Opinion

Bank closures are breaking trust and leaving rural and regional business out in the cold

- December 12, 2023 3 MIN READ

When a bank leaves town, often all that’s left is a boarded-up building. But it can have a shocking effect on businesses, jobs, liveability and prosperity explains Australian Small Business and Family enterprise Ombudsman, Bruce Billson.

The Australian Banking Association is updating its bank closure protocol, but I find it laughable in that it implies a degree of consultation when it is nothing more than a notification after the decision has been made.

It is merely a commentary on closure. There is no genuine opportunity for a community to influence the decision.

Banks are doing nothing more than a driver putting on the indicator light to change lanes after they have already moved.


Why not give the local council, the water authorities and other businesses in that area the chance to make a judgment about whether they want a business banking branch to stay in their community and reward it with their business.

Banking is an essential service with a privileged position in the economy, and our small, family and farming businesses depend on having a close and reliable relationship with their bank.

Bank closures increasing

Since 2017, there’s been a reduction of one-third in bank branches throughout Australia, and the number of automatic teller machines has been cut by two-thirds. In regional Australia, the banks have closed 218 branches and removed 566 ATMs in just the past two years, according to APRA.

Some 30 per cent of small businesses are based in regional Australia and when the bank leaves it can be devastating. Access to cash and deposit services is diminished, and bank customers must commute to other centres for service or engage with metropolitan-based bankers, who may not understand the regional small business customers’ investment potential, operational environment or business challenges.


Bank should be made to provide individualised support for small business customers, including adequate and durable alternative access arrangements.

At the very least, they should keep ‘folks in the field’ with local knowledge so existing banking relationships, and small businesses seeking finance are supported and given fair treatment.  I know many would rather the banker visit their farm or business and learn more about how they operate.

Shamefully, we have heard examples of banks refusing to lend to customers in regional areas where there are minimal or no other recently approved loans.

Limited options for rural businesses

What options does a farming business have if they want to have a face-to-face chat with the bank manager about sensitive and personal hardship provisions?

I met a rural accountant who had a client that had a payment for $60,000 intercepted by the invoice substitution scam and lost their money. The banks recently promised to finally match BSB and account numbers with names to help prevent these substitution scams, and I welcome that. But this customer now wants to go into the branch to make any transaction above $10,000 – except there is no longer a bank in their town.

A cafe owner told me how difficult it was to get a new staff member on as a signatory for the business accounts. That’s something you need to do in person in the branch.

The functioning of enterprise, commerce and trade relies upon a banking service and accessibility that is reasonable and relatively comprehensive.

I acknowledge that several customer-owned banks are opening branches in regional communities, including locations where larger banks have left.

Could post offices fill the gap?

It’s also suggested the Post Office can fill the void, but they often don’t offer the full range of services a small, family or farming business needs, and the fees and charges can be higher than the same service provided by the bank. Plus, Post Offices don’t want to handle large amounts of cash.

And what’s to stop the same issue occurring with growing pressure on Post Offices to also close?

Let’s not forget it is the bank that is breaking trust and removing a point of contact and an aspect of service that small businesses were relying upon.

Banks actively compete for small business customers by claiming they know the challenges faced and what they need.  Well, many are saying they want the branch service to stay.


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