This discussion paper makes the case for the creation of a public bank in Australia by providing Australia Post with an Authorised Deposit-taking Institution (ADI) licence, and moving in time to establishing PostBank as a full national savings and loan bank.
The paper examines the history of banking in Australia, the dominance of the ‘big four’ commercial banks, the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Banking Royal Commission), and the current state of banking services for rural and remote communities in Australia.
It looks at examples of banking services offered through postal networks in other countries, and offers suggested business models and funding options for creating a PostBank in Australia, before addressing some of the barriers and challenges to establish such a service.
The Banking Royal Commission found that many Australians did not have adequate access to basic financial services, and that even those who did are often ill-served by our existing financial institutions.
Just as we would not leave the creation and maintenance of our health system or our roads entirely in private hands, we should not leave our banking services, financial infrastructure and financial stability entirely in private hands.
The establishment of a postal banking service in Australia would, by operating within the existing infrastructure footprint of Australia Post outlets nation-wide, provide banking services to Australians who are currently underserviced by the existing banking sector.
With a social benefit mandate, such a bank could also improve banking services across the country by setting new standards for financial products and services that other banks will have to meet if they are to compete.
Moreover, PostBank could ensure the continuation of postal services in remote and regional communities, and underpin the ongoing viability of Australia Post’s services across Australia.
We propose a phased approach, which would begin with the opening of basic savings and transaction accounts, followed by credit cards and personal loans, then the introduction of mortgages for owner occupied and small investor real estate followed by commercial lending with an initial focus on agricultural and other regional and rural business lending.
This phased approach would allow a steady, staged rollout of new services with profits and capital from one stage funding the rollout of the next phase, thus minimising initial capital requirements.
A government owned bank offers many benefits to Australians, including improving services for currently ‘underbanked’ customers, especially in rural and regional areas; improving standards across the financial services industry; and providing stability to Australia’s economy in times of volatility in international financial markets.