Will hub plan halt closures, or see them increase?

Tuesday, 1 October 2019

A large crowd protested the proposed closure of the Fairlie Westpac branch in August 2016. Ruby Grant, 9 , Poppy Geary, 10, and Gracie Hellmrich, 10, from St Joseph's School were among them.

EDITORIAL: On the face of it, a 12-month trial of regional banking 'hubs', in tandem with a moratorium on regional branch closures, looks like something for Regional Development Minister Shane Jones to trumpet from the rooftops.

After all, almost 50 branches of highly profitable Australian-owned banks Westpac, BNZ and ANZ have closed in the two years to 2018, according to the bank workers' union.

But will what looks like a compromise mean further branch closures in the long run, as these hubs, for which the six banks involved will share the running costs, become the norm? And if the latter proves to be the case, will that actually be a problem?

It was August 2016 when the reality of bank closures really hit home, with Westpac proposing to close 19 branches.

Of course, not all branches are created equal. The 19, confirmed following consultation, included branches in Dunedin, Christchurch, Palmerston North and Tauranga, where Westpac had other branches, and in smaller centres, like the Wairarapa town of Carterton, and Stoke, outside Nelson, which still had other banks, giving residents the choice of switching allegiance if they wanted to do their banking face to face.

* Westpac 'digital educator' to help branchless Ranfurly customers

* Closure of Stoke branch 'extreme arrogance', Grey Power says

* Maniototo community rallies to fight to retain town's only bank**

It was in towns like Fairlie, home to the Mackenzie District Council offices and an ageing, slowly dwindling population, and Ranfurly, in Central Otago, that the closures were felt most keenly, leaving them without physical banks, meaning a 180km round trip from Ranfurly, or 125km from Fairlie, for those keen to do their banking in person.

Central Otago District Mayor Tony Lepper said at the time that a bank was 'somewhere to go, it's someone to talk to, it's the heart of their town'.

But as the three banks said, the vast majority of customers now bank online or via apps on their phones. Branches earmarked for closure were typically 'low-volume'.

Westpac said in Fairlie, along with its ATM, it would provide an iPad or computer at the library, while 'digital educators' and a dedicated 0800 number would help customers adapt to new technology. Ultimately, as businesses do, the banks were seeking 'efficiencies'.

In response to which, affected communities could jab an accusing finger at their most recent huge profits, achieved with the affected branches still on the books.

Last year, Jones asked Reserve Bank governor Adrian Orr to make servicing the regions a condition of banks' registration. Finance Minister Grant Robertson, who also attended the meeting, said later he didn't believe there was 'a regulatory place for saying where a branch is…', but added that banks needed a 'social licence' to operate. Jones was 'highlighting an aspect of that'.

Fast forward to Monday and news that the three Aussie giants, plus Kiwibank, TSB and ASB will trial four hubs, opening in Opunake, South Taranaki; Martinborough, in Wairarapa; Stoke; and Twizel in early 2020. They will feature a Smart ATM, for deposits, money transfers, and withdrawals. Each will have support staff to assist ATM users.

That range of services is not exactly equivalent to those at a dedicated branch, but it does include a human presence, so if the trial is successful, is that the future of regional banking? The big six sharing costs, and closing the branches they still have?

That probably wouldn't be welcomed in Opunake, Twizel and Stoke, which still have branches. But in Martinborough, Fairlie and Ranfurly it may well be considered an improvement. Might some smaller branchless centres even be able to argue they need a hub? Watch this space.