Customers want access to bank branches, says EPAM report

Despite the growing trend of bank branch closures across the nation, a new report shows that 59% of Australians would not be comfortable about banking with a provider that has no local branches.

The survey of 1,000 Australians, conducted by US software company EPAM in October, is part of EPAM Continuum Consumer Banking Report 2024.

The fourth annual EPAM report covers 9,000 banking customers in Australia, Canada, Germany, Italy, Hong Kong, Saudi Arabia, Singapore,  the US and UK, studying customer satisfaction, banking services, in-branch banking and AI banking.

The Australian report, which can be downloaded from the EPAM website, shows that despite most bank customers (75%) knowing they can access bank services via a mobile app or eBanking, the overwhelming majority still want access to in-person services with 82% of respondents saying they had used a physical bank branch in the last year, with 21% doing so at least monthly.

Customers used a variety of channels for their different banking needs, the EPAM report revealed, with the main reasons for using branches being deposits (38%) and receiving cash 23%, while banking apps were favoured for making payments (54%) and checking account details (47%), which were also the main reasons for customers using bank websites.

Overall, four fifths of Australians (81%) said they were happy with their current bank account. This happiness was driven by great customer service (54%), a strong reputation with the wider public (33%) and providing innovative digital banking services (31%).

EPAM report’s findings on mortgages

When it comes to mortgages and what influence they have on customer behaviour regarding banks, the report shows how important mortgages are in Australia compared to other countries.

Asked what would be the main purpose if customers were considering opening a new account with a new bank, 16% said it would be for mortgages, 17% said loyalty and rewards programs, while 23% said credit cards and 48% said savings.

Respondents were also asked what services they received from a financial provider that wasn’t their primary bank. The top service was savings (32%), followed by credit cards (23%) and mortgages came in third at 13%.

Speaking to MPA about the report, EPAM co-head APAC Panos Archondakis (pictured above) said when looking at the reasons why customers were considering switching to a new bank, mortgages weren’t as big a factor in other countries, with the global average being 11%.

“It was cards, loyalty schemes, better rates and so on. But in Australia 16% of Australian clients said that they would switch banks for a mortgage and of those 48% said the main purpose was saving – getting a better [interest} rate essentially,” Archondakis said.

“So it looks like with the interest rate behaviour over the last year and people remortgaging, there's a decline in new mortgages and people are shopping around for rates and that’s the reason why they've got a new bank.”

Archondakis said the 13% of Australian customers who had a mortgage with a bank that wasn’t their primary provider, was a bit higher than other countries with Germany and Singapore at 7% or 8%.

He said the statistic that really stood out to him was that 81% of Australians used a bank branch in 2023, but only 5% of those customers went into the branch to talk about their mortgage.

“Mortgages, in spite of the high priority, the significance of it in your life, you don't need to go into a branch to talk about it.”

However, this could be because 71% of all home loans in Australia came through brokers, so customers might be conversing with the broker about their mortgage rather than the bank.

A majority of those surveyed, 60%, used more than one financial provider for their banking services. Archondakis said people were happy to stick with their main bank but “load up their phones” with different banking apps for different needs, and neo or digital banks had failed to displace bigger banks.

The importance of bank branches

Archondakis said EPAM conducted the first consumer banking report in 2020 during major COVID lockdowns and there was a belief that this would have a major impact on people’s banking behaviour.

“But we still saw close to 80% of people using branches even in the middle of a lockdown,” he said. “That got us interested – why on earth are they doing that?”

Looking at the data and studying how people were adopting digital banking and social media, especially in countries such as China where the use of WeChat is prevalent, Archondakis said the conclusion was that people liked interaction.

“We saw a strong correlation with people who use social media for banking with the same group of people that like to go to the branch.”

Surprisingly, the report showed that 18- to 34-year-olds were strong supporters of bank branches, with more people in this age group visiting a branch than the 55-plus age group in the last year.

Archondakis said interaction with humans was driving people to visit bank branches and this was a steady year-on-year trend. More detailed data showed that customers felt it was easier to carry out transactions face to face.

“Sometimes digital interfaces may be a bit clunky. I might have a very simple question to ask just before I hit the button, but I can't ask it in an app. So doing it face to face, it might take a little bit longer and you've got a queue up, but people just want peace of mind and to be reassured by talking to someone.”

The data revealed that deposits and withdrawals were the main transactions occurring in bank branches and this could be an important factor for small businesses, such as local stores that needed to deposit and withdraw money.

Archondakis said the closure of bank branches in Australia, especially in regional and rural areas, was also occurring all across Europe.

He said the number of transactions happening in bank branches had fallen dramatically, despite people saying they wanted a branch close to them. “Even if they visit a branch once a month, that’s much lower than it would have been 20 years ago.”

Branches were becoming uneconomic for banks to run but their closure had both regulatory and reputational impacts.

“In spite of consumers [wanting] them [branches], the banks just simply can’t afford it,” Archondakis said.

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