The other reason for removal of ATM fees

ATMs are going the way of letterboxes and public phone booths. Emails are replacing letters, mobiles phones are replacing public phones and payment options like Apple Wallet, payWave and cash out are rendering ATMs redundant. In the not to distant future we will be using ATMs about as often as we currently use letterboxes and public phones.

Not every ATM is bank owned and operated but they are all expensive to maintain so its little wonder the banks want to extricate themselves from this high cost service as soon as they can. Servicing ATMs is labour intensive, just like delivering snail mail, and its even more expensive in regional and remote areas where demand is lower and costs are higher.

The decision of the big four banks to remove ATM fees has been represented as an industry wide initiative to benefit customers. “We have been listening to consumer groups and our customers and understand there’s a need to make changes that benefit all Australians” said CBA’s Matt Comyn.

“We want all Australians to benefit from one of Australia’s largest ATM networks” said Westpac’s George Frazis. “It will particularly assist Australians in rural and regional areas” he added. The last comment is telling. Whilst customers will appreciate not having to pay each time they use another bank’s ATM, what this collective move by the big four banks will lead to is a race to shut down ATMs especially in rural and regional areas. Banks will find it easier to withdraw ATMs when they can say to customers “you can now go down the road and use other banks’ ATMs at no cost.”

ANZ’s Fred Ohlsson let the cat out of the bag when he said, “you probably don’t need four ATMs in a row”.

There will be a flurry of bank ATM closures and no bank wants to carry the can of being the last ATM in the street. This is what happened when the banks closed down smaller branches in suburbs and towns and invariably it’s the last bank that closes which wears the flack.

The Australian Bankers Association chief executive Anna Bligh claimed that foregoing ATM fees would be “a hit to the bottom line”, although the cost to the big four banks is estimated at less than $200m on combined profits last year of around $35b. Plus we’re talking about a product with a limited life span.

Rather than thinking about how much they are giving up in fees, the banks are thinking more about how much they can save by closing down or outsourcing their ATM networks in the shortest timeframe.

It’s comes as no great surprise that politicians on both sides have taken credit for the decision by the banks. The Treasurer Scott Morrison said “the changes came thanks to pressure from government for the banks to put their customers first.” Meanwhile, Labour’s financial services spokeswoman Katy Gallagher said “there is no doubting that Labour’s calls for a royal commission has led to this decision.”

Of course, banks like any other organisations must constantly look for ways to reduce costs and consumers are never going to complain about the removal of any fee but for the banks and politicians to represent this in such a self serving manner does little to improve their reputation and standing.

As Jack Lang, the NSW Labour Premier from the 1920’s, would say “in the race of life, always back self-interest – at least you know it’s trying!”