Regional Banking Investment Alliance Proposes Cost-Sharing Model
The Regional Banking Investment Alliance (RBIA) has recently proposed a cost-sharing model to support the regional bank branches throughout Australia. The scheme aims to maintain essential services such as cash handling and fraud advice, which are paramount for the smooth operation of these regional branches.
Estimated Costs of the Proposal
RBIA estimates that the total annual cost of implementing this model would be approximately $153 million. This figure equates to a mere 0.17% of the total operating income of the major banks. Thus, the proposed cost-sharing model would not significantly strain the financial resources of the larger banks.
Community Service Obligation on the Wider Banking Sector
The RBIA suggests that the costs of maintaining regional bank branches should be shared by the wider Australian banking sector as a part of their community service obligation. This proposal would presumably take the form of a levy on major banks, making it a community-oriented initiative.
Westpac’s Response and RBIA’s Contention
The proposal by the RBIA was announced following Westpac’s recent decision to extend its regional branch closure moratorium until 2030. Westpac also plans to pilot a new Community Banking Service specifically for regional Australia.
However, the RBIA has criticised Westpac’s decision, labelling it as ‘tokenistic’ and ‘cosmetic’. The Alliance argues that such measures fail to address the fundamental issues faced by bank branches in regional and remote communities. David Heine, RBIA spokesman and CEO of Regional Australia Bank, expressed his concern stating that, “Extending the moratorium doesn’t fix anything, it just makes inequities that exist today worse and threatens the viability of other banks who have done the right thing.”
The Alliance’s Advocacy for Regional Banking
The RBIA, comprising a group of 24 regional banks and supporters, is committed to fighting for local communities to ensure that face-to-face banking continues sustainably into the future. The Alliance believes that the proposed cost-sharing model would be a significant step in this direction, providing essential support for regional bank branches at a total cost of $153 million a year.
The Cost-Sharing Model: A Commitment to Rural Banking
According to the RBIA, the recipients of the cost-sharing model would share a common characteristic – a commitment to invest in regional, rural, and remote face-to-face banking services. “All banks will have an equal ability to be a recipient, as long as they exceed this basic regional branch investment threshold,” Heine stated. This initiative, therefore, encourages banks to invest in regional branches, thereby ensuring their sustainability and viability.
The RBIA’s proposal marks a significant step in the direction of ensuring the continuance of essential banking services in regional and rural Australia. The proposed cost-sharing model presents an opportunity for the wider banking sector to contribute to a cause that would greatly benefit these communities.
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