Westpac sidesteps Australia Post long-term deal, CBA and NAB on-board

Australia Post has brokered new decade long agreements with two major banks, but Westpac has so far shunned committing long-term.

Clermont Post Office is just one of the regional Australia Post sites that offer banking services, following the closure of local banks.

Australia Post has brokered new decade-long service agreements with two major banks, but Westpac has so far stopped short of committing long-term to paying for its customers to use post offices.

Commonwealth Bank and National Australia Bank have separately signed new 10-year deals for Bank@Post, which provides banking services at more than 3,500 local post offices. The new agreements are being announced on Wednesday.

The preceding 2018 deals with the big banks — excluding ANZ — are now synonymous with a scandal that led to then Australia Post chief executive Christine Holgate parting ways with the group.

Ms Holgate controversially gifted Cartier watches to executives who brokered a lucrative agreement, worth more than $66m a year across three major banks, to allow post offices to continue to perform banking services.

Instead of signing on for 10 years, Westpac has opted to extend its Australia Post contract for 12 months.

The latest developments in the commercial deals with Australia Post coincide with major banks steadily culling branches and automatic teller machine numbers. More recently the large banks have cited Covid-19 and an accelerated shift to digital for shrinking their national physical presence.

The number of bank branches and similar services across Australia tumbled to 5173 in June last year, down from 5816 just three years earlier, official data shows.

Australia Post’s executive manager community and consumer Nicole Sheffield wouldn’t disclose the value of the fresh CBA and NAB deals, but said arrangements would continue to include a community representation fee and a variable fee per transaction.

“Last time we wanted to announce the totality of the deal and that was part of our strategy,” she said. “This time it is about commercial in confidence and managing it, because it is also dependent on the volumes and what we predict will be happening over the next decade … and also some of the new products that we plan to roll out.”

Ms Sheffield noted outcomes on the banking service deals were still built into Australia Post’s performance and bonus structures.

“Executives have consistent scorecards and it’s focused on delivering services … banking services is one of those key services and our remuneration is very transparent,” she said.

“So any extra rewards or gifts that are outside of that, I can’t comment on.”

In 2018, the Australia Post community representation fee amounted to $22m per major bank, and the transaction charge was reportedly between $2.50 and $3.

Wednesday’s announcement said Westpac and Australia Post had started negotiations “around a possible new longer agreement”, although the bank wouldn’t comment further.

Ms Sheffield said Australia Post was working to understand Westpac’s longer-term requirements, while having “positive discussions” with ANZ about striking an arrangement.

But ANZ chief executive Shayne Elliott took umbrage with the new Australia Post banking charges in 2018, labelling them unfair and questioning the quantum of the community access fee.

CBA’s retail banking services chief Angus Sullivan on Wednesday said the latest Australia Post deal would ensure the bank’s regional customers had ongoing access to services.

“We have a strong relationship with Australia Post and investing multi millions of dollars each year for a decade in the capability, technology and security of Bank@Post outlets builds on our priority to reimagine services and ensure our customers can continue to bank easily, safely and securely,” he added.

CBA — which has the nation’s biggest network of branches — had 928 across the group at the end of March.

Ms Sheffield said earlier this month Australia Post and CBA jointly consulted with communities in Molong and Blayney, where the bank was withdrawing branches, to see how they would use the post office services.

CBA is trialling having a banker one day a week in the respective post offices.

NAB’s personal banking executive Rachel Slade said the new deal with Australia Post would see the bank roll out new services in that channel from October, including a business change facility and express business deposits.

“Around 260,000 NAB customers currently use Bank@Post. It helps us to provide access to banking services in more locations and adds convenience for our customers,” she added.

CBA had about 875,000 customers using the Bank@Post service in 2019.