Playing fair: Could the big four ASX bank shares be in hot water again?

A federal Senate inquiry into bank branch closures in regional areas began today.

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ASX bank shares are experiencing a lacklustre day along with the broader market as a federal Senate inquiry gets underway into branch and ATM closures in regional areas.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down 0.27% to 7067.9 points.

Meantime, here is the state of play among the big four in late afternoon trading:

  • Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 0.08% to $24.39
  • National Australia Bank Ltd (ASX: NAB) shares are up 0.09% to $28.43
  • Westpac Banking Corp (ASX: WBC) shares are down 0.23% to $21.32
  • Commonwealth Bank of Australia (ASX: CBA) shares are down 0.37% to $104.27

Sluggish ASX bank shares amid inquiry commencement

According to The Australian, officials from the corporate regulator, ASIC, told the hearing that over the past six years, bank branch numbers have fallen by 39% in capital cities and 34% in rural areas.

The banks say the closure of branches and ATMs is due to customers preferring to deal with them digitally.

In the Commonwealth Bank's written submission, it said:

CBA has observed a clear shift in customer preferences towards digital and phone-based banking channels over many years. As has occurred in other industries, many customers and businesses have adopted the benefits offered by digitisation. This is true for banking and financial services, as much as it is for media and streaming services, telehealth, and ride-sharing.

The Australian Banking Association (ABA) made the same point in its submission, saying:

Accordingly, the decline in branch numbers should not be seen as a decline in service options for
customers. In fact, there have never been more ways to access banking services. Customers can
access online banking services 24/7 and phone banking is typically available from around 8am to 8pm – much longer than the opening hours of most branches.

ASIC officials also told the inquiry that the number of ATMs in remote and regional Australia had reduced by 60%.

In the Reserve Bank's written submission, it noted Australians were using less cash.

However, it said about one-quarter of consumers would face "major inconvenience or genuine hardship if they could no longer access or use cash".

ACCC concerned over 'muted competition' in bank sector

The Australian Competition and Consumer Commission (ACCC) was represented at the inquiry today by its head of mergers, exemptions and digital division, Tom Leuner.

He discussed his concerns about lacking competition in the banking sector, commenting:

The ACCC has had long-standing concerns about muted competition between the major banks and the impact that has on consumers, small businesses and all users of banks.

That issue really came to a head in our consideration of the Suncorp matter.

The ACCC was focusing on: if Suncorp is brought into ANZ … we considered that makes the likelihood and extent of that muted competition – or in other words what is called coordination conduct – it increases the likelihood and extent of that. So we're worried about (that).

ASIC Commissioner Alan Kirkland also appeared at the inquiry today. He focused on the impact of branch closures on indigenous communities.

He suggested that banks consider setting up dedicated First Nations banking channels including call lines, regular regional pop-up services, and ensuring staff receive training on indigenous culture.

Motley Fool contributor Bronwyn Allen has positions in Anz Group, Commonwealth Bank Of Australia, and Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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