digital-banking

The end of bank branches

Are the days of popping into your local bank branch becoming a thing of the past?

The way we bank is changing at a rapid rate. In the past, if you wanted to open an account, make a deposit or take out a home loan, you had to physically go into your bank branch and meet face-to-face with a teller or a lending specialist.

Fast forward to 2016 and the vast majority of banking transactions, especially for younger generations, are carried out digitally. You can pay the rent, do your shopping, move money between accounts and even apply for a home loan online, all without leaving the comfort of your couch.

Could this shift to digital banking spell the end for bricks-and-mortar bank branches? Let’s take a look at the issues involved and some of the developing technologies that could soon make bank branches obsolete.

Read our guide about online banking here.

Savings Account Offer

RaboDirect High Interest Savings Account

3.05 % p.a.

max rate

1.80 % p.a.

standard variable rate

Savings Account Offer

Introductory rate of 3.05% p.a. for 4 months, reverting to a rate of 1.80% p.a. Available on balances below $250,000

  • Maximum Rate: 3.05% p.a.
  • Standard Variable Rate: 1.80% p.a.
  • Introductory period: 4 months
  • Monthly fees: $0.00
Go to site
Promoted
Rates last updated May 23rd, 2018
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
RaboDirect High Interest Savings Account
3.05%
1.80%
1.25%
$0
$0 / $1
Introductory rate of 3.05% p.a. for 4 months, reverting to a rate of 1.80% p.a. Available on balances below $250,000
ING Savings Maximiser
2.80%
1.15%
1.65%
$0
$0 / $0
Ongoing, variable 2.80% p.a. when you link to an ING Orange Everyday bank account and deposit $1,000+ each month and make 5+ card purchases a month. Available on balances up to $100,000.
Bankwest Hero Saver
2.60%
0.01%
2.59%
$0
$0 / $0
Ongoing, variable 2.60% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $250,000.
AMP Saver Account
2.55%
2.10%
0.45%
$0
$0 / $0
Introductory rate of 2.55% p.a. for 4 months, reverting to a rate of 2.10% p.a. Available on balances below $5,000,000.
Bank Australia Bonus Saver Account
2.60%
0.15%
2.45%
$0
$0 / $1
Ongoing, variable 2.60% p.a. when you deposit at least $100 and make no withdrawals. Available on the entire balance.
HSBC Serious Saver
3.00%
1.60%
1.40%
$0
$0 / $0
Introductory rate of 3.00% p.a. for 4 months, reverting to a rate of 1.60% p.a. Available on balances below $1,000,000.
RaboDirect High Interest Savings Account (SMSF)
2.70%
1.90%
0.80%
$0
$0 / $0
Introductory rate of 2.70% p.a. for 4 months, reverting to a rate of 1.90% p.a. Available on balances below $250,000
Citibank Online Saver
2.85%
1.70%
1.15%
$0
$0 / $0
Introductory rate of 2.85% p.a. for 4 months, reverting to a rate of 1.70% p.a. Available on balances below $500,000.
Westpac Life
2.30%
1.50%
0.80%
$0
$0 / $0
Ongoing, variable 2.30% p.a. each month you deposit money, and make sure your balance is higher at the end of the month than it was at the beginning. No monthly account-keeping fee.
RaboDirect SMSF PremiumSaver
2.15%
0.90%
1.25%
$0
0 / $0
Ongoing, variable 2.15% p.a. when you link to an RaboDirect High Interest Savings Account and increase your balance by $200+ each month. Available on balances up to $250,000.

Compare up to 4 providers

Rates last updated May 23rd, 2018
$
Name Product Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Monthly Account Fee Product Description
ING Orange Everyday Account
Visa
$0
$1,000
$75 cash bonus.
$0 monthly account fees.
Receive a $75 cash bonus if you open a new Orange Everyday account, enter the promotional code and deposit at least $1,000 within a calendar month and make 5+ card purchases (T&Cs apply). Get a competitive ongoing variable rate when linked with an ING Savings Maximiser.
UBank USaver Ultra
Visa
$0
$0
No monthly account keeping fees and earn bonus interest when you deposit $200 or more monthly.
RAMS Action account
Visa
$0
$0
A RAMS everyday transaction account where you can manage your account online.
ME EveryDay Transaction Account
Mastercard
$0
$0
Free access to any ATM in Australia.

Get your ATM fee refunded within 30 days with $0 monthly fees.

Compare up to 4 providers

A dying breed

Figures released by the Australian Prudential Regulation Authority in 2015 revealed that Westpac, ANZ and NAB all reduced its branch numbers nationwide in the 12 months to June 2015, by 48, 19 and 2 branches respectively. Only CommBank increased its branch network, by one.

Experts are predicting that branch numbers will continue to drop as digital and mobile banking replaces old-fashioned options such as cheques and ATMs for many Australians.

Roy Morgan Research conducted in 2013 revealed that 59% of Australians aged 14 or over (or 11.2 million people) used internet banking at a financial institution in any four-week period and this trend is expected to continue in coming years.

The convenience and time-saving nature of online transactions has played a huge role in the rise of online banking, but there’s also been another important player: the smartphone. Smartphones have made it possible to bank at a time and place that’s convenient to you.

Smartphones have also led to the development of mobile banking apps that are easier and more intuitive to use. In 2015, an international survey by Bain & Company revealed that mobile banking is actually more popular in Australia than internet banking. In 2014, 38% of customer interactions with their bank occurred over a smartphone or tablet (up from 22% the previous year), while online banking made up 35% of customer interactions.

But what does this mean for the banks? In December 2015, the Economist Intelligence Unit surveyed 203 senior retail banking executives from around the world to find out what they thought. A total of 49% of survey respondents agreed with the statement that traditional transaction/branch-based banking model will be dead , while 64% agreed that retail banking will be fully automated and 32% disagreed

The results of this survey suggest that if the banks are to stay relevant in the digital world, they’re going to need to innovate and adapt.

Not the end of banks

While the shift to online and mobile banking services has undoubtedly had an impact on Australian bank branches, this doesn’t mean the end of banks in Australia. The major banks have taken measures to ensure that they are well placed at the forefront of the digital banking revolution. We still have transaction and savings accounts, credit cards and home loans with the same banks — we just don’t need to pop into our nearest branch to manage them.

At the same time, banks are making a raft of changes to the layout of their branches and the services available to customers. With the decline in the use of physical cash, many modern bank branches feature automated teller machines, staff holding iPads, and are far different spaces to what they once were. As more people manage all their day-to-day transactions online, the modern bank branch is being transformed into a place where customers can go for more complex discussions, such as applying for a home loan or receiving financial planning advice.

However, that doesn’t mean the digital revolution doesn’t pose a risk to the major Australian banks. The cost of maintaining branch networks is expensive, and there are plenty of technology-based businesses with their eye on offering cheaper services than the banks in certain sectors.

For example, look at the rise of specialist online money transfer companies in recent years. While sending an international money transfer via your bank can be expensive thanks to high transfer fees and low exchange rates, online transfer companies don’t have as many overhead expenses as the banks. Focusing their effort on money transfers — instead of the range of products and services banks provide — means these companies can afford to offer cheaper transfers.

Another example can be found in online savings accounts. Without the cost of maintaining physical branches, many online-only banks are able to offer higher interest rates than competitors that operate in the real world.

A new way of banking

Looking ahead, millions of dollars are being spent around the world trying to predict what the future holds for banking. Some experts have pointed to China’s Alipay as a sign of things to come. The ecommerce payment platform has more than 400 million users around the globe and processed USD $519 billion of digital payments in 2013 alone — as a comparison, PayPal processed just $180 billion.

But while it started out offering an easy way to manage digital payments, Alipay now offers a much wider range of banking services to customers, including transferring funds to other users, paying bills, top up their mobile phone credit and even earn interest on your savings balance. Best of all, it can all be done via your smartphone.

While many of these services are not available via PayPal, you can’t help but feel that it’s only a matter of time before PayPal — and a range of other providers — expand its offerings in the digital banking sphere. And as consumers, we can only be better off for that increased competition.

Shirley Liu

Shirley Liu is a program manager at finder, formerly the publisher for Banking and Investments. She is passionate about helping people make an informed decision, save money and find the best deal for their needs.

Was this content helpful to you? No  Yes

Related Posts

Savings Account Offers

Important Information*
RaboDirect High Interest Savings Account

Maximum Variable Rate

3.05

Standard Variable Rate

1.80
Bankwest Hero Saver

Maximum Variable Rate

2.60

Standard Variable Rate

0.01
Bank Australia Bonus Saver Account

Maximum Variable Rate

2.60

Standard Variable Rate

0.15
Citibank Online Saver

Maximum Variable Rate

2.85

Standard Variable Rate

1.70

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
Go to site