Australia’s banking giants are resisting mandates to keep regional branches open, warning of cybersecurity risks and a higher cost of living if they have to invest in declining services. A Senate inquiry examining the effect of increasing rural branch closures continued last week, raising the possibility of changing banks’ licences to require them to maintain a presence in the bush. Chief executives from Commonwealth Bank, ANZ, NAB and Westpac have been grilled by the Senate committee on rural and regional affairs and transport so far. The inquiry has been examining whether banks have a social obligation to regional Australia, which contributes to the economy through agriculture, mining and tourism. Westpac chief executive Peter King denied suggestions the bank was ignoring those expectations by closing rural branches while it made enormous profits. It was offering online services in the same way the government had digital platforms for Medicare and Centrelink, Mr King said. Australian Banking Association chief executive Anna Bligh claimed banks would have to divert money away from critical technology if they had to operate a set number of regional branches. “Trying to predict what banking will look like in Australia in five years time or 10 years time ... is an impossible task,” Ms Bligh told the inquiry. “Seeking to enshrine one channel that is in rapid decline will have the effect of taking money out of innovation, security, cybersafety, where customers are actually banking.” Ms Bligh said banks needed to maintain profits to keep their credit ratings, which flowed on to consumers. “If we want to have an impact on banks’ credit ratings, then just say hello to more expensive products for every Australian,” she said. “It’s a very delicate balance and it needs to be thought through in every single part of the system.” Face-to-face banking is considered an essential service in country Australia and part of the social fabric. Many witnesses have given evidence that local bank managers are critical for farming operations, while small businesses and community services rely on cash. But all four major banks told the inquiry the majority of customers use digital platforms, with billions of dollars transacted online every week. NAB chief executive Ross McEwan told the inquiry any move to introduce mandates would be unwise. “You need to consider what are you trying to enshrine into Australia because it sounds like you’re enshrining a world that will never change,” he said. ANZ chief executive Shayne Elliott said branch networks were no longer the commercial advantage they once were. “Tying a small group of banks to an old model ... I’m not sure that would have the sort of outcomes we would all imagine,” he said. The Commonwealth Bank, which has paused rural closures until 2026, spends $1 billion a year to keep branches open and $400 million distributing cash. Chief executive Matt Comyn said that cost was becoming unsustainable, but the company still wanted the highest market share of country branches. Mr Comyn also issued a plea for rural and regional customers to bank with CBA if they valued the service in their local communities. “There’s no question that regional Australia is valuable to us,” he said. NAB is the only big four bank that has not promised to pause closures while the inquiry is being undertaken. Its branch in Waroona is earmarked to close in November. According to the Financial Sector Union, more than 1600 bank branches were closed across Australia in the five years to June 2022. A disproportionate number of these branches were located in regional and rural Australia.