Regional and community banking in Australia: Designing for trust beyond the metro branch network

For many Australian banks, the future of distribution is often framed as a question of efficiency: how quickly can customers be migrated to digital, how far can physical footprints be rationalised, and how can service costs be reduced without damaging experience? In regional and remote communities, that framing is too narrow. The challenge is not simply branch reduction. It is service redesign.

Publicis Sapient’s Australia Customer Banking Report 2024 points to a clear tension in the market. Customers are using digital channels more, but many still connect trust, service and reassurance with physical access. Across Australia, 72% of customers visited a branch in the past six months. At the same time, 70% oppose eliminating cash services from branches, and the strongest resistance comes from older Australians and people with lower confidence in the banking system. Those signals matter everywhere, but they carry particular weight outside major metropolitan areas, where alternatives are fewer and the consequences of service withdrawal are greater.

Why physical banking still matters more outside major metros

Regional and community banking customers are often discussed as if they are simply lagging the digital transition. The research suggests something more important: their needs are structurally different.

In major cities, customers may have multiple nearby branches, stronger transport links, more service alternatives and greater confidence that if one channel fails, another is available. In regional and remote communities, the local branch can play a broader role. It is not just a place for transactions. It is a point of access, education, reassurance and escalation.

This helps explain why branch expectations remain practical and human at the same time. The top services customers expect at a local branch are ATMs, customer service, and deposits and withdrawals. Lending, account support and help with mobile and online banking also rank highly. In other words, customers do not see branches as legacy real estate. They see them as part of the service fabric.

That service fabric matters even more in smaller communities where local businesses still need to deposit takings, older customers may depend on cash, and face-to-face support may be the clearest route through a complex or stressful banking issue. When physical access is removed in these areas, the impact is not merely inconvenience. It can feel like the removal of capability.

Cash is not just a payment preference. It is a resilience issue.

The report shows a market that is moving toward digital payments in practice while still valuing cash as a safeguard. More than three in four Australians still carry cash, and 70% oppose the removal of cash services from branches. While cards and digital wallets are preferred for many day-to-day transactions, cash retains a distinct emotional and functional importance.

That is especially relevant in regional and remote communities. In these contexts, cash supports people who are less digitally confident, helps some customers avoid payment surcharges, and provides a fallback when technology fails. For small businesses and households alike, cash access is tied not only to habit but also to control.

This is why banks should avoid treating cash simply as a declining product to be priced out of existence. The research shows most Australians are against paying extra for cash access, with 72% saying it is a core service that should not cost more. Even customers who are open to digital migration may still see the withdrawal of cash as a breach of community obligation if no credible alternative is offered.

For regional banking leaders, the implication is clear: if the traditional branch model is under pressure, the answer is not to ignore cash demand. It is to redesign how cash services are delivered.

Trust in digital banking depends on reliability, not just usability

Regional service strategy is often discussed in terms of digital adoption, but adoption alone does not create trust. Reliability does.

A significant barrier to deeper digital migration is outage risk. The report found that 60% of Australians have experienced at least one service outage when paying with a card or digital wallet, and 31% have experienced multiple outages. Around a third would seek to switch banks or consider switching after a digital outage.

This has major implications for regional and community banking. In metropolitan areas, an outage is frustrating. In remote areas, where branch alternatives may be limited and telecom or power disruptions may compound the issue, an outage can reinforce the belief that digital-only banking is fragile. That makes trust harder to win.

Banks sometimes assume that improving the app experience is enough to shift behaviour. In reality, customers also need confidence that the service will be there when it matters. Resilience becomes part of experience design.

This links directly to broader trust dynamics in Australian banking. Banks are still seen as secure, but they are also viewed as expensive and unaccountable, and many Australians say they have not seen meaningful change in how banks operate in the years since the Royal Commission. In regional communities, where institutional relationships are often more visible and personal, service changes can shape trust quickly. A poorly managed branch closure or badly handled outage does not stay abstract. It becomes local memory.

Digital confidence is uneven, and human support still anchors adoption

Customers still associate personalised service more strongly with physical channels than digital ones. Those who have recently visited a branch are far more likely to expect personalised service than those who have not. The report also shows that many Australians want better digital customer service, but remain wary of AI, especially when it appears to reduce access to a person.

For regional and community banks, this should shape transformation priorities. The goal is not to force customers out of branches. It is to make digital channels feel more connected, contextual and human, while preserving clear paths to live support.

That means designing journeys where customers can start in one channel and continue in another without losing context. It means making branch staff, contact centres and digital interfaces part of one service model rather than separate silos. And it means recognising that digital education is itself a service, especially in communities where some customers may need help learning how to bank confidently across app, phone and web.

What a sustainable hybrid service model could look like

For banks rationalising physical footprints, the future in regional Australia is unlikely to be branch-heavy or digital-only. It will be hybrid by necessity.

From footprint reduction to service redesign

Regional and community banking in Australia is often described as a balancing act between economics and obligation. That is true, but incomplete. The deeper challenge is design.

Banks need to reduce cost and modernise. Customers need simple digital journeys, dependable access to cash where it still matters, and confidence that a human will be available when the issue is important or the technology fails. Those needs are not contradictory. But they cannot be met through channel strategy alone.

The winners will be the banks that stop thinking in terms of branch versus digital and start designing for continuity, trust and resilience across both. In regional and remote Australia, that is not just a better customer experience. It is a more sustainable way to serve communities while transforming the bank.