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Standing Committee on Financial Institutions and Public Administration
Regional banking services

CHAIR —I would like to declare open this hearing of the House of Representatives Standing Committee on Financial Institutions and Public Administration's inquiry into alternative means of providing banking and like services in regional and remote Australia to those currently delivered through the traditional bank branch network. Since the deregulation of the banking industry, banks have responded to pressures of competition by introducing measures to reduce costs and maximise profits. One of these measures involves the downsizing or closure of many branches in rural and regional areas. Forecasts suggest that this process of rationalisation will continue. Indeed, the banks have told this committee that branches will continue to close.

The loss of traditional banking branches and services has had a major impact on individuals, business and communities concerned. Many of the communities appearing before the committee today have either lost or fear that they may lose their banks. However, many of these communities have rallied and are actively involved in finding and establishing alternative ways of accessing financial services.

The committee is here to find out more about the impact of the closures on your communities and to assist in the process of finding and establishing alternative ways of accessing financial services. In seeking solutions to the problems created by the closure of bank branches, we are exploring both institutional and technological alternatives to banking and like services.

There are already a number of alternatives in place in some regional and remote areas, many of which are operating quite successfully. Both private and public effort is involved and, in some cases, cooperatively. These initiatives include a proposal from the Pharmacy Guild to use its pharmacy Intranet to provide a network of banking outlets—and there are over 5,000 pharmacies throughout Australia. Colonial State Bank initiatives include the establishment of single site operations that will be licensed to go to and be collocated with a rural business. Where these are not viable, smaller agency dealer franchises will be established.

We are going to talk to the Bendigo Community Bank first up today, and we are certainly looking forward to hearing a lot more from them. Another initiative is the establishment of electronic agencies by Bank SA. Bank SA has 173 electronic agencies in rural South Australia, and the system incorporates a low-cost terminal with EFTPOS that allows for a broad range of banking services such as deposits and withdrawals, cheque processing, balance inquiries and statement requests.

We have also seen the successful establishment of credit unions in many communities where the banks have left, and in the course of this inquiry we will be visiting some of these communities and trying to identify factors that assist in their successful establishment or, alternatively, impede their establishment or limit the degree to which they can provide services. This includes legislative and other regulatory impediments; and of course CreditCare, which is very much involved in this, was an initiative that the Hon. Ralph

Willis was very much involved with when he was Treasurer.

A number of strategic alliances have been formed between credit unions and other financial institutions to offer specific services to rural customers. Some local and state governments are investigating ways of sharing facilities or establishing one-stop shops which may provide both government and banking services. The committee is very interested in these developments.

We are looking at ways of expanding agency services where they do exist and establishing them in areas where they do not. For instance, we will be looking closely at services offered by public institutions such as Australia Post, namely giroPost, and considering how these may be extended and improved. On that particular point, I have been heartened by recent discussions with the chief executive officers of the major banks regarding their willingness to consider options for jointly utilising franchise type operations to offer a range of banking facilities.

Technological alternatives clearly have a major role in extending the access to banking services to those in rural and regional Australia. Electronic banking facilities such as ATMs and EFTPOS are already widely available particularly in metropolitan areas. Telephone banking offers a range of services—as does the Internet—and smart cards are being trialled in many places and slowly introduced in others.

Although these new technologies are very promising and may indeed be the future of banking, the committee is aware of the need to distinguish between their potential and the reality of their availability. Not all communities have ATM or EFTPOS facilities, and even where they are available the services they provide are limited or inadequate. We hear from some people, for instance, that telephone banking often involves waiting, which involves a cost. While banks are increasingly offering services via the Internet, many rural areas simply do not have the infrastructure in place to allow full access, and where access is available it is often slow and costly.

We are keen to find out today the extent to which new technologies are satisfying the banking requirements of your communities and where gaps remain in the service. Given the impact that the closure of banks—often with little notice—has on communities, it is not surprising that the announcement of an impending closure is usually met with anger, particularly by those communities who often, for a very good reason, feel as if they have been badly done by by the banks.

If the closure of bank branches is to continue, there must be better ways of going about the process. We will be looking for ways of minimising distress to communities involved and of maximising their participation in the development of constructive strategies to ensure their continued access to financial services.

During this inquiry we will travel to all states and territories and this is our second

visit to a regional area. We have been greatly assisted in organising this visit by a number of people including Neville Anderson, Jeremy Maloney and Hugh Delahunty from the Office of Rural Affairs, Stewart Petering from the Minyip Consultative Committee and many individuals from the Shire of Southern Grampians and the Shire of Yarriambiack.

Our aim in this inquiry is to find answers. There will, of course, be no single solution to the problems being experienced as a result of bank closures. We will be looking for that mixture of strategies to address this situation. The solution will certainly involve both institutional and technological alternatives. We recognise that any solutions will need to balance the needs of financial institutions and their customers. They will also require the recognition of mutual responsibilities and the cooperation of governments, industry and community. Quite simply, our regional and remote communities deserve nothing less.

I would like now to introduce my colleagues on the committee. Greg Wilton, the member for Isaacs in Melbourne, is the Deputy Chairman. The honourable Ralph Willis from the seat of Gellibrand in Melbourne, who I am sure is well known to you, is also a member of the committee. Jan Connaughton is the secretary to the committee and Adam Cunningham is assisting, as is Lorraine Hendy.

[3.01 p.m.]