Customer owned banks’ innovations to keep branches open

  • By Zilla Efrat

Customer owned banks now operate the only local branch left in town in many communities across Australia.

So says the Customer Owned Banking Association (COBA) which has been participating in the Regional Banking Taskforce, established by the government to assess the impact of bank branch closures in regional communities.

It says more than half of its members’ headquarters are based outside capital cities.

“While looking at the impact of branch closures, it is also important to consider the underlying drivers behind closures,” COBA says’

“There is no doubt that cost pressures, including significant costs associated with regulatory compliance, evolving customer preferences, along with large overheads associated with the traditional branch model, can place pressure on banks operating branches across Australia, with the impact of closures felt most acutely by regional communities where alternatives are limited.

“Customer owned banks have developed innovative solutions to maintain banking services for local communities. Toowoomba-based Heritage Bank operates seven community branches based on a unique model which involves establishing a joint-venture between Heritage Bank and the local community to establish a branch that retains banking services in the local area.

“This model involves the formation of a community-based company made up of a range of investors from the local area, to be the joint-venture partner. Heritage and the community company contribute to the set-up costs and share ongoing expenses. The directors of the community company act in a voluntary capacity.

“Importantly, profits are shared, and the company distributes its share of profits back into the community via grants to support charities, sporting clubs and other deserving local organisations. The more that local residents use the Community Branch, the greater the profit, and the more the community benefits through grants being given back to local organisations. In addition, these local communities benefit by keeping access to a local face-to-face bank branch, through the jobs the branch creates, and through the other local services it supports.

“Central Queensland-based credit union The Capricornian has worked with local councils to find a solution for communities faced with the prospect of living without branch-based banking services. By partnering with local councils, and operating from council buildings, The Capricornian has found a solution that allows local residents ongoing access to in-person banking services.”