It also found while the use of cash is declining across the economy, cash and face-to-face banking services remain important in regional and remote areas, during times of crisis and by the vulnerable, elderly and disabled.
The report listed eight recommendations including that the government recognises access to financial services as an “essential service” and that it creates a mandatory banking code of conduct, citing the UK model as an example.
RMIT University finance researcher and associate professor Dr Angel Zhong supports a mandatory banking code of conduct in Australia that would require banks to consult with the community and seek regulatory approval before closing a branch.
She cited the UK’s “three-mile rule”, where banks are required to provide free cash services within three miles (4.8km) for rural residents and one mile (1.6km) for urban dwellers.
This doesn’t necessarily have to be via a bank branch or ATM, but can also include shops that offer cash-out transactions for free and other alternatives.
Introduced last year, the legislation aims to maintain current levels of access to cash across the UK by fining banks that fall below a minimum level of service.
“The UK’s approach recognises that while digital payments are on the rise, cash remains essential for certain transactions,” Zhong said.
“By safeguarding access, they address the concerns of rural communities and vulnerable individuals.”
Australia’s geography and distribution of population makes the three-mile rule difficult to replicate in Australia, an Australian Banking Association spokesperson told 9news.com.au.
“Australia has unique geographical challenges with cash distribution that many other countries don’t face,” the spokesperson said in a statement.
“Australia for example is 32 times the size of the United Kingdom.
“The banking sector remains committed to ensuring cash continues to be accessible to customers.
“Banks provide fee-free ATM withdrawals at 85 of Australia’s most remote communities.
“Banks also pay for cash services to be available at around 1800 regional Bank@Post locations.”
The senate report’s recommendations also include the expansion of Bank@Post services with Australia Post as well as the establishment of a community banking program and examining the feasibility of a publicly owned bank.
Given the history of state-owned banks within Australia, Zhong said that option should be a “last resort”.
“I think (the mandatory code of conduct) is a better approach to strike a balance between preserving the value of taxpayers’ money and also ensuring that within Australia, Australians have access to cash and banking facilities.”