Latest / Dollars In The Dirt / #003 - 36% of Rural Banks Are GONE. Here's What That Actually Means For Your Farm

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#003 - 36% of Rural Banks Are GONE. Here's What That Actually Means For Your Farm · Dollars In The Dirt

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  Since 2017, over a third of all rural branches
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  in Australia have closed their doors for good. But that's not the scary part.
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  The scary part isn't the 400km round trip for
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  face-to-face service. The scary part is what you're
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  left with at the branch. Your relationship, your local advocate
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  and your leverage. Most farmers think this is just
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  an inconvenience. The truth is, it's a deliberate shift
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  in the power dynamic. Decisions are no longer made by a local manager
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  who knows your family or your property. They're made by a credit analyst in
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  a city office who only sees the numbers on a screen. This
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  isn't just about fuel branches. This is the end of relationship banking
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  as we know it. Today, I'm going to break down what this massive
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  structural shift actually means for your farm's future and how to operate in
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  a world where the bank doesn't know who you are anymore. Welcome
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  to Dollars in the Dirt. I'm Brecon Curtis and this is where we break down
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  the finance side of farming so you can grow your operation, buy
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  that next property and build real wealth. Let's get into
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  it. It's a sad reality. Over a third of rural branches in Australia are
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  gone. And that's not a future. It's already happened. And this is not just
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  opinion. It's not political. It's a structural shift in how rural
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  Australia is financed. Let's start by translating that statistic into
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  reality. What does 36% gone actually mean? Well,
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  it means But there's no more branches that can actually help
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  you with getting an agribusiness loan. They're declining every day and
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  there are fewer bankers on the ground that can actually help you navigating the
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  struggles that come with getting rural finance. The banks can't
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  get staff anymore that are experienced in this area. And
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  they've stopped developing those people for a long time. So post
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  the Banking Rural Commission that was handed down in 2019, customers
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  aren't able to rely on their bank manager to help them with putting a loan application
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  together. And what that means is that they need to look
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  to other places to get that advice when putting this together. So it's
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  not just branches closing. It's fewer decision makers, fewer
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  experienced rural bankers. There's less knowledge. and
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  there's less advocacy inside the bank. The bank didn't just close
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  the door, it took the relationship with it. And this leads us
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  to the hidden change that most farmers are feeling, but might not have
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  put a name to yet. The relationships with their banks has become incredibly
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  thin. One manager now covers larger geographical areas, there's
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  more clients, it's a more complex business, and there's less time
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  per customer. And there's more reliance on centralised teams. There's
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  greater segmentation. And if you're borrowing less than $2 million,
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  you're with a centralised team. And what this means is
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  that you don't have someone in your corner helping you navigate the
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  complexities of getting a rural loan. You're dealing with someone in a call
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  centre. that often doesn't really understand what happens
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  on a farm day to day. And they're also less willing to help you
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  with the application. So what that means is
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  you're left to your own devices on navigating all the paperwork, putting
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  together all the information and trying to understand all the different bank jargon.
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  There's also been a lot of experience that's left the banking system in the last
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  10 years. And this is due to a few reasons. The banks have stopped
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  investing in the rural talent that they've developed for years and years.
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  A lot of old school bankers have left the industry And what that means
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  is that a lot of knowledge has also exited the industry. Banks, they
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  can't provide any sort of hands-on advice around how to construct
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  a cash flow budget. And that leaves the customer looking for
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  other ways to try and navigate the banking system. So just the other day,
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  I had a customer come and see me that, you know, they were
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  trying to get a loan through their bank. And
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  what happened was because the borrowing wasn't enough to be dealt with the local
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  branch, they were palmed off to
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  a call center in Sydney. And getting a rural loan in
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  the middle of Queensland through a bank manager in Sydney is not that easy
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  when the person doesn't actually understand, you know, your location, the
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  commodities, the seasonal risks, and what actually happens on a
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  farm in Western Queensland to what's happening in Sydney. So,
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  you know, they made the application, the bank took weeks, eventually
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  someone got back to them, and eventually they just never
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  heard anything for weeks on end and eventually gave us a call and they
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  said, you know, we're trying to do this, we've been impacted by a flood and we're trying to
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  get some money to restock and we just keep trying to get palmed
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  off to different people in Sydney, we don't hear anything back from the bank, you
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  know, what should we do? And this just shows that trying to
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  get finance in a rural location is
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  not that easy. You know, if you're not seen to be borrowing enough money from the bank, they
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  don't really care, especially in that sub $2 million sort of bracket,
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  there's no service really. And you get put into a centralized team.
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  And so eventually, you know, we put this together for the customer, found
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  a bank that actually was interested in assisting that type of customer in
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  that location. And we got it sorted within a couple of weeks, but they were very frustrated
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  with what the service that they'd received. And this is a common story that
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  we hear every day. From different people, the bank doesn't
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  seem to care. And it gets harder and harder for people
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  in rural Australia when the branches keep closing and there's no one local to deal
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  with. Another brutal truth is around loyalty. Like, you know, a lot of
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  people think that, you know, being with a bank for a long time, the
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  parents might have been with the same bank for years and years. And that loyalty
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  is what keeps them with that bank. And they seem to think, well, whatever
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  the bank manager says is true. And the reality is, though, that
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  the bank isn't really loyal to the customer. They're loyal to their shareholders. They've
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  got a policy that they need to abide by. The staff
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  come and go. And really, the loyalty is with the person you're dealing with. And
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  the bank is just the provider of the funding. So we see a lot of customers
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  that have been with banks for a long time. And this
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  leads to them paying a lot more in interest, often not getting the
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  best deal that they can because they're skewed by one
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  view on the world from one manager, from one bank and one policy, which
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  that doesn't help their business when there's other options out there that could be providing
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  a lot better interest rate to the customer, a lot better terms, and
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  there might be a policy that's a lot more favorable to their situation. And
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  in terms of loyalty, you know, there's no local decision makers anymore around being
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  able to deal with the customer one-to-one. You know, we go back in time, the
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  local bank manager used to have an authority where they could actually approve money
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  on the spot. That isn't there anymore. The customers need to wait
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  for the bank manager to go and put the application together, go to credit,
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  and then come back, you know, weeks later with an answer where there's
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  no local decision makers like there was. And
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  you need someone that knows your story to put that together, to advocate that
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  to the bank, to get what you need to do. So by having different bank
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  managers changing constantly has led to that loyalty
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  being lost with banks. And that really makes it hard
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  for rural Australians, especially when getting finance, because that loyalty
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  is what people used to rely on to grow their businesses and to help them to
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  gain the funding that they needed. Just quickly, if you're tired of explaining your
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  operation to a new bank manager every year, only to get a one-size-fits-all
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  deal that doesn't fit your business, we can help. At Season Finance,
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  we do things differently. We've got over 70 years of combined experience
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  in agricultural lending, and we work for you, not the banks. We're
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  the consistent expert team in your corner, fighting to get the finance
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  that actually helps you grow, purchase the next property, and
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  build your legacy. Don't leave money on the table. If you're looking at your next
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  move or just want a second opinion on your current setup, Click the link in
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  the show notes to book a confidential, no obligation chat with the
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  team and we'll show you what's possible. Righto guys, now back to the
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  episode. So guys, I need to ask the question, you know, why is
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  everyone so loyal to their banks when the banks really haven't been loyal
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  to their customers? The managers aren't there on the ground like they used to
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  be, the branches aren't there like they used to be and the banks just aren't
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  really that interested in rural businesses when they
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  keep retracting. So why do people remain
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  loyal to banks when the banks aren't really loyal to
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  them? So the solutions has been put forward with branch
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  closures is around what they call bank it post. And
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  what that is, is really Australia post is now the new bank
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  branch that we used to have in all the different banks used to have their own
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  branches in rural towns. And the solution
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  that has been put forward is that, well, we'll just make Australia Post
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  the new bank branch for all the different brands in one place, which, you
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  know, there's a lot of logic in that and I can see why it does
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  make sense. It's sort of a stopgap, allowing the banks to downsize their staff
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  and then outsource that to Australia Post that are always going to be there. The problem
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  is, it's just a basic service. You know, you can't open
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  a bank account, you can't get a loan, you can't talk to someone if
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  you have an issue, there's an unusual transaction on your account, the
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  Australia Post staff can't help you with this. All it is is just a transactional service
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  where you just can bank money, you can withdraw
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  money, and you can... do the basic stuff, but it
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  doesn't give you any access or advice and it's definitely not
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  going to be someone that's going to help you with any issues that you have. You
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  cannot realistically manage your farming business through it. There's no
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  proper account set up, there's no lending, there's no dispute resolution,
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  there's no term deposit, there's no international payments. And
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  there's no relationship banking with this model. Access
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  is not the same as advice, and it's definitely not the same as advocacy. This
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  isn't just a problem for individual farmers. It has a massive flow-on
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  effect for rural communities. There's a massive flow-on effect with
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  branch closures, and there's fewer professionals in towns. And when
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  I look back at my career, when I went to some rural towns, there
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  was 10 or 15 bank managers in towns. And I look at those same towns now, and
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  there's two or three bank managers at best. And there
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  was five or six branches. Now there's one or two. And
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  what that means is that there's less people in those towns, which
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  all those rural towns to survive need more and more people. If the
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  bank manager's not there, his wife's not there, his family's not there, so there's less
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  kids at the schools. What it means is the economic activity
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  in those towns just reduces over and over. And this is
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  the thing that most people don't really appreciate, is that as more and more
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  people leave rural towns, it means those towns will slowly die, and it
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  means more and more services will leave. You know, the rural businesses
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  are all still there and the farmers still need access to finance and
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  they still need access to services, but there's less and less people
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  there. Well, you know, it's just a snowballing effect with which often
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  means less people, less services. It has a massive flow
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  on effect. So after all this, what does it actually mean for your farm
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  day to day? You know, the practical realities are you need to be more
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  prepared than ever. You need to understand your business. You
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  need to really rely on different professionals
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  that can actually help your business grow. Your accountant, your finance broker,
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  your solicitor, you know, all those people need to make sure that
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  you're prepared if you want to grow your business and know how
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  and what you need to do to make that happen because the services just aren't
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  in rural towns like they used to be and you can't rely on your bank to
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  guide you anymore. So you need to have a clean numbers. You need to
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  make sure that you have a clean set of numbers in terms of your financials are
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  up to date, your ATO portals are all sorted, you have a budget,
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  you have your stock numbers sorted, and you have a clear plan around where
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  you want to take your business because you don't have the bank manager there
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  anymore that you can go in and just have a meeting with and sit down and
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  say, this is what I want to do over the next 12 months. You need to have
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  that sorted in terms of a plan presented. And
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  then you have to represent that strong because you don't have someone local that
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  might be able to help you with that. So you need to make sure that when you do find
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  someone that can help you with that, that you're putting your best foot forward. You need
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  to look at all the different banking options and there's so many different lenders out there
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  that finance farms. being able to access those and
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  knowing who to talk to, you know, who the best option is around that
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  is really important. And having someone that's advocating for you is
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  really important. You know, the system's changed and whether you like
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  it or not, the risk is significant in pretending that it hasn't. And banks
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  aren't disappearing from rural Australia, but local banking is.
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  And the farms that understand that shift and adapt early will
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  be far better positioned than those who assume that things will
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  go back to how they were. So here's what you need to understand. This
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  isn't a temporary inconvenience. This is a new permanent reality
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  of agricultural finance in Australia. The 36% of branches that
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  are closed aren't coming back. The experienced bankers who left the
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  system aren't returning. And the relationship banking model your parents
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  relied on, well, it's gone. But here's the good news. The
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  farms that adapt to the new reality early will have a massive competitive
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  advantage. While everyone else is complaining about banks not
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  understanding them, you'll be presenting your business in a way that makes approval
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  inevitable. While everyone else is loyal to a bank that doesn't even
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  know their name, you'll be leveraging competition between
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  multiple lenders to get better terms. The systems change. The
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  only question is, are you going to change with it? Or are you going to
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  keep pretending that loyalty And a handshake still
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  means something to a credit analyst in Brisbane who never set
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  foot on your property. The choice is yours, but I can tell you this, the
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  farms that are growing right now aren't the ones waiting for the bank to
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  come back to town. They're the ones who have figured out how to win in
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  the new game. Thanks for tuning in to Dollars in the Dirt. If you've got
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  value from today's episode, make sure to subscribe so you never miss
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  the insights you need to grow your business. And if you're ready to stop being just another
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  number to the banks, visit Season Finance via the link
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  in the show notes. Remember to follow us on socials and catch you