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In its 2024 Points of Presence Statistics report, APRA analysed just how many bank branches are open across the country. In the last seven years, there have been over 2,000 closures.
According to the data, the number of bank branches for each year was:
- 2017: 5,694
- 2018: 5,485
- 2019: 4,975
- 2020: 4,769
- 2021: 4,323
- 2022: 4,012
- 2023: 3,590
- 2024: 3,360
“The latest statistics show the ongoing trend of a decline in physical points of presence over the last year albeit at a slower rate than the previous year. The number of bank branches declined 6 per cent across Australia between June 2023 and June 2024, including a 3 per cent decline in regional and remote areas,” said APRA.
“Between June 2017 and June 2024, there was a 41 per cent fall in the number of branches across the country, including a 36 per cent decline in regional and remote areas.”
This drop in physical branches has both pros and cons for the broking industry. While borrowers may increasingly turn to brokers as branches are becoming scarcer, it could also generate new competition.
“With fewer branches, brokers can fill the gap for personalised financial services. Consumers who used to walk into a branch for advice may now turn to brokers for mortgage and financial assistance,” said CMO Online CEO Ben Crombie.
“Consumers might need brokers more for complex financial products like home loans, since fewer bank staff will be available to guide them in-person.
“Banks may shift focus to digital lead generation and potentially try to bypass brokers with better online tools or direct-to-consumer strategies.”
Similarly, there are pros and cons on the consumer side. According to Crombie, these are:
Pros:
- Convenience: Many consumers are already shifting towards digital banking through mobile apps and online platforms, which offer 24/7 access.
- Lower costs: Banks may reinvest savings from reduced branch operations into improving their digital offerings, possibly leading to better interest rates or fewer fees.
- Faster services: Automated processes reduce waiting times compared to in-branch transactions.
Cons:
- Limited access for older or less tech-savvy individuals: Elderly or rural populations may struggle to access digital services.
- Loss of personalised service: Many consumers value in-person interactions, especially for complex financial needs (like home loans).
- Fewer ATMs and cash services: As branches close, ATM networks shrink, making it harder for cash-reliant consumers to access funds.
Whether the closure of physical branches is a positive or negative for the industry remains to be seen. However, it will certainly create new ways of operating.
“Digital transformation leads to operational efficiency and potentially better pricing for customers. New digital tools (like neobanks) provide innovative financial solutions. Brokers can benefit from the need for personalised, expert advice as banks reduce face-to-face services,” said Crombie.
“[However], many people are concerned that digital-only banks may not offer the same level of security or service. Communities, particularly in rural or regional areas, could be underserved. Bank branches play a role in building relationships and trust, which is hard to replicate digitally.”
One shift Crombie expects to see off the back of these closures is a rise in niche, non-bank lenders. With less choice down the road, people may start to search online for personalised services.
“The reduction in physical bank presence creates opportunities for non-bank lenders and fintech companies. Younger demographics are typically very comfortable transacting online and non-bank lenders can capitalise on this. This reduction in physical locations would indicate that the non-bank lenders may be facing more competition from traditional lenders as they invest in more online services,” he said.
This sentiment was shared further by Australian Banking Association CEO Anna Bligh, who said that Aussies overwhelmingly prefer digital banking solutions.
"Whilst customers continue to change the way they bank, Australia still maintains one of the most extensive branch networks in the world," she said.
"This report reflects the change in the way Australians access banking services. With 99 per cent of banking transactions now taking place digitally, less Australians are visiting branches, with traffic dropping by almost 50 per cent in recent years. Australians are actually interacting with their bank more than ever before, thanks to the ease and convenience of digital banking. This is further evidenced by payments by mobile wallets now outstripping total ATM cash withdrawals."
The decline in bank branches was previously discussed by Broker Daily, with Sufficient Funds director and broker Randy Araya-Bishop saying that the pandemic was “the beginning of the end of bank branches.”
“COVID-19, for example, pushed us into the future by 100 years. The banks themselves basically [said] now we’re going to introduce all these virtual documents you can sign now electronically. You can see your customers virtually. There’s ID verification, now the banks are implementing their own ID processes that can all be done by the customers at home, not having to go into the branches as well,” said Araya-Bishop.
“A lot of the branch traditional lenders, the top four banks, they’re becoming outdated with their processes with that face to face. Where a lot of these emerging online lenders, they’re providing quicker turnaround times than the major banks, cheaper rates and cheaper products.”
“As far as these statistics go, APRA is continuing to analyse the trend and will continue to consider the broad range of feedback received on possible changes to the underlying data collection. APRA will continue engaging with key stakeholders on ways to increase transparency around the availability of banking services in Australia, noting that these services are increasingly delivered through digital channels that aren’t covered by the Points of Presence collection,” said APRA.
Related: Will bank branches become a thing of the past?
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