Customers of regional bank branches that are being closed have long had a sinking feeling they are being played.

The letter arrives notifying of the closure, with the “facts” clearly spelled out: customers have failed to use the branch as often as they used to, they are turning to digital channels in preference to face-to-face services and choosing to use an ATM over speaking to a teller.

The “facts” are often supported with figures and graphs showing the decline in transactions and change in behaviour.

While access to their bank remains just as important to them as it ever was, these customers reflect on the helpful staff showing them how to use an ATM, or when the bank’s hours were cut down to just a few hours a week on alternate days, or when they were encouraged to sign up to online banking that they never use.

Older customers in particular feel confused and angry but they are left to carry the blame for letting this essential service slip from their community’s grasp.

For them, it doesn’t make any sense.

That is, until recently.

The Federal Government’s Treasury Department now has in its possession pages of first-hand accounts from bank staff admitting that they have been working under orders to move customers away from face-to-face banking and on to digital channels.

They say they have also been told to refuse teller service and direct customers to ATMs if they want to withdraw cash.

Statements include:

“We are paid a bonus for migrating customers to digital banking. This acts in a catch 22 situation as once converted, staff are cut and then branch hours and then closures.”

“We are unable to open any account that a customer requests unless they are registered for internet banking and if we disable them due to them not wanting internet banking we are penalised as it is a target we need to reach.”

“Just the other day we were told that we’re not allowed to deposit cash into customers’ credit cards. We have to tell them no we can’t do it and take them to the ATM.”

“Our customer interactions get converted to numbers and those numbers make you look like a failure because they should be tracking down not up!”

The statements are a smoking gun.

It is the first time hard evidence has been available to prove these long-suspected practices exist, yet the information, provided to the Regional Banking Taskforce through the Financial Sector Union, was ignored by the Government in its final report.

FSU national secretary Julia Angrisano says it is clear from the feedback from bank employees that the banks are engineering the changes they are using to justify branch closures.

“The banks claim that the public prefer to complete their financial transactions online and it is easy for the blanks to blame customers for these closures,” she said.

“However, they are the ones enforcing this change – it has long been part of their business model and bank staff have had targets imposed on them to convert customers to digital banking.

“They have had limits placed on the number of over-the-counter transactions and how many new online banking accounts they had to open – so effectively workers have participated in the demise of their own jobs.”

Using manipulation to distort reality and make someone question their own judgement – as the banks have been doing by telling customers they are to blame for branch closures because they have changed their behaviour, when they have actually been steered to interact with the bank in a different way – is called gaslighting.

The practice should not be acceptable under the overarching principles of the Banking Code of Practice, through which the banks make commitments in relation to trust and confidence, integrity, service and transparency and accountability.

Those commitments include:

• We are committed to earning and retaining the trust of our customers and the community.
• We will act honestly and with integrity.
• We will be fair and responsible in our dealings with you.
• We will build and sustain a culture based on strong ethical foundations.
• We will ensure banking services are accessible, inclusive and provided to you in a fair and ethical manner.
• We will be transparent in our communications with you.

Banks also operate under a “social licence”, which although not enshrined in legislation, is an important principle in corporate governance.

Former Australian Securities and Investment Commission chairman James Shipton described it in 2020 as intrinsically linked to “trustworthiness”.

“Trust is crucial to the efficient functioning of every part of society,” he said.

“Everywhere within the financial system trust is needed and relied upon. Too often we just think of (it) as an amalgam of companies, pension funds, mutual funds, sovereign wealth funds and so on … yet at the end of each corporate structure – at the end of every shareholding chain – is people.

“Accordingly, it is profoundly important that people have trust in that system – the idea that corporations act in the service of people also gives rise to concepts like the ‘social licence to operate’.

“In many ways the motivation for the calling of the Financial Services Royal Commission was because poor conduct by many financial institutions was fraying the trust the community had in the financial sector and putting at risk that social licence.

“That’s why the Royal Commission looked at not just breaches of the law but also community expectations.”

Instead of highlighting and addressing the banks’ strategies and their human cost, the Regional Banking Taskforce turned a blind eye.

There was no mention of bank staff being given performance targets to engineer digital banking figures.

There was also no mention of the impact reducing opening hours or pushing customers to use ATMs is having on foot traffic data being used to justify closures.

The comments of those blowing the whistle on these practices were not referenced.

The omissions are no surprise given the make-up of the taskforce (comprised mainly of banking representatives) but disappointing given the fanfare and community hopes that were associated with its launch.

“Having access to bank branches is vital for every community, particularly for residents who are unable to use online services to conduct their banking,” taskforce co-chair Bridget McKenzie said when the inquiry was launched.

“Bank branch closures in the regions also affect the liveability of towns, and so I am pleased to announce this taskforce will be looking at how we can keep banking services in rural Australia.”

The big question is whether the Federal Government – both the previous Coalition government and the new Labor ministry – has taken on the role of enabler in this psychological game with regional Australians.

The setting of terms of reference that started from the premise that branch closures were inevitable, and ignoring submissions to the taskforce that shone light on the ugly truth of data manipulation, suggest this.

With no independent arbitration of the Banking Code of Practice, the “social licence” to operate being unlegislated and the Government cosying up to the banks through the Regional Banking Taskforce, the gas lights are burning bright.

Or are they?

This article appeared on The Regional on 16 December 2022.

Related story: Banking taskforce report opens the gate for mass closures

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