Bank branch closures hurting rural and regional small businesses

banking, business bust, fail, lockdowns
Bankruptcy, failed business going down or opening times concept. Man putting closed sign in window in cafe, restaurant, shop, store or agency. Late at night in city.

Australian Small Business and Family Enterprise Ombudsman Bruce Billson is stressing the importance of banking services in rural and regional areas, saying that more more should be done to support those impacted by branch closures.

In a submission to the Regional Banking Taskforce, the Ombudsman said bank branch closures are disruptive to small and family businesses and that can have a ripple effect on the wider community.

“Small businesses rely on banking services to operate in the modern economy and it is essential those in rural and regional areas have access to the full range of banking facilities,” Billson said. “Branch closures increase small-business administrative costs, the level of risk for business owners, and have a community-wide economic impact caused by business patronage moving away, along with reduced community amenity, particularly if it is the last remaining bank in town.

“For some small businesses, the loss of a local bank branch may even cause them to look for services outside the regulated financial system,” Billson added. “That is a bad outcome and there is more that can be done to support small businesses when a bank branch closes.”

Billson said that the ASBFEO welcomes any opportunity to work with the Australian Banking Association (ABA) to amend the code of practice to ensure customers affected by a branch closure can move to any other bank with no cost penalties. He has also asked the Regional Banking Tasfkforce to consider expanding programs such as the Regional Tech Hub to help rural and regional small businesses secure safe banking services.

“Particularly in areas where there is no local bank branch, NBN connectivity is critical,” Billson said. “My office has long argued that access to banking and vital communications services are essential and a greater focus is needed to set and adhere to deliverable service standards. Where these standards are not met, impacting a small or family business, some consequences and remediation steps should apply.

“Australian small and family businesses have faced many difficult challenges over the past two years – the pandemic has exacerbated the impact of bushfires, floods and drought,” Billson added. “These businesses need support as they work to get back on their feet, including access to essential banking services.”