Continued bank branch closures and the rise of online banks

Tara McCabe

Tuesday 29 October 2019

It’s quite likely that you’ve noticed a number of bank branches quietly closing down over the past few years in your area, town or even city. Or if banks aren’t on your radar much because you do all your banking online, you may have found it harder and harder lately to find an ATM, for that once in a blue moon time you want to get hold of some actual cash.

Closed for business - sign.

Well according to statistics released by the Australian Prudential Regulation Authority last week, physical bank branches have been reducing in numbers all over the country in the past few years. 

The APRA’s ‘Points of Presence’ statistics showed that the number of bank branches in major cities across Australia has gone down by approximately 9% in just two short years. Further to that the number of bank branches available across each state also seems to be in steady decline, with Queensland notably losing as much as 11% of its bank branches between 2017 and 2019.

Why are more and more bank branches closing down?

Mozo Banking Expert Peter Marshall said, “the harsh reality of the world we live in these days is that bank branches are less and less relevant. One of the main purposes of banks having branches has been to meet the needs of customers who use cash, and as cash is in serious decline as a payment method, there is simply less of a requirement for them”.

RELATED ARTICLE: Digital banking and neobanks

Online banks vs ‘non-online’ banks and the Big Four

This “evolution of banking” as Marshall referred to it as, could be an opportunity for many Australians to jump ship and take advantage of all the perks online banks and neobanks have to offer. 

As well as giving you access to your banking 24/7, online banks often offer more competitive interest rates than banks with physical branches and many have accounts with zero monthly account keeping fees.

In fact, online banks currently take out 3 of the top 5 spots in the Mozo database for the maximum interest to be earned on a bonus savings account**, with neobanks 86 400 and Up Bank currently tied for 2nd place and online bank ME coming a close third. 

The average maximum interest rate for a bonus savings account with an online bank currently stands at 1.98% p.a. which is significantly higher than the average 1.61% p.a.* maximum interest rate offered on a bonus savings account with all other ‘traditional’ banks, or in other words banks with physical branches. 

What’s more, the average maximum interest rate offered for a bonus savings account with one of the big four is even lower, currently standing at 1.44% p.a. That’s a hefty 0.54% p.a. less than the average interest to be earned with an online bank for the same type of savings account.

Online Bank bonus saver accounts in the top 5:

  • 86 400 Save Account : maximum interest rate of 2.25% p.a when you deposit at least $1,000 once a month into either your Pay or Save Account.
  • Up Bank Saver Account:  maximum interest rate of 2.25% p.a.when you make 5 or more purchases through your Up everyday transaction account each month.
  • ME Bank Online Savings account: maximum interest rate of 2.20% p.a. when you make 4 tap and go purchases with your ME everyday transaction debit card.

Traditional Bank bonus saver accounts in the top 5:

  • MyState Bank Bonus Saver Account: maximum 2.50% p.a. interest rate when you make at least 5 purchases throughout the month through a linked everyday account and deposit at least $20.
  • Bank of Queensland Fast Track Saver Account: maximum interest rate of 2.15% p.a.  when you transfer at least $1,000 each month into your corresponding Day2Day Plus transaction account.

How much can you save by switching to an online bank?

Let’s break it down using Mozo’s Savings Calculator

Say you open a bonus savings account with a starting balance of $5,000, deposit $200 per month and meet all the relevant criteria to achieve the maximum interest rate. With an online bank on average you would earn approximately $122 of interest over the course of the year and your closing balance would be $7,522.

Now take the same situation but you open your bonus savings account with a non-online bank. With the same amount of money and the same amount of deposits each month, you would earn approximately $99 worth of interest and your closing balance would be $7,499.

Lastly, imagine you have the exact same situation but this time you open a bonus savings account with one of the big four. On average you would earn approximately $88 of interest over 1 year and have a closing balance of $7,488. 

That’s $34 worth of interest that’s better off in your pocket than the big banks' profit sheet.

Seize the day!

So if you’re ready to channel some good ol’ carpe diem and seize a higher interest rate for your savings, check out the bonus savings accounts below or head to Mozo’s savings account comparison page to see if you could be getting a better deal.


*Average interest rates for bonus savings accounts gathered from the Mozo database and based on a bonus savings account with a balance of $10,000. Averages correct as of Monday 28th October, 2019.

**Maximum interest rates for bonus savings accounts with a balance of $10,000. Correct as of Monday 28th October, 2019.

Compare today's top savings accounts

Back to top