Australia's banking giants are resisting mandates to keep regional branches open, warning of cyber security risks and a higher cost of living if they have to invest in declining services.
A Senate inquiry examining the effect of increasing rural branch closures has raised the possibility of changing banks' licences, requiring them to maintain a presence in the bush.
Banks would have to divert money away from critical technology if they were obliged to operate a certain number of regional branches, Australian Banking Association chief executive Anna Bligh said.
"Trying to predict what banking will look like in Australia in five years time or 10 years' time ... is an impossible task," Ms Bligh told the inquiry at Parliament House in Canberra on Wednesday.
"Seeking to enshrine one channel that is in rapid decline will have the effect of taking money out of innovation, security, cyber safety, where customers are actually banking."
Banks needed to maintain profits to keep their credit ratings, which flowed on to consumers, Ms Bligh said.
"If we want to have an impact on banks' credit ratings, then just say hello to more expensive products for every Australian - it's a very delicate balance and it needs to be thought through in every single part of the system."
Face-to-face banking is considered an essential service in country Australia and part of the social fabric.
Many witnesses have given evidence that local bank managers are critical for farming operations, while small businesses and community services rely on cash.
But all four major banks told the inquiry the majority of customers use digital platforms, with billions of dollars transacted online every week.
Introducing mandates would be unwise, NAB chief executive Ross McEwan said.
"You need to consider what are you trying to enshrine into Australia because it sounds like you're enshrining a world that will never change, but it is changing dramatically."
Branch networks were once a commercial advantage, but had faded into the past, ANZ chief executive Shayne Elliott said.
"Tying a small group of banks to an old model ... I'm not sure that would have the sort of outcomes we would all imagine," he said.
The inquiry has been examining whether banks have a social obligation to regional Australia, which makes a significant contribution to the economy through agriculture, mining and tourism.
Westpac chief executive Peter King denied suggestions the bank was ignoring those expectations by closing rural branches while it makes enormous profits.
It was offering online services in the same way the government had digital platforms for Medicare and Centrelink, Mr King said.
The Commonwealth Bank, which has paused rural closures until 2026, spends $1 billion a year to keep branches open and $400 million distributing cash.
Chief executive Matt Comyn said that cost was becoming unsustainable, but the company still wanted the highest market share of country branches.
"There's no question that regional Australia is valuable to us," Mr Comyn said.
The inquiry will move to the NSW Riverina town of Junee on Thursday.
