Hundreds of bank branches gone

Hundreds of outlets have gone, but despite concern in Parliament and rural communities, the banks point to the tiny number of transactions at the counter. reports.

The big five banks closed 84 branches and 249 ATMs in one year, a report from KPMG shows. Overall, the entire banking sector, including smaller banks like TSB and SBS, went from 934 retail bank branches at the end of September 2019 to 850, and 2465 ATMs to 2216 at the end of September last year.

The branch closures, detailed in KPMG’s 2020 review of banks, have prompted concerns in Parliament and at a select committee in May, National MP Nicola Willis asked New Zealand Bankers’ Association chief executive Roger Beaumont if existing branches had any future.

But since KPMG gathered its statistics, another 77 big-bank branches have been closed, and about 50 more ATMs have been decommissioned.

Beaumont said banks were grappling with Willis’ question, but told MPs the moves were not driven by the banks but by customer behaviour.

“Customers prefer the convenience of online banking or banking on their app,” Beaumont told the finance and expenditure select committee.

“Banks are simply responding to where customers are choosing to engage with them and how they’re choosing to transact,’’ he said.

“Less than 1 per cent of all transactions occur within a branch, and that figure is declining.

“I heard a story a couple of weeks ago from one of our major banks where one of their branches was averaging six transactions a week. That’s not six transactions an hour or six transactions a day. Six transactions a week.

“So if you translate that to a shoe store or a burger bar, you know, selling six items a week is just unsustainable.”

Beaumont said that in the 12 months since the start of the Covid national lockdown, 328,000 more people had signed up for online banking.

The May select committee hearing was held in response to concerns raised by National MP Andrew Bayly about branch closures and the withdrawal of cheques.

Bayly, supported by the Dyslexia Foundation and Grey Power, said about a million people, including many neurodiverse people living with conditions like brain injuries and dyslexia, struggled with online banking.

Beaumont said banks were concerned about the “1 or 2 per cent of customers” finding the shift to digital banking difficult.

When Labour MP Ingrid Leary queried Beaumont’s estimate of the number of strugglers, he said it was backed up by an analysis of in-branch transactions.

Beaumont said banks were working with customers to help them transition to phone and online banking, and suggested community groups like Grey Power and Age Concern, as well as families of those who struggled, had a role to play in helping them bank digitally.

But MPs could decide to act, and Willis asked Beaumont how the committee could be confident that this small number of people were not being left behind by changes in the banking system.

“Is there a case for a Kiwishare-type obligation given the social infrastructure that you provide?”

The Telecom Kiwishare, which was abolished in 2011, guaranteed future owners of a privatised Telecom could not take the axe to free local calling.

The Reserve Bank said it did not have the power to require banks to keep branches open in order to keep their banking licences.

Surveys by Federated Farmers, and also Consumer NZ, showed the public shared MPs’ concerns about branch closures, with farmers worried for the future of small rural towns.

John Kensington, head of banking and finance at KPMG, said that despite branch closures, banking had never been so accessible.

“Yes, the number of physical branches has declined, but the number of substitute ‘branches’ people have access to has increased,” he said.

Customers could transact at any time on their devices, and generally needed to speak to a banker in person only when they had a problem, or to verify their identity. There were mobile mortgage managers too, he said.

Even identity verification was going virtual. Kiwibank spokeswoman Kara Tait said a pilot project at the state-owned bank to verify identities remotely was working for four out of five customers.

Massey University banking expert Claire Matthews published a study on the

‘‘That’s not six transactions an hour or six transactions a day. Six transactions a week.’’ Roger Beaumont New Zealand Bankers’ Association chief executive