NAB’s misstep on branches in regional Australia

NAB’s branch in Cobden is one of the rural banks earmarked for closure.

Australia’s romance with the bush appears to be over, at least in the eyes of the country’s biggest agribusiness lender, National Australia Bank.

As I was writing an article about NAB resuming its closures of regional branches after a one-year moratorium, I was told that at one of the branches earmarked for closure a staff member made a customer a cup of tea.

The theory was that if one of NAB’s staff had time to do that, the branch in question was obviously not that productive and was another reason why on April 29 it will permanently shut its doors.

What was once good old fashioned customer service has now become a nail in a coffin. And the banks have been hammering those nails in, with the number of country bank branches falling 11 per cent to 2202 in the past four years, according to the Australian Prudential Regulatory Authority.

Australia’s banks are big businesses, listed on the ASX with a fiduciary responsibility to make money for shareholders. But these days, businesses needs to focus on more than just delivering a return for shareholders.

Australia is a big country, with small communities scattered across the continent. They are the communities that produce our food, grow fibre for our clothing and hold vast natural resources, supporting the national economy. Corporate Australia has a responsibility to those communities — which need businesses to be open, not closing — as part of their social licence to operate.

This is something that NAB, which boasts about being Australia’s biggest agribusiness, should realise, particularly when one of its branches earmarked for closure is at Cobden, Victoria in Australia’s dairy heartland. There’s something amiss when the biggest agribusiness lender shuts a branch in the biggest dairying district, which produces about a quarter of the nation’s milk supply.

Importantly, a bank branch in a town is an enormous community asset, and once it closes it sparks a chain reaction. Empty shopfronts breed empty shopfronts. Residents in smaller towns start doing their banking in larger towns, along with their supermarket and other shopping, fuelling a greater exodus and slow death of once thriving communities.

This can be explained through a fundamental economic principle known as the multiplier effect. The size of this effect varies but generally every $1 that is spent in a local community generates another $1.50, strengthening its economic base, creating more jobs and business opportunities. If that dollar is spent in another town, the reverse happens — the smaller towns get smaller and the bigger regional centres get bigger.

NAB says its branches earmarked for closure have been underused. In Cobden, about half a branch’s customers had visited in a year, while 80 per cent used branches in towns within a 20-minute drive.

There is no doubt the function of bank branches have been changing in the past 15 years as more people turn to online banking. The digital revolution has changed the nature of a traditional bank branch, as well as disrupted large sections of the economy. It’s a challenge business must grapple with, particularly in a country as vast as Australia with a small and scattered population.

But there have been a few actions from NAB that have accelerated the shift to online at the expense of bricks and mortar. The main one has been reducing the operating hours at more the 100 country branches to a three-hour window from 9.30am. Come 12.30pm, when many businesses take lunch breaks, NAB has closed for the day. This was a strange decision, particularly when at the time NAB said it would prevent the closure of those branches.

How can a customer use a local branch when it is closed when they need it? Banks have always had difficult operating hours — not opening before 9.30am, making it impossible to duck in before the start of the work day or just after the school run, and have traditionally closed at 4pm, when many people are still at work. As for public holidays, they don’t call them bank holidays for nothing.

Cobden is one of the branches that has been on reduced hours. It is no wonder that 80 per cent of NAB’s customers in the town have done their banking in the neighbouring towns of Camperdown, Terang or Timboon.

To survive the digital revolution, businesses have had to adapt. The banks, in the main, haven’t done this. Walk into a branch and not much has changed from 20 years ago.

And it is regional Australians who have borne the brunt of this failure. After all, smartphones don’t put volunteer firefighters in fire trucks, lifesavers on the beaches or help staff any of the other community-based services that regional communities need.

It’s not good enough to cut opening hours or close branches. That’s dealing with the problem using blunt tools. It requires more nuanced and innovative thinking.

Now is an opportune time to do just that. As urban Australians escape to the country amid the spectre of more COVID-19 lockdowns, regional property prices have taken off.

Remote working has allowed people to have a tree change while still keeping their city-based jobs. Carving off some branch space for a shared office area for these remote workers is one way NAB could repurpose branch infrastructure. It could also use the space to create community hubs, providing their expertise to help foster more entrepreneurship in the regions.

This is not an outrageous idea. Australia Post has transformed surplus buildings into small business hubs as part of its Hive program. One of these Hives in Geelong has been working like a dream for several years — it is also still decked out in Australia Post livery, maintaining brand awareness in the area.

NAB, CBA and Westpac have tapped into Australia Post’s network, signing up to Bank@Post. There was nothing particularly new about this deal, except for the three majors paying Australia Post a “community representation fee” of $22m each to access more than 3500 post offices.

While regional communities have welcomed this agreement — which enables them to still do over-the-counter banking, and is up for renewal this year — post ­office staff are just that, they are not bank employees, and there isn’t the privacy of a bank manager’s office where you can discuss your financial situation.

If you want to do that, you have to phone the bank’s call centre and face an automated menu, navigating several options, before being placed on hold and then speaking to an actual person. It’s a far cry from a conversation with your local bank manager in their office where, if you’re lucky, they’ll make you a cup of tea.