Digital shift accelerates, but role of branch network is far from over for banks in Australia

Robert Bustos McNeil

Australian consumers increasingly embrace digital banking for simplicity and speed, yet new research from global consulting firm Kearney highlights that physical branches continue to play a vital role in the retail banking landscape, particularly for high-value and complex products.

According to Kearney’s latest APAC Banking Radar, Australia is undergoing a rapid transformation in banking behaviours. Digital channels are now the preferred choice for researching and purchasing simple financial products. Yet even as digital adoption accelerates, the branch remains critical.

Kearney’s analysis shows that while Australia has experienced one of the steepest declines in branch numbers across Asia Pacific, alongside Thailand, it still maintains one of the highest ratios of branches per 10,000 customers in the region. With community and regulator pressure to maintain branches ongoing, this highlights an opportunity for banks to rethink how their existing regional branches can better serve customers, particularly in rural areas, where a branch often acts as a critical community hub.

Digital investment grows, but complexity still needs a human touch

Australia’s major banks are investing heavily to meet growing digital expectations. The Big 4 banks, ANZ, CBA, NAB, and Westpac, are projected to spend nearly $8 billion on enterprise technology by 2025 to improve the digital experience, and remain competitive with each other, against neobanks and fintech challengers and when compared with online experiences from other service industries.

This investment is delivering clear results in simple product categories. According to Kearney’s research, 72 percent of Australians now use online banking platforms to research financial products, with 79 percent completing purchases online. In both Japan and Australia, consumers often use price comparison websites to research products, then transition to online banking to complete transactions.

An untapped opportunity for banks

In Australia’s mortgage market, brokers currently originate around 75 percent of home loans. Kearney’s paper highlights that although the big four banks now offer digital home loans with end-to-end online processing, adoption remains relatively low. This is due to gaps in the digital experience (including limited variations and options available online) and a continued customer preference for face-to-face engagement when completing a home loan.

While more Australians are turning to the use of banks’ digital platforms to research complex products such as loans and mortgages, many still choose brokers at the point of purchase. This creates a significant opportunity for banks to better leverage their digital platforms, capturing mortgage customers who are already engaged during the research phase. Banks’ online channels represent an under-utilised asset, and evolving digital mortgage offerings to better meet customer expectations will be key to unlocking this potential.

“Banks in Australia have a major opportunity to capture a greater share of mortgage origination. To seize it, they must strengthen their digital platforms to better support proprietary channel mortgage sales.  An improved digital experience can support expanded face-to-face and digitally-assisted mortgage origination in the proprietary channel through in-house bankers. Although branch numbers are declining, branches could become important hubs for in branch and mobile lenders, and for providing assistance to customers to move seamlessly between online and physical channels, helping banks win back share from brokers.” said Robert Bustos McNeil, Asia Pacific Lead, Financial Services at Kearney and report author.

Kearney’s research points to a future where success will depend on banks mastering a hybrid model: combining the speed and convenience of digital channels with the personalisation, trust, and expertise that customers still expect for complex financial needs. As banks continue to ramp up investment in enterprise technology, regional branch closures are becoming a growing battleground between policymakers and the industry. Kearney’s findings show that branches are not just a legacy of the past, they remain a vital part of the customer experience and a significant opportunity for banks to strengthen relationships, support more complex transactions, and capture greater customer loyalty.

“Australia’s banking sector is rapidly evolving. While digital adoption is reshaping how customers engage, the demand for trusted advice, particularly for complex financial decisions, remains strong. Banks that who genuinely listen to their customers and balance digital innovation with personalised service, especially in regional communities, will be best positioned to deepen customer relationships and stay competitive in a changing market,” said Robert Bustos-McNeil.