Banks must provide cash services to customers, Reserve Bank says

Source: Radio New Zealand

• The Reserve Bank says banks should provide basic cash services
• Services should be walkable distance in urban areas or driveable in rural areas
• Services should include cash withdrawals, deposits and change
• The RBNZ suggest banking hubs in addition to what individual banks provide
• It says banks earn big enough profits to cover costs
• The RBNZ is seeking submissions, which close on 10 April

The Reserve Bank (RBNZ) is suggesting the banking industry should be forced to provide basic cash handling services to consumers and businesses throughout the country.

The central bank has opened a six week consultation process to get public views on ensuring and maintaining a minimum level of cash in districts.

RBNZ director of money and cash Ian Woolford said providing and handling cash should be a basic banking service.

“We believe banks must provide cash services to customers, free-of-charge, because cash is an essential part of a customer’s relationship with their bank.”

He said banks had been reducing the places where customers could get cash, bank cash or get change, especially in rural areas, with about 40 percent of bank branches closed over the past decade.

“We want this to change, and we are open as to how,” Woolford said.

“Cash benefits society, as it is used for economic, social and cultural reasons, and as the steward of cash we are focused on ensuring the cash system is healthy and available.”

The bank cash hub – walkable, driveable

The RBNZ said the most efficient way to provide minimum access standards was a ‘multi-bank, full-service cash site’.

Such hubs would offer customers of any bank three types of cash service – cash withdrawals, cash depositing, and cash swapping of high denomination bank notes for lower notes and coins.

It said five full service hubs currently existed in Martinborough, Ōpōtiki, Twizel, Waimate and Whangamatā, but were only available to ANZ, ASB, BNZ, Kiwibank, TSB, and Westpac customers.

Several other locations offered only partial services, or were open only to account holders of the bank providing the service.

The RBNZ has been running a trial in Waipukurau with an automated teller machine which offers 24 hours a day allowing people to swap cash for bigger or smaller denominations, to withdraw cash, and soon to be able to deposit business takings direct into accounts.

The proposal said banks should be responsible for ensuring enough cash service sites around the country, it suggested 2.5 sites for every 10,000 people.

Urban sites should be in areas where there were at least 1,000 people within three kilometres walking distance.

Rural sites would cater for between 200 and 1,000 people and be within 15 kms drive, or no more than 30 kms for remote areas.

The RBNZ produced 66 district maps with suggested urban and rural locations for the hubs.

It said arrangements for supplying and collecting cash from districts should be worked out later.

The banks should pay, they make enough profit

Woolford said the benefits of making cash available outweighed the costs.

He said cash services provided benefits to the country of $2.83 billion a year, with an estimated annual cost to the banks of around $104m.

“This cost is negligible when compared to the more than $10bn annual pre-tax profits earned together by the banking sector.”

Woolford said several other countries were moving in the same direction, and research showed a high level of demand for cash with more than 70 percent of small businesses saying they would be adversely affected if cash was unavailable.

The RBNZ’s own research showed 80 percent of adults used cash sometimes, more than half store cash and 8 percent relied on cash as their sole means of payment.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand