Australia Post chief executive Paul Graham hopes to strike a deal with banks, which would increase funding for post offices that provide more banking services in regional Australia, within three months, as more lenders close branches outside cities.

At a Senate committee hearing, Mr Graham said banks were paying too little under existing contracts as higher volumes went through Bank@Post, sending the service towards financial loss. Three of the big banks and about 80 other lenders pay Australia Post about $90 million a year for it to provide basic banking services.