Banking in the Bush : a decade of change

Economic Papers (Economic Society of Australia),  March, 2005  by Diana J. Beal,  Sarath Delpachitra

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Respondents were asked how they normally paid for common consumer requirements. Table 3 gives this information in terms of the method of payment most often used for each type of good or service. The most used payment method is highlighted in bold.

The use of electronic delivery channels was further investigated by asking a question regarding the normal use of the internet and telephone banking. Table 4 gives the results for this question in terms of percentages of all respondents. About 25%, 58% and 66% of respondents respectively did not normally use internet or telephone banking for any of the tasks listed.

Respondents gained their supplies of cash by a number of methods, the most popular being 'cash-out' with debit cards (21.6% of respondents), withdrawal at own financial institutions' ATMs (20.0%), over-the-counter withdrawal at own financial institutions (17.8%), withdrawal at any financial institutions' ATMs (15.9%), cashing cheques (13.3%), over-the-counter withdrawal at giroPost or RTC (7.9%) and 'cash-out' with credit-card purchases (3.5%).

Even though the closure of branches of banks, as opposed to branches of other types of financial institutions, precipitated the outcry against the dislocation and inconvenience suffered in rural areas during the 1990s, 67.5% of these respondents still patronised banks as their main personal-banking financial institutions. A further 19.4% used credit unions, 10.5% used building societies and 2.6% patronised community banks. Nearly 30% of respondents had one or more non-business loans and, even though the number of financial institutions branches has contracted in the last few years, 77.8% of these loans were arranged at a branch. Only 22.2% had been arranged by other means, chiefly by telephone.

Nearly 23% of respondents had changed their main financial institutions in the last three years, chiefly because of location (24.1%), fees (24.1%), attitudes towards customers (20.5%), interest rates charged on loans or paid on deposits (17.9%) and overall quality of service (13.4%). The majority of these respondents now banked with a non-bank financial institution or a community bank. Just over 20% of respondents used a different financial institution for their business banking from their private banking. The chief reasons for this were better products being available (50%) and being locked in with given institutions through loan-contract conditions (22.7%). Numerous other reasons were given, such as the need for privacy, lack of suitable products, partnership arrangements, or habit. One respondent patronised a credit union as well as a bank 'on principle'.

Just as the nature of personal banking has changed over the last few years, so too has business banking. The continuing growth of direct entry, as noted above, has reduced the number of cheques received. Half of the business respondents reported their numbers of cheques received had decreased by an average of nearly 53% and almost 44% of respondents reported their own writing of cheques had reduced by an average of 48%. The range of reductions in writing and receiving cheques was wide, but for most business respondents the reduction in the numbers of cheques received was greater than the reduction in cheques written. This pattern of reductions reflects the greater adoption rate of direct entry by large organisations as compared with small businesses. Very few respondents reported the reduction pattern the other way around, where the decrease in cheques written exceeded the reduction in cheques received. In the place of writing cheques for purchases, business respondents reported using their credit cards (56.1%), using debit cards (35.8%), using BPay (33.3%), and using direct debit (27.6%).