Australians abandoning bank branches

Banks are shuttering branches at a breakneck pace – but customers are also abandoning branches in droves

Australians abandoning bank branches

Australian banks are shuttering branches at the fastest rate in 20 years, drawing strong criticism from some quarters for abandoning customers. But there’s a reason so many locations are closing – customers are abandoning branches.

Customers are turning their backs on branches as digital banking gains traction – a trend accelerated by the COVID-19 pandemic. New research has revealed that nearly 90% of Australians say they won’t return to their pre-COVID-19 branch usage, according to a report by The Australian.

The report, released by financial services firm RFi Group and technology specialist GBG, found that about 60% of consumers now use mobile banking apps, up from just 35% in 2019. Older Australians have been catching up to younger generations’ use of digital banking thanks to the restrictions imposed by the pandemic, the report said.

“Eighty-eight per cent of consumers can see no resumption of their branch usage post pandemic, either indicating their pandemic branch usage will be the norm or predicting a further reduction of their branch visitation,” the report said.

GBG general manager for Australia Carol Chris told The Australian that the pandemic “accelerated a trend that we were already seeing” as more and more customers adopted digital services.

Read more: Bank branches closing at fastest rate in 20 years

“The benefits of digitalization could have bred new habits,” she said. “For example, processes like identity verification can be quite cumbersome when conducted in person. … Meanwhile, digital identity verification methods can be as simple as taking a selfie.”

Banks have been heavily criticised by the Finance Sector Union for shuttering or announcing closures for more than 300 branches since the onset of the pandemic. ANZ alone has closed more than 140 of its branches, The Australian reported.

ANZ CEO Shayne Elliott told a parliamentary hearing this month that the bank had seen an “astonishing, rapid rate of customer behaviour change.”

“We have seen branch traffic fall at an alarming rate,” he said.

Alex Boorman, RFi managing director of consulting, said he expected branch closures to continue.

“While we cannot predict the end of branches – they will always play a role in customer engagement – evidently branch networks will continue to contract,” Boorman told The Australian. “Consumers are becoming increasingly comfortable using digital channels.”

Boorman said that older customers, who have historically been slower to embrace digital banking, are becoming more comfortable with it.

“One key area of digital growth is in mortgages, where consumers have typically been resistant to applying for mortgages online, but where comfort and preference is now increasing,” he said.

The report found that 32% of people taking out a mortgage in the past two years completed part of their application online. Half of those under 35 said they were happy to apply for a mortgage through digital channels.

Ryan SmithRyan Smith is currently an executive editor at Key Media, where he started as a journalist in 2013. He has since he worked his way up to managing editor and is now an executive editor. He edits content for several B2B publications across the U.S., Canada, Australia, and New Zealand. He also writes feature content for trade publications for the insurance and mortgage industries.
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