Small town fights back, abandoned by big banks

Monday, June 25, 2007

Small town fights back after being abandoned by the big city banks

The tiny Tararua town of Eketahuna is setting up its own money exchange after the big banks refused to set up shop there or even provide an automatic teller machine.

The initiative owes a lot to the town’s do-it-yourself attitude – the community already runs the local supermarket and the local petrol station – and to the knowledge and experience of senior lecturer in Banking Studies at Massey University, Claire Matthews, who lives in nearby Pahiatua.

Mrs Matthews, a Tararua District Councillor, proposed the idea of a money exchange for the town, which has had no banking facilities since the Bank of New Zealand closed its branch 11 years ago. The nearest banks and ATMs are either 35km south in Masterton or 25km north in Pahiatua.

Mrs Matthews has more than 20 years’ experience with the banking industry. Her research report for her Masters in Business Studies looked at the experience of two Northland towns, after their last bank branch closed.

“In the 1990s a lot of small rural towns lost all banking facilities, as the banks closed many branches around the country,” she says. “The number of branches in New Zealand reduced by 42 per cent between 1993 and 1999. The towns of Maungaturoto and Waipu were of particular interest because they had established money exchanges. I visited both communities and talked to people and one of the things that struck me was how similar Maungaturoto was to Eketahuna.”

Last year, after the district council’s final bid to get a bank to establish an operation in the town was again turned down, Mrs Matthews decided Eketahuna could do better on its own. “A bank branch is only of use if you are with that bank, and an ATM really only allows withdrawals, which may attract higher fees for customers of other banks. I suggested a money exchange, as I had seen in Northland.”

Since then she has worked with the council and the Eketahuna Community Board to develop the proposal, using her research report as a basis.

The exchange will be run by staff in the council’s service centre and will aim to break even rather than make a profit, with the council subsidising the operation for the first six months on a trial basis. It will provide access to cash through an eftpos machine, change for businesses, cash or cheque deposits, and cheque cashing for approved customers. Deposits will go by courier to banks in Masterton.

It is expected to be up and running by August.

Full story at: http://masseynews.massey.ac.nz/2007/Massey_News/issue-08/stories/01-08-07.html

ENDS