New Zealand's banks resumed a moratorium on bank closures after the industry stared down pressure from Finance Minister Grant Robertson to open banking "hubs" in provinces across the country.
In April the New Zealand Bankers' Association (NZBA) announced that the four major Australian banks - ANZ, ASB, BNZ and Westpac - along with TSB and state-owned Kiwibank, would cease the closure of regional bank branches until the end of the year.
The pledge was originally made in late 2019 when the six banks promised to cease closures until the end of the trial of regional banking "hubs" in 2020, but was quietly abandoned after Covid-19 caused delays to the trials.
Eventually, the hub trials began in November 2020 in Twizel, Martinborough, Stoke and Opunake.
Operating around a "smart ATM", the hubs allow customers of any of the participating banks to make deposits and withdrawals. While staff are able to assist with other transactions on tablets and phones, they cannot directly assist with products.
But when it announced the delayed start to the trial, NZBA confirmed that from the start of this year, regional closures would resume.
Bank branch closures resumed, with the announcement by BNZ that it would close 38 branches, prompting South Wairarapa mayor Alex Beijen to petition Robertson calling for a formal inquiry into the impact of branch closures.
Beijen's council is based in a town with one of the hubs - Martinborough - but he played down its usefulness.
"The 'hub' is merely a super ATM and does not address the social harm and problems to rural communities that result from the closing of branches that support rural and provincial communities and economies," Beijen wrote on March 3, according to documents released under the Official Information Act.
The letter was supported by 33 other mayors from the Far North to Southland.
A week later, Robertson wrote to NZBA chairman Steve Jurkovich (the chief executive of Kiwibank) warning that the Government was unhappy with the closures.
"My colleagues and I are concerned about the impact of bank branch closures on businesses and individuals who rely on a reasonably accessible physical branch for their day-to-day banking services because they are unable to access or use alternative (such as online) services," Robertson wrote.
"Bank closures are now regularly occurring and this means that some of the public confidence that we hoped would be engineered by the trial [of the hubs] has not eventuated."
Robertson invited the banks to consider bringing forward the opening of further regional hubs before the trial was completed, suggesting areas which cover the bulk of New Zealand's land mass.
"Particular areas that may benefit from such consideration include areas of remote coastline (such as Northland, Coromandel, and the East and West Coasts) and heartland areas (such as South Wairarapa/Southern Hawke's Bay, parts of Taranaki/King Country, and Otago/Southland)."
A fortnight later, Kiwibank confirmed it was closing branches in Balclutha, Waihī, Waipukurau and Gisborne as well as several metropolitan branches. A spokeswoman pointed out that the closures had been flagged publicly before Robertson's letter was sent.
More than a month after Robertson's letter was sent, Jurkovich responded with an outline of what the banks were doing to support customers, but declining to open more banking hubs.
"We would like to keep the trial limited to the existing sites to ensure we receive a full year's picture of customer usage," Jurkovich wrote. "Rest assured a lot of work is being done in the background.
NZBA chief executive Roger Beaumont said Covid-19 had a significant impact on how customers used bank branches, the banking hubs and the commitments made by the six participating banks "none of which could have been foreseen when the trial was announced".
The trial aims to test demand for basic banking services in small communities where branches have closed. The industry was "acutely aware" of the impact of branch closures.
"We want to see the trial through before making any significant changes like adding further hubs. Installing a hub requires quite a bit of work, including the tech build, physical fit-out, and negotiations with venue owners. It's not something you can do overnight."
Robertson said the Government was "working closely with the industry on the future of banking services including the trial hubs".
He would encourage the banks "to provide services across New Zealand and to ensure vulnerable customers are supported".
Documents released under the Official Information Act revealed how few transactions are now being done in branches, and even at ATMs, compared with five years ago.
Materials provided to Robertson by Kiwibank showed that in 2016, out of every 1000 transactions, 65 were done in branches and 20 at ATMs. By 2021, only five in every 1000 transactions took place in a branch, with a further three at ATMs.