Regional and community banks in Australia are at a pivotal crossroads. As digital transformation sweeps the financial sector, these institutions face a unique challenge: how to modernize and innovate without losing the personal relationships, cash services, and community trust that set them apart from the major banks. The path forward is not about choosing between digital and local—it’s about finding the right balance to thrive in a digital-first era while preserving the local touch that customers value most.
Recent years have seen a significant decline in physical bank branches, particularly in regional and remote areas. Since 2017, over a third of branches in these communities have closed, leaving many customers—especially those who rely on cash or in-person service—feeling underserved. Despite the rise of digital payments, a majority of Australians (70%) oppose the removal of cash services from branches, and more than three-quarters still carry cash. For elderly customers, the need is even more pronounced, with 93% opposing any move to eliminate cash services.
While digital adoption is surging, not all customers are ready or able to make the leap. Digital literacy, internet access, and trust in technology vary widely across regional populations. Many customers still associate true personalization and trust with physical branches, not digital channels. This perception gap is both a challenge and an opportunity for regional banks.
With the shift to digital comes increased exposure to scams and cyber threats. Australians are acutely aware of these risks: more than half report being targeted by scam attacks, and nearly all expect their bank to offer meaningful support if they fall victim. However, only a minority of scam victims find their bank’s assistance completely helpful, with slow response times and a lack of personalized care cited as common pain points.
Regional customers, in particular, value empathy and local understanding when dealing with the aftermath of a scam. They expect not just reimbursement, but reassurance, accountability, and a sense that their bank is truly on their side. This underscores the importance of blending technology with the human touch—using data and AI to detect and prevent scams, while ensuring that support remains compassionate and accessible.
The future of regional banking is not digital-only or branch-only—it’s hybrid. Regional banks should:
This approach ensures that no customer is left behind, and that the unique needs of regional communities are met.
As cash remains a vital part of the financial ecosystem, especially for older Australians and those in cash-based industries, regional banks are exploring new ways to provide access. This includes:
These solutions help maintain financial inclusion and support local economies, even as the traditional branch network contracts.
To ensure no customer is left behind, regional banks are investing in:
By meeting customers where they are, banks can foster trust and confidence in digital services.
With scam activity on the rise, regional banks must:
AI and data analytics can play a crucial role in identifying risk factors, flagging suspicious activity, and delivering timely interventions. However, automation must be balanced with human oversight, ensuring that customers always have the option to speak with a real person when it matters most.
Regional banks’ greatest asset is their deep connection to local communities. By combining this with smart digital innovation, they can:
Transparency, education, and proactive communication are key to maintaining trust as banks introduce new technologies. Customers who understand how their data is used and how AI protects them are more likely to feel confident and engaged.
Younger Australians are driving demand for banks to support green initiatives and social responsibility. Regional banks are uniquely positioned to:
The future of regional banking in Australia is not about choosing between digital transformation and local service—it’s about integrating both to deliver what customers truly value. By embracing a hybrid model, investing in personalization, bridging the digital divide, and leading on security and social responsibility, regional banks can secure their place at the heart of their communities for generations to come.
Publicis Sapient partners with regional banks to design and deliver transformation strategies that honor local strengths while unlocking the full potential of digital innovation. The journey is complex, but the rewards—for banks, customers, and communities—are profound. Now is the time to act, ensuring that regional banks remain not just relevant, but indispensable, in the digital age.