ATMs down 33 per cent since 2017

James Frost

Nov 9, 2020

AFR

The number of branches and ATMs operated by the big four has fallen sharply over the past five years and is likely to accelerate as customers do more banking online, branch foot traffic falls and banks clamp down on costs.

While branch numbers have been in steady decline since the early 2000s, the number of ATMs have begun to drop off more sharply as the cost of maintaining expensive networks of the high-tech machines rises and the use of cash plummets.

Since the big four abolished fees for using another bank’s ATM, this has become an increasingly rare sight.

Points of presence data submitted to a parliamentary inquiry showed a 33 per cent fall in the number of branches and ATMs operated by the big four banks per 100,000 people, between 2015 and 2020.

Westpac was the bank to reduce its footprint the most decisively, slashing its ATMs in regional areas by 45 per cent and in metro areas by 56 per cent, for an average of 53 per cent across Australia, according to the data.

Shadow assistant treasurer Andrew Leigh said the savage reduction in points of presence per capita was a blow to “the forgotten Australians”, including those with disabilities, low levels of digital literacy or limited access to transport.

“When this was raised in the early 2000s, branch closures were taken seriously, even prompting a parliamentary committee inquiry. Today, the Morrison government has ignored it,” Mr Leigh said.

“It’s not like everyone can do all their banking online. The Morrison government has no plan to ensure that disadvantaged Australians have access to branches and ATMs,” Mr Leigh said.

A spokesman for the Australian Banking Association said the closure of any branch was always a last resort, while also noting that the take-up of digital banking services had accelerated during COVID-19.

“With any branch closure, banks maintain face-to-face services through an existing outlet, a franchising arrangement with the community or agency arrangement with Australia Post,” the spokesman said.

From profit to cost

The data dovetails with the official statistics compiled by the Australian Prudential Regulation Authority, which reveals a steep fall in the number of ATMs from June 2017 to June 2020.

According to APRA’s data, the number of ATMs in metro areas fell 32.9 per cent over that time, while the number in inner regional areas fell by 26.4 per cent.

The fall in the number of ATMs coincides with an industry-wide decision in September 2017 to stop charging customers withdrawing money from another bank’s ATM. The fees generated by the practice were worth about half a billion dollars a year at the peak.

The changing role of ATMs from profit to cost centre was evident in August, when ANZ announced it planned to sell 1300 of 2100 ATMs it owned and operated to the Armaguard Group in 2021. The consideration for the network was described as immaterial by the bank.

Commonwealth Bank’s investment in its intelligent deposit machine network also proved costly when a coding error allowed it to be exploited by criminal syndicates, leading to a then record $700 million fine.

Analysis from consultants Deloitte in the wake of full-year results from the big four banks showed costs would remain under pressure after combined profits fell $10 billion or 36.6 per cent to $17.4 billion.

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Deloitte financial services leader Arthur Calipo said banks had little choice but to accelerate their transformation to digital but needed to ensure they did not leave customers by the wayside.

“Banks should be looking to connect deeply with their customers and delivering simpler, better and more engaging banking experiences. At the same time, they also need to make changes to their cost base and streamline processes,” Mr Calipo said.

Data from a major Australian bank as of May 2020 said more than 90 per cent of customer interactions were conducted online, while over the counter transactions have halved over the past four years.