The 19 branches that could potentially close according to First Union are:
- Kamo, Whangarei
- Broadway Avenue, Palmerston North
- Bishopdale, Christchurch
- Gardens, Dunedin
- Te Aroha
- Fendalton Mall, Christchurch
- Te Anau
- Cherrywood, Tauranga.
Westpac has told media that a consultation is underway with staff and customers to decide the fate of the stores.
First Retail managing director Chris Wilkinson says Westpac’s review of its branches is part of the wider narrative of retail struggling in provincial towns around New Zealand.
“Closures unsettle communities and affect business confidence. From reduced amenity value through to gaps appearing in the streetscape, a bank leaving town affects community spirit, business perception and appetite for investment,” he says.
“The centres are not likely to present longer-term potential for the bank - or they have determined that the demographics there will transition effectively to online channels.
“Consumers typically only change banks when they start a job or buy a property, so in the lifecycle of a customer that will also be a factor they are considering. It may also be the bank doesn't have any competitors they are worried about grabbing their goodwill.”
Westpac says that more than 85 percent of its customers’ transactions are taking place outside of a branch, while online transactions increased 61 percent in the last five years.
But customers have grappled with the news, with many expressing shock and disappointment at the announcement.
An elderly man in Cherrywood even collected close to 500 signatures within two days in an effort to stop the closure of his local Westpac bank.
However, while the number of Westpac branches on the chopping block may seem drastic, Wilkinson says many other bank companies have been closing sites in rural towns on an as needed basis.
“What's probably polarised people this time is where Westpac has made this move on a larger scale at once. We are sure other banks have had similar 'managed-attrition' but it's gone under the radar,” he says.
An example of this is ASB’s Helensville branch closing last year, leaving Kiwibank as the sole remaining bank in the township.
The growth of online banking was also cited as the reason why it was closing up shop.
A possible solution
As Wilkinson mentioned, banks – and on a whole, retail stores - won’t hang around if there’s no opportunities in the area.
Any efforts to save the banks, like petitions, may prove fruitless in the face of changing customer behaviour and less foot traffic on the streets.
But Wilkinson believes starting a community bank like that of Bendigo Bank in Australia may be a solution.
Community banks have stepped up to fill the gap of over 2000 banks closing in rural, regional and suburban areas around Australia.
Branches like Bendigo set out on a joint venture with the local community and are publicly owned, with both parties acting as shareholders.
After running costs and the bank’s share of revenue are covered, the profits are then reinvested back into the community through dividends to shareholders and grants to community projects.
Typically, around $400,000 to $500,000 capital is needed from a community before Bendigo will start up a branch.
Wilkinson says in order for a community bank to get off the ground, leadership is needed and would typically be driven by councils.
Some funding would be required, he says, along with the support of individuals and local businesses.
“The Bendigo example is a good one - and this should be supported by the likes of Kiwibank or other challenger brands as way to meaningfully support grassroots New Zealand,” he says.
“Organisations such as Ministry of Business, Innovation and Employment (MBIE) and Local Government New Zealand (LGNZ) should be the ones initiating the discussion as they are the ones recognising vulnerability in the regions and have the way-with all to bring parties together.”
No timeline has been set for the outcome of Westpac’s review of its branches, but it said staff and customers would be the first to know.