Digital revolution in Australian banking has continued to progress by leaps and bounds, with a new report showing that 98.9% of customer interactions were now taking place via apps or online, and cash being used for just 13% of payments (down from 70% in 2007).
The Australian Banking Association (ABA), in partnership with Accenture, has published the Bank On It – Customer Trends 2023 report, which revealed just how fast Australian banking is evolving.
“Australia has witnessed a phenomenal shift in customer banking and payment preferences in recent years,” said Anna Bligh (pictured above), ABA CEO. “As a nation, we are early adopters of new payment options. Globally, Australians are now at the forefront of adopting cashless payment methods and it’s clear these recent technology leaps are now permanent consumer preferences.”
Rapid shift to digital banking
Findings showed that cards have rapidly replaced cash, with 75% of payments occurring with cards compared to just 26% in 2007. The use of cheques, too, has dropped, from 1% of all payments in 2007 to a mere 0.2% last year.
The use of mobile wallets has also quickly increased. In 2022, more than 15.3 million cards were registered to mobile wallets, up a massive 760% from just more than 2 million cards in 2018. At the same time, the number of mobile wallet transactions skyrocketed by 8,200% to 2.4 billion from 29.2 million. Mobile wallet transactions had a total value of $93 billion in 2022, up from $746 million in 2018 – that’s a 12,400% jump.
The report also found 98.9% of interactions have taken place digitally. Between 2019 and 2022, online banking transactions rose 21%, app interactions increased 31%, and branch interactions fell 46%.
Despite the decline in the numbers of branches in Australia over the past two decades, the nation has a notably higher branch density, at 24 bank branches per 100,000 adults, than New Zealand and Finland, the two-most comparable OECD countries by urbanisation.
Bligh said banks are responding to customer’s growing demand for digital banking with an eight-fold increase in technology investment since 2005, up from $3.5 billion to $28.5 billion.
“As customers increasingly shop, pay, or are paid digitally, they also expect their banking and payment services to be available digitally in a format that is convenient, fast, cost-effective, and secure,” she said.
Despite the rapid shifts to digital banking and payments, Bligh said face-to-face banking services will continue to have its role.
“Branch density remains higher in Australia than in most comparable countries globally,” she said. “For banks that participate in [email protected], the report shows that 98% of branch closures occurred within three kilometres of a branch of the same brand or one of the 3,540 [email protected] locations across the country – a service that is funded by Australian banks.”
Hessel Verbeek, a managing director at Accenture, said the Bank On It – Customer Trends 2023 report showed the unprecedented nature of the customer-led shift to digital channels.
“We know that customers are choosing digital interactions in many aspects of their lives, well beyond banking,” Verbeek said. “This report shows the scale and pace of the customer shift to digital banking, and the digital transformation by Australian banks.”
Major overhaul of Australia’s payments system
ABA also welcomed Treasurer Jim Chalmers’ announcement of a major overhaul of Australia’s payments system – an overhaul Bligh said was long overdue.
Speaking at ABA’s annual conference in Sydney, Chalmers said the federal government’s major payments initiatives are as follows:
- strategic plan for the payments system, which includes a phase out of the bulk electronic clearing system (BECS) and a full transition to the safer and more productive new payment platform (NPP), and a reduction in the government’s use of cheques
- reform of the payments regulatory architecture, including an expanded mandate for the Reserve Bank
- proposed list of the payments functions that can be regulated under a new payments licensing regime
Bligh said the announcement sets out the strategic direction to move the economy away from the current 60-year-old system and transition fully to the real-time payments platform.
“This strategic direction will help focus investment in payments technology and infrastructure that will benefit customers into the future,” she said.
Bligh also backed proposed regulatory reforms that will give the Reserve Bank greater oversight and standard-making powers over digital wallets and other forms of payments infrastructure, saying this “will help ensure clear consumer protections apply no matter who is processing your payment, and that the security of customers personal and financial information is maintained.”
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