Rural banking: Are the new hubs working?

The seven hubs are part of a trial by the New Zealand Banking Association (NZBA) to find a new approach to providing banking services in rural areas. Six banks are involved – ANZ, ASB, BNZ, Kiwibank, TSB and Westpac.

Before the Whangamatā hub opened at the end of July this year, the town’s last bank was a BNZ branch, which closed in May 2021. Consumer NZ visited Whangamatā to check out the hub and ask locals about their experiences with it so far.

A handy improvement

“It’s the best thing that’s happened to Whangamatā,” one local woman told me outside the hub.

“It’s handy, just you know for emergency things, you know not so much day-to-day banking,” her husband chimed in.

The elderly couple had popped in to do some business they couldn’t do from home. They told me how easy using the hub was, especially as they didn’t need to make an appointment. Before the hub was set-up, they told me their next closest banking option was in Thames, around an hour and a half drive away.

There are other banking options in the surrounding area (i.e., Paeroa, Tauranga, Waihi and Whitianga). However, since Whangamatā is a town with more than 3000 people and no immediate facilities (outside of one ATM) it fit the criteria for a hub.

During my visit I saw plenty of locals curious about the new hub. Many would wander over, have a look and remark on how they just wanted to see it, before going about their day. Some already seemed familiar with it, but only a handful actually used it beyond accessing either of its two ATMs.

There was another ATM down the road, left over from the closed BNZ branch, which seemed just as popular as the new ones in the hub, if not more so.

How the hubs work

The hubs house six of New Zealand’s biggest banks. The hubs all offer different services, with the new or updated ones having representatives from the banks available on-site – the reps take turns, with one rep usually available each day. If you need to meet with your bank’s representative, you can make an appointment for their respective day.

The hubs also have different operating hours. The Whangamatā hub opens 10am to 2pm, Monday to Friday, with access to a Smart ATM between 8am and 6pm. There’s also another ATM outside in the courtyard, open 24/7.

Smart ATMs have all the usual features of a standard ATM, but also offer additional services, like being able to deposit money, and transfer money between accounts and pay bills. These features are helpful in the banking hubs, when there are limited face-to-face services.

When you enter the Whangamatā hub, you're greeted by a concierge who can answer general questions, arrange appointments, and help navigate the digital services provided. Within the hub, there are tablets for accessing banking services that don't require face-to-face interaction. There is a private room for appointments with your bank’s representative on their available day.

In a media release introducing the most recent hubs, Roger Beaumont, Chief Executive of the NZBA, expressed how the hubs’ face-to-face services will help with customer queries and online banking.

Are the hubs enough support?

Sarah* and her neighbour, Gail*, were visiting the Whangamatā hub for a booked appointment on the day Consumer visited.

Gail struggles to get around, and Sarah helps her when she can. The two of them had set off for their appointment that day, only to be disappointed on arriving at the hub to find there was no record of it.

“We didn’t have anything before, so I think it’s great,” Sarah told me outside the hub. “But it’s frustrating, with my little neighbour here who needs assistance with the bank, and we can’t get an appointment.”

This was the second time Sarah had shown up for a scheduled appointment only to be let down. “We made two appointments [a week in advance], and I wrote them down, and I’ve got there, and they haven’t put them down.”

Both times, Sarah had made the appointments to help Gail. “I’m not impressed with it at all,” Sarah said.

“I’m just lucky to have Sarah to help me,” Gail told me. She recognised that not everyone has that sort of help and while the improved access is welcome, it isn’t solving all their problems.

With such long waiting times for appointments, it’s little wonder Sarah and Gail are frustrated when they must book ahead all over again.

While I was in the hub another local came in to make an appointment and was told the next available one was 14 days later. He was okay with this.

Despite the appointment hiccups, the overall reception to the banking hub in the community was overwhelmingly positive.

Consumer posted an outreach on a local community Facebook page to gather more perspectives, and several Whangamatā locals responded. Many said the staff were helpful and friendly, and that the service is invaluable to the community. One individual said they believe the hub is the way of the future for all banks.

There was a recurring theme expressed of needing to use the banking hub so as not to lose it, given the hub is a part of a trial.

Trial providing useful insights

The most recent hubs to open (including Whangamatā’s) are part of phase two of the trial. The trial finishes midway through next year, at which time its success will be assessed, and potential next steps identified.

Beaumont told Consumer that, through the trial’s first phase, the NZBA learnt that people preferred dedicated spaces for banking, more privacy and an option for face-to-face contact. These features were lacking in the phase-one hubs, which were all located in towns with fewer than 2000 people, where there was lower customer demand.

Based on the phase-one feedback, the latest hubs have more features, such as Smart ATMs, a private meeting room, representatives for the individual banks and a full-time concierge. Some of the existing hubs have been upgraded too.

The hub in Stoke now has a different bank representative available each day, with a separate room for providing private financial advice. Ōpunake has a booking service where people can arrange to meet with someone from their bank. Twizel has the same option as Ōpunake, except meetings are via video call.

Digital exclusion

Consumer’s 2023 banking survey found 54% of New Zealanders primarily access banking services through their mobile apps, whereas only 6% go into a branch.

Beaumont told Consumer that many customers prefer the convenience of online banking and using their app. “[However,] our banks are still conscious of the need to provide banking options for customers who cannot, or prefer not to, use online and mobile banking,” he said.

Not everyone feels adequately connected or catered for online. In 2020, the Citizens Advice Bureau stated that, over a three-month period, 4379 of its clients across Aotearoa reported feeling digitally excluded. These clients were a wide range of ages, with 45% aged between 30 and 59, and 36% between 60 and 79. Of those aged under 25, 48.5% identified as Māori or Pasifika.

Alternatives are required for those customers who are unable or unwilling to access banking services online.

“Most [banks] have contact centres available seven days a week. There are also around 670 bank branches available around New Zealand, and there’s a commitment not to close regional branches while the regional banking hubs trial is ongoing,” Beaumont told Consumer.

However, branches are still closing due to lack of use. Recently, one branch closed in Ōpunake, a regional town with over 1400 people, that’s also a part of the trial.

Last year, banks across New Zealand made a profit of over $7 billion dollars (after-tax), and just over $6 billion the year before. Consumer believes that with these sorts of profits, it is not unreasonable to expect equitable access for all New Zealanders.

The Commerce Commission has just started a study into personal banking services, with a focus on accessibility. The Commission will be investigating the nature of competition within the industry, consumer behaviours and preferences, as well as obstacles to new or innovative banking products or services – such as the hubs. It is aiming to release a draft report with preliminary findings in March 2024, before the final report in August 2024.

What can we learn from other initiatives?

The UK is also trialling banking hubs, with the NZBA and UK Finance sharing information to learn from each other’s approaches.

In the UK, Post Offices offer basic banking services for anyone with a UK bank account. This is also the case in Australia through participating Australian Post outlets.

Many Post Offices have closed in Aotearoa, so this isn’t a practical solution for us. However, perhaps we could have something similar, providing the option for face-to-face service, which seems to be missed by some New Zealanders.

Beyond this, for people like Gail, for whom travelling is difficult without someone’s help, what other options are available? Could rural mobile banking services be provided for simple matters?

We are eager to see what will happen at the end of the NZBA trial, and how banking services can be improved for those living in rural and remote areas.

*Names have been changed to protect privacy.