Bank branches go missing as tap-and-pay apps take off

Banks have shut more than 300 branches in the past year — many in remote areas — as lenders cut costs.

Banks have shut more than 300 branches in the past year — many in remote areas — as lenders cut costs to offset tough conditions and ­phone banking takes off.

Authorised deposit-taking ­institutions, including banks, building societies and credit ­unions, had 5904 branches as of June 30, down 5 per cent, or 315 branches, from a year ago, according to a report released yesterday by the banking regulator.

On a net basis, factoring in closures and the opening of new, smaller-format stores, banks cut their branch networks by 2 per cent, or 123, to 5357.

The Australian Prudential Regulation Authority report showed the number of bank branches increased from 5264 in 2007 to a peak of 5504 in 2012, but has declined ever since.

Building societies and credit unions have shrunk their physical presence even more, though there have been several mergers and many have converted into banks.

Banks have wielded the axe most in remote and very remote sites, where total branches fell 17 per cent and 13 per cent respectively, compared to the 4 per cent decline in highly accessible areas.

At June 30, there was just 42 branches in very remote areas, as deemed by the Accessibility/Remoteness Index of Australia.

The APRA report came as ING Direct yesterday became the latest lender to launch Android Pay — allowing customers to “tap and pay” with their phones — as the take-up of mobile-phone banking storms past traditional computers.

ANZ chief Shayne Elliott, who also recently teamed with Google for Android Pay and Apple’s new payment service, predicted mobile digital wallets could kill off the credit card within the next decade.

Commonwealth Bank, which maintains the biggest branch network of 1131, had 2.7 million tap-and-pay transactions in the three months to June 30, more than double a year ago, according to its annual accounts this month.

CBA’s share of online logins from mobile devices has grown to 75 per cent and half of all online sale applications, while use of branches and ATMs has declined.

Westpac has the next biggest branch network at 1080, followed by National Australia Bank’s 748 and ANZ’s 721.

At a Trans-Tasman Business Circle event in Sydney this month, Bank of Queensland chief Jon Sutton said branch usage had declined across all generations for transactional purposes, with a quarter of millennials in Australia, Britain and China used a banking app daily. However, he said smartphones would not replace the “emotional intelligence that an on-the-ground banker or branch manager can provide”.

But analysts predict a more dire future for branches as the population ages, mobile banking becomes dominant and banks slice costs to counter weaker growth and regulatory challenges.

CLSA’s Brian Johnson labelled the migration from “old-world” branches and ATMs to online and mobile devices “the most critical issue facing banks today” that will determine their success.