A federal inquiry has delivered its final report on the impact of bank closures in regional Australia, calling for significant regulatory changes.

The Senate committee's final report, titled “Bank closures in regional Australia” (PDF), recommends eight measures, including the establishment of a community bank and guaranteeing access to cash for all Australians.

The inquiry, which began in February 2023, involved over 600 submissions, 13 public hearings, and visits to regional towns affected by branch closures. 

The report highlights the failures of private banks in serving regional Australians, saying; “It is clear that the current model of banking industry self-regulation has failed to shelter regional Australia.”

The committee found that banks have “little incentive” to maintain branches in regional areas, resulting in nearly 800 closures between June 2017 and June 2023, according to the Australian Prudential Regulatory Authority. 

This accounts for more than one-third of all regional branches. The report asserts that without regulatory intervention, branch closures will continue, leaving communities to “pay the price”.

One of the report's central recommendations is for the federal government to guarantee “reasonable access to cash and financial services for all Australians”. 

Additionally, it suggests investigating the feasibility of a publicly-owned bank and establishing a Regional Community Banking Branch Program (RCBBP). 

The RCBBP aims to support the creation of community bank branches in regional, rural, and remote areas, with government contributions helping to lower the required capital from local communities.

The report underscores the continued importance of cash and in-person banking services in regional communities. 

It notes that many regional areas have higher proportions of elderly, Indigenous, and disabled populations who rely heavily on these services. 

The closure of bank branches, especially the last bank in a community, can have a “devastating effect on the town's morale” and force residents and small businesses to travel long distances for banking services.

“Bank branch closures are devastating to many regional and remote communities,” the report states. 

“Many have a higher proportion of elderly, Indigenous, and/or disabled populations, and may be particularly exposed by bank branch closures.”

The Australian Banking Association has criticised the committee's recommendations, noting that 98.9 per cent of banking transactions are now conducted digitally, reducing branch visits by nearly 50 per cent in recent years. 

The association also warned against establishing a public bank, citing past failures of state-owned banks and potential risks to the viability of small and medium-sized banks serving regional areas.