Banks urged to analyse social, economic impacts of rural branch closures

For many years banks have been pulling out of small towns, blaming a lack of foot traffic and profitability.
For many years banks have been pulling out of small towns, blaming a lack of foot traffic and profitability. Photo credit: RNZ / Supplied

By Riley Kennedy of RNZ

Rural communities are urging banks to give more thought before closing branches in small towns.

For many years, banks have been pulling out of small towns blaming a lack of foot traffic and profitability.

Last month, Kiwibank announced plans to close seven branches, five of which are in rural communities. A final decision is due at the end of March.

Rural Women New Zealand national president Gill Naylor is urging the banks to undertake a rural impact analysis to study the effects of bank closures.

"We think there needs to perhaps be a little more work done on those impacts rather than simply looking at bottom lines," Naylor said.

A petition was presented to Parliament this month on behalf of 33 mayors across the country urging banks to reinstate rural branches.

South Wairarapa mayor Alex Beijan, who delivered the petition, said the banks were maximising profit at the expense of rural communities.

He said post offices and petrol stations had left rural towns in recent years.

"And now banks ... are now closing their doors as well.

"So where is the hub of a town and what importance does that place on the fabric of the society?" he asked.

"I understand the banks find branches to be commercially unviable but I have a problem with that when they are making $5 billion a year. They must have a social conscience."

When the petition was delivered to Parliament, Beijan said as part of it they also called on the banks to analyse the impacts on rural communities.

"To find out what actually are the social and economic impacts it will have on our rural economies and in the meantime put a moratorium on bank branch closures so we can see what the scale of the problem is."

Beijan said he compared the banks' situation to the automotive industry.

"Catalytic converters are not economically viable but the Government legislated to say you must because ... that is of a social imperative."

He said closures of banks went beyond the odd inconvenience.

"There is a huge amount of impacts we are seeing and as local government officials it's our responsibility, is to look after the economic and social well-being of our areas," Beijan said.

"What we are seeing is impacts on elderly and people who aren't as technologically and financially savvy and that causes a lot of time spent travelling to banks in major towns.

Beijan said children were also affected by bank closures.

"The way they bank and the traditional way of teaching them financial literacy - and that used to happen by going into a bank and depositing money."