Tuesday, 17 October 2023
Banking and Financial Services
Today I stand to address a matter of growing concern in our community of Pearce in Western Australia, one that affects many of us: the closure of banks; the reduction in the number of bank automatic teller machines, ATMs; and the rapid transition towards a cashless society in Australia. We need our financial institutions to consider the far-reaching consequences branch closures and ATM reductions are having on the people they serve.
In recent times, I have received many, many contacts from concerned residents wanting to discuss the impact that the big four banks' branch closures are having on them, particularly pensioners, local businesses, and community and sporting clubs. For example, one local resident, Mr Newton, shared his experience. He and his wife are now stretching their banking activities out to fortnightly intervals, as they cannot afford the petrol or the time to make the round-trip from Merriwa to Whitfords only to be met with two meet-and-greet staff and one teller, with an hour-long wait along with other disgruntled customers. The shortage of branches is extending to Two Rocks and beyond, forcing a businessman in Seabird to pay a day's wages for a staff member to cover him at work since he cannot get back in time to assist staff during peak business hours.
It is not just these communities affected. Places like Seabird, Lancelin and Moore River, with high day tourism numbers, are reliant on metro banks. The nearest branches in the Durack electorate are a considerable distance away, with the Commonwealth Bank situated in Moora and Geraldton, the National Australia Bank in Dongara, Bankwest in Jurien Bay, and the ANZ in Geraldton. The situation becomes even more unacceptable when we consider the loss of ATMs. The big four banks now only have one ATM each left in Pearce, with Bankwest offering a slightly better option of three.
While we acknowledge the industry's shift towards digital banking, we must make sure that no-one is left behind. A cashless society can have an adverse impact on small businesses, particularly those on the outer fringes of the metropolitan area and in rural or remote areas. They may struggle to keep up with the cost of accepting digital payments, and customers who prefer using cash may be driven away. This in turn can lead to the closure of small businesses and the loss of jobs in local communities. Local sporting and community groups that still rely on cash transactions for their events are having to travel considerable distances to access their financial institutions, with most now situated in either Joondalup or Whitfords.
It is important that we are careful not to disregard the potential negative impacts that come with the transition to a cashless society. First and foremost, a cashless society can have profound implications on financial inclusion. Not everyone in Australia has access to a bank account or is comfortable with digital technology. Elderly people may be less comfortable with technology and less able to make the switch from physical currency. Rural communities could also be left vulnerable because of poor broadband and mobile connectivity. People with low income or debt also tend to find cash easier to manage. This exclusion can perpetuate income inequality and create a two-tiered financial system, with significant repercussions for social cohesion.
Additionally, digital transactions are not immune to technical glitches and cyberattacks. Threats from organised cybercriminals are very real, and they frequently find new ways of breaching established security systems. During the pandemic, many more of us made online and mobile purchases, and data breaches increased to match. We have witnessed numerous high-profile data breaches in recent years, with sensitive personal information and financial data falling into the wrong hands. In a cashless society, the risks of such breaches increase substantially, potentially exposing us to identity theft and fraud. The protection of our financial assets and personal information becomes a real and critical concern. Digital transactions leave a trail of data, allowing corporations to track our spending habits and financial activities. We must carefully weigh the convenience of cashless transactions against the price of sacrificing our privacy.
Many people also feel that cashless spending is more difficult to control. It's simply too easy to overspend when you're not looking at a finite, physical sum of money in your wallet or purse, so careful budgeting becomes very important. Moreover, digital payment systems often come with transaction fees that can add up over time. While this might be seen as a minor inconvenience, it can disproportionately affect low-income individuals, who can least afford it. Beyond individual consumers, a cashless society could also prove costly for small businesses. Most credit card and mobile payments attract a processing charge of up to three per cent, which will quickly eat into small profit margins, making it hard for independent shops and small-scale specialist outlets. In a cashless society, we may find ourselves paying more for the privilege of accessing and managing our own money.
The disappearance of cash could also pose a threat to financial stability. Natural disasters or even large-scale cyberattacks could render entire financial systems useless, preventing people from accessing their money or buying what they need. In this scenario, the old-fashioned physical quality of cash seems reassuring and a reliable form of payment when digital infrastructure falters. Without this backup, we become more vulnerable to disruptions and emergencies. Ensuring that we have the means to survive and recover during times of crisis is an absolutely essential consideration.
In conclusion, the transition to digital transactions, with access to fewer financial institutions and ATMs, and the move to a cashless society in Australia offer undeniable convenience and efficiency to some. However, we must also consider the valid concerns of financial inclusion, privacy, security, potential increased costs and the impact on small businesses. Think about what a cashless society might mean—no more tooth fairies, no more piggy banks, no more car boot sales, no more markets, no more saving cash for a rainy day, no more giving to the homeless and no more tipping waiters or busking musicians. Is this a future we really want or need? Instead, we should aim for a balanced approach, where our residents have access to their financial institutions and where cashless options coexist with traditional forms of payment, to ensure that no-one is left behind and that our society remains secure, private and inclusive. It is time for our financial institutions to take our concerns and the concerns of our residents seriously and find a way to use new innovative ideas to ensure the best possible outcome for all of us.