CBA says cost of keeping money in branches is a $350m a year challenge

CBA has provocatively detailed for the first time that it costs $350m a year to supply cash to its branches, in a move that will open up the vexed cash services issue yet again.

As the biggest bank in the market with 1,850 ATMs, CBA says it has “more than twice” the network of competing banks. Picture: Lisa Maree Williams/Getty Images

Banks are spending hundreds of millions each year to keep cash in the branches and they want you to know it.

CBA, the biggest bank in the market, has made the unprecedented move of using its annual results presentation to detail how much it costs to keep cash in the branches.

At $350m per annum, the bank describes the provision of cash services as a “challenging commercial model”.

The enormous bill for cash will serve as ammunition for the banks when they face a House of Representatives committee later this month which is set to examine the vexed issue of cash services.

Consumer activist group Cash Welcome is calling for new regulations that would mandate big banks to provide cash and big retailers to accept it.

“This is the first step from the banks, the next step will be to demand how they need to cut this cost by reducing cash services further,” Cash Welcome campaign manager Jason Bryce said.

Separately, there has been an independent members bill put before parliament calling for fines against businesses that do not accept cash on amounts below $10,000.

At the heart of the matter are older Australians – many in regional areas – who want cash for everyday use with nearly 20 per cent of over 65s classified as ‘high cash users”.

Bank CEOs such as CBA’s Matt Comyn and ANZ’s Shayne Elliott are navigating a fine line between managing the shrinking – and increasingly expensive – business of providing cash with fears that regulators could intervene and dictate terms by mandating cash services.

Banks have publicly admitted to not holding any cash in some branches – a change which prompted a social media uproar in recent times after ANZ customers realised selected branches did not carry cash any longer.

Commonwealth Bank CEO Matt Comyn at the Senate Committee hearing into bank closures last year. Photo: Supplied

As the biggest bank in the market with 1,850 ATMs, CBA says it has “more than twice” the network of competing banks.

This would suggest other banks in the Big Four – ANZ, NAB and Westpac – will most likely not spend as much each year on the provision of cash.

The new CBA report says monthly cash ATM withdrawals have plunged 50 per cent since 2018.

The dire economics of cash supply came to a head earlier this year with the transport of cash between banks being jeopardised by problems at Armaguard – the issue has since been resolved through a new deal between Armaguard, the big four banks. Coles, Wesfarmers, Woolworths and Australia Post.

A combined rescue of the cash transporter involved a $50 million bailout that means Armaguard will receive monthly payments in exchange for efficiency and restructuring requirements.

The emergency at Armaguard brought in key players from the Australian Bankers Association to the Australian Competition and Consumer Commission highlighting the significance of the issue.

The Reserve Bank of Australia has also been monitoring the provision of cash, suggesting that almost half of all Australians do not use cash at all, but then suggesting “cash remains essential in the lives of some Australians, albeit a shrinking proportion”.

Ultimately it looks like it is only a matter of time before the issue boils over again with the banks needing to greatly cutback on the provision of cash to satisfy bank shareholders unless they are prevented from doing so by regulation, which will effectively subsidise cash services for older Australians.