Transcript - TV interview - ABC Afternoon Briefing
MATT DORAN, HOST: We’ve heard much in recent years about the demise of banks in rural and regional corners of the country; branches closing, ATMs being pulled out of main streets, with the major banks arguing customers are signing up for online services in their droves. But new research suggests customer-owned banks are stepping in to fill the gap. The Regional Development Minister is Kristy McBain. She’s been at a banking roundtable meeting in Merimbula on the New South Wales South Coast, and she joined me a short time ago.
Kristy McBain, welcome back to Afternoon Briefing. We’ve heard so much about the state of the banking system in regional Australia – big banks pulling out, leaving customers behind. Is the state of the system as bad as we all fear?
KRISTY MCBAIN, MINISTER: Regional towns across the country have experienced the big four banks leaving their communities, leaving customers and businesses high and dry at a time where they want and they need face-to-face services. It’s good for communities to have those face-to-face services, but it’s also good for community wellbeing. What we’ve seen is customer-owned banking actually open branches in our regional areas. Their employment has gone up by 4.4 per cent over the last year alone, showing that they’re investing in our regional communities at a time when the big four are pulling out.
DORAN: Should it be up to these customer-owned banking organisations to fill that void, or are the major banks sort of breaching their social licence to operate?
MCBAIN: The big four will point to the fact that there are a whole bunch of market conditions that are making them pull out of regional areas, but what I think is happening is that customer-owned banking is finding its own niche. There are opportunities that exist in our regional areas and we’re seeing communities picking up those customer-owned banking institutions because they support local communities. They put dollars back into our local communities through grants, through sponsorships, and they get us. They’re smaller, they’re more agile. You can speak to someone at the branch, you can telephone them and you get an answer. That’s definitely what people in my own electorate of Eden-Monaro are saying. They’re switching their banking because they want to speak to someone.
DORAN: Looking at some of the figures that have come out today in a report by KPMG looking at that sector, I have to admit I was quite surprised to read just how much money is being held or how much assets are being held by these community-owned organisations – $158 billion. Much smaller than the major banks, but still a significant amount of money and assets there. Is this something that we’re going to see only continue to grow, do you think?
MCBAIN: That figure alone is a huge figure across the regions, and potentially will continue to grow as we see more of those big banks pull out of our regional communities. I can walk down the street and I can speak to small businesses and big industries who are saying, I want someone local. That balance sheet will continue to grow. On Tuesday alone I was in Braidwood, which has a couple of thousand people. They’ve had a customer-owned bank there for close to 20 years. In that time, that bank has put over $2.5 million back into the community through grants and sponsorship. People are seeing the direct investment from some of these customer-owned banks back into their communities and are more than happy to switch their banking to that model, and that balance sheet will continue to grow because of that.
DORAN: Are there limitations with just how many gaps these sort of organisations can fill? I mean, if you look at your neck of the woods, say, the New South Wales South Coast - many towns down there with decent-sized populations that may have seen the big banks pull away, but do have, I guess, the critical mass of potential customers to support these organisations. Compare that with some of the more remote and rural parts of the country where there aren’t those population centres. Is that where these sort of community groups would potentially not be able to fill that void?
MCBAIN: Each town and village is incredibly different across the country, so it’s a matter for those customers to understand their own demographics and see where they can plug the gaps. I was in South Australia earlier this year and the town of Coober Pedy is now without a bank at all. It’s not essentially the smallest town going, but it does provide an opportunity for someone to come in. There are banks across the country who are making those decisions based on the opportunities and we welcome people in regional Australia to come to our communities and help us grow our banking sector.
DORAN: A couple of weeks ago we were speaking with Anna Bligh from the Australian Banking Association, and she said that so many people are moving to online banking services now, which is one of the reasons why the big banks in particular are able to pull their services from smaller communities, because they’re not actually needed there anymore. That’s been challenged by quite a few advocates in this space. Is that similar to what you’re hearing?
MCBAIN: Absolutely, the need is always going to be there. Our demographics show that we have people that don’t want to move to online banking, they don’t want to talk to someone that’s far away from their destination. They want that face-to-face contact and that’s where the opportunity exists for some of these customer-owned banks. The need is there in our communities and we are taking up that need with the banks that are available to us.
DORAN: Clearly there is a Senate Inquiry currently underway looking at the state of banking in rural and regional Australia; without pre-empting the sort of findings that it may deliver to the Parliament, is there anything that the government’s considering at the moment around regulation to ensure that there is a certain amount of representation of banks, whether they be large or small, in regional communities, to keep that appearance there or to keep that presence there?
MCBAIN: The Regional Banking Inquiry, which we support, will hear evidence and submissions from local businesses, from local communities and from some of the banks involved. We’ll wait to see what those recommendations are, but I think it’s incumbent upon us to work with the sector and work with communities to achieve solutions.
DORAN: Kristy McBain, it is a very important area and one of great interest to many of our audience right across the country. Thanks for making the time to speak with us about it today.
MCBAIN: Thank you very much.