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Summary
- There has been increased usage of online banking, accelerated by COVID-19, leading to shut down of bank branches.
- ANZ, ASB, Westpac and BNZ have closed a lot of regional branches amid this trend.
- Rural communities are suffering due to bank closures as they value face to face interactions and are not tech savvy.
More banks in New Zealand are heading for closures amid an increased digital usage of banking services, accelerated by the coronavirus pandemic. However, rural communities are suffering the most and are frantically looking for ways to stop the same.
Changing customer preferences and a rise in online banking has forced the banks to reduce or shut down their services through branches.
Recently, Kiwibank announced its plan to close 7 branches over a period of 12 months due to altering tastes of customers and operational matters like lease reviews. The affected branches include Gisborne, Balclutha, The Palms, Onehunga, Waipukurau, Matamata, and Waihi.
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The bank stated that the visit to some of its branches had fallen by more than 50% over the past 5 years. While online banking is used at least 5 times a week, a customer visits a branch once or twice a year, as per Kiwibank’s Chief Executive Steve Jurkovich.
In March, ASB also planned to decrease hours at Te Awamutu, Cambridge, and Matawata, while closing the Morrinsville branch. Westpac is also set to shut down its branch in Pahiatua on 1 April.
PM asked to set up inquiry on branch closures
On 2 March, South Wairarapa Mayor Alex Beijen with the support of 32 provincial mayors presented a letter to the Parliament to inquire the impact of shut down on the rural community branches.
Beijen stated that the NZ banks had abandoned the rural community and indulged in the maximisation of profits at the expense of communities.
Gisborne Mayor Rehette Stoltz has also urged banks to take into account wider consequences than just economic ones while making the decision to close the branches. Stoltz added that the recent decision by Kiwibank to shut down branches could upset older communities who were not tech savvy to use online banking services and rather preferred face-to-face interactions.
National President of RWNZ Gill Naylor also expressed disappointment saying reduction of banking services in rural communities was causing deeper inequality of services compared to urban communities and were adding to burden. She noted that rural communities needed services close to where they lived and rural proofing must have been done before any decision on the closure was taken.
In 2020, the NZ government set up regional banking hubs in association with NZ Bankers’ Association to offer basic services in a location with an aim to halt the bank closures at the time of trial. Ardern stated that the hubs were getting more customers and she was hopeful of the expansion of hubs.
