Money Matters in the Bush: Inquiry into the Level of Banking and Financial Services in Rural, Regional and Remote Areas of Australia

January 2004

© Commonwealth of Australia 2004
ISBN 0 642 71215 8

Duties of the Committee
Terms of Reference

Acronyms and Abbreviations

Recommendations

Establishment of the inquiry
Conduct of the inquiry
Structure of the report
Acknowledgments

The trend in bank branch closures
The influence of globalisation on the banking industry
The context of branch closures
Deregulation
  Financial regulatory policy
Technological developments
Changes in consumer preferences
  Growing consumer demand for electronic banking
  Banks investing in new technology
  Summary
Demographics
  The drift in population to larger regional centres and the 'sponge city' effect
  Population shifts and bank branch closures
  Regional shopping hubs and smaller towns
  Questioning the nexus between population trends and branch closures
Conclusion

General decline in the provision of services
Branch closures and the decline in service provision to country Australia
The effect of bank closures in country areas on local residents
  Inconvenience and costs
  Savings and security implications
  Limited choices
  Financial exclusion
The effect of branch closures on businesses in country towns
  Daily banking affairs-inconvenience and costs
  Safety and security associated with cash management
  Fall in trade
  Erosion of business-banker relationship and the loss of business opportunities
  Limited choice in accessing finance
The effect of bank branch closures on the community
Conclusion

Moratorium on closure and community reaction
Background to the protocol for bank branch closures
Development of the bank branch closure protocol
Notice of intention to close branch
  Period of notice
  Consultation
The transition period
  Education and training
  Services available after branch closure
  Portability of accounts-costs associated with transferring accounts
  Other disincentives to switching accounts
Omissions from protocol
  Notice before changing the branch that manages the account
  Community impact statement
Amendments to the branch closure protocol
Conclusion

Competition and contestability in the banking industry
Agribusiness
Retail banking transactions in country Australia
Conclusion

Anticipated branch closures
Current access to a banking service-overview
Statistics on access to banking services
APRA's 'Points of Presence' database
  Problems with definitions-branch and agency
  Other difficulties in analysing the data
  Lack of analysis
A map of the distribution of banking and financial services in Australia
Conclusion

Introduction
Shared banking
Perceived problems with shared banking
  Potential to undermine quality and level of service
  Conflicts in a shared facility environment
  Administrative difficulties
  Regulatory impediments-the Trade Practices Act
  Regulatory impediments-Financial Services Reform Act (FSRA)
Mobile banks
  Community support for mobile banking
  Banks' attitude to mobile banking

A new regulatory regime for ADIs
Credit Unions
Building societies
Barriers to entry
  Start-up costs
  Portability and banking practices
  Prudential regulations
  Requirements under the FSRA
  Status of non-bank ADIs
  Lack of experience in servicing the financial needs of farmers
  Levy on industry
Community Banks
  The Bendigo Bank model
  The Heritage Building Society model
The advantages offered by a community bank
  Reinvigorate the economic life of a community
  Dividends for the community
Establishing a community bank
  Community support, commitment and determination
  Leadership and business skills
  Start-up costs
  Failure or take-over
Owner-managed branches
  Bank of Queensland
Conclusion

Agencies
  Westpac
  ANZ
  Commonwealth Bank
  St George
  Bendigo Bank
  Agencies associated with credit unions and building societies
Shortcomings
  Limited services
  Privacy and concerns about security
Banks' view
Summary
Australia Post
  Business banking
Shortcomings of Australia Post agencies
  Privacy
  Small business banking service
Scope for expansion
Summary
Conclusion

CreditCare
Background to the RTC programme
The RTC program and Post Office outlets
RTCs-broad support
  Support from local government
  Support from financial providers
Shortcomings of RTCs
  Implementation-slow start
  Limited range of services
  Meeting the needs of business
  Strategies to expand services
  Funding
Conclusion

Background-ATMs and EFTPOS
ATMs and EFTPOS-consumer benefits
Fees and charges
Drawbacks for consumers
  Distribution of ATMs and EFTPOS terminals
  Costs and security
  Limited services
  Safety, security, competency and confidence
  Physical access and industry standards
  Foreign ATMs-fees and charges

Computer and internet use in Australia
  Access to a computer
  Access to the Internet
The growing use of the internet and telephone for banking purposes
Small business and electronic banking
Farmers and electronic banking
Overall trend in the use of electronic banking in country Australia
Provision of telecommunications services in country Australia
  Overall accessibility to electronic banking
  Inadequate infrastructure
  Broadband
  Affordability
  Cash flow and cash management problems
  Establishing a relationship between customer and banker
Conclusion

Using technology to bridge the divide
Electronic banking and customer relationships
The broader issue of access to financial advice and assistance
  Use of video conferencing
Conclusion

Older people in rural, regional and remote Australia
Transport
Older Australians and the use of new technology
Strong attachment to traditional banking
Older Australians navigating electronic banking
  Proficiency in using new technology
  Risk of financial exclusion
  Education and training
  Building confidence in the use of new technology

Indigenous communities in remote Australia
Banking and financial services for Indigenous Australians
Telecommunications infrastructure
  Committee's view-telecommunications
Competency and confidence in using new technology
Financial literacy
Safety net banking account
  Committee's view
Book up
Education and training

'Money Dreaming'
Delivering culturally appropriate services
The Tangentyere Council
The Traditional Credit Union
  Limitations on expanding services
  The regulatory regime and compliance costs
  Competition with the traditional banks
The Cape York Community
  Summary
Committee view
Rural Transaction Centres in remote Indigenous communities
Investment capital in remote Indigenous communities

Public expectations of financial services providers
The banks' awareness of community expectations
Financial institutions and community obligations
  Minimum standards expected of financial institutions
  Committee view
Community Service Obligation
  Imposing a community service obligation
  Licensing requirement
  Stronger government intervention
Access to finance and financial advice
The banks as invigorators and sustainers of social capital
Overseas models
  The United Kingdom
  United States of America (USA)
  Canada
  Lessons for Australia
Local Government
Conclusion