on the bank’s Facebook page.

“So how does this help the customer? Are you going to give us no fee accounts? Better interest rates?” asked another.

It was the same on Twitter, with at least one customer suggesting the move will cost the bank their business: “@Bankwest will be closing my accounts and moving elsewhere in the next few days. All stores within half hour of me is [sic] closing. See ya.”

However, Bankwest is not the first bank to close branches in recent times. Earlier this year, ANZ and NAB announced they would trim the number of regional branches.

And in announcing its full-year results in November 2017, Westpac announced “a net reduction of 58 branches” as part of an efficiency drive that it claimed had helped slash costs by $262 million.

Closing branches to embrace digital efficiencies is eerily similar to the 1990s, when banks – particularly the four majors – slashed their branch networks in a bid to push customers onto mobile and telephone banking (before the internet really took off).

The difference this time around, however, is that rather than banks embracing new technologies, the larger players are facing intense competition from the booming fintech sector.

Grappling with a very real threat to their bottom lines by smaller, more agile players with lower cost bases, banks may be increasingly forced to abandon face-to-face services in order to stay competitive.

The Australian Banking Association (ABA), which represents most of Australia’s largest banks, has been contacted for comment.

Are we facing a new round of mass bank closures?
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