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Kiwibank to ditch cheques in February 2020

Thursday 16th May 2019

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When Kiwibank CEO Steve Jurkovich stands up to address the Grey Power annual meeting next week, he might want to wear his bulletproof vest.

That’s the advice from national president Mac Welch, reacting to today’s announcement from Kiwibank that it’s axing cheques from March next year. The government-owned bank says cheque volumes have slumped and it would cost it millions of dollars to keep issuing and accepting them. The investment is better spent elsewhere.

Of course Welch is joking about the vest. And Grey Power members won't only be quizzing Jurkovich only about cheques at the AGM - they are also frustrated about the closure of bank branches.

But Welch's comments show the strength of feeling about the disappearance of cheques from the 70-something Grey Power president. He's never made an automatic bank payment in his life - and doesn’t want to. And he says his view isn’t that uncommon among older people.

“They’ve used cheques all their lives. Now people are saying ‘Get a plastic card you hate and use that’.”

Welch says he and many of his generation don’t trust electronic banking. “So many older people get conned, so you get suspicious. My wife pays things on the computer and I tell her off.”

Kiwibank today announced it will go cheque-free on February 28, 2020, making it the first mainstream New Zealand bank to do so. It won’t issue cheque or deposit books after September and it will stop accepting or providing cheques next March.

“For the past five years the use of cheques has been steadily declining," Jurkovich says. “With less than 1 percent of Kiwibank payments now made by cheque we’ve come to a tipping point. We’ve chosen not to invest in a shrinking service and outdated technology. Instead we’re moving forward and equipping customers for a world that is increasingly digital.”

Jurkovich says only 0.5 percent of the bank’s one million or so customers - 5,400 people in total - write more than one cheque a month. And that’s because digital banking options are “easier, faster and cheaper” for customers, he says.

In 2010, New Zealanders made 18 transactions by cheque per person; by 2018 that number was less than four.

Jurkovich says Kiwibank will be offering in-branch “tech tea” sessions - a cup of tea and internet banking training for customers. It has also developed an e-banking module for Digital Inclusion Alliance Aotearoa’s Stepping UP programme - a community-based digital skills initiative.

“We’ll be getting in touch with all customers that do write cheques,” he says.

Meanwhile, the bank is working with large organisations that issue cheques to try and wean them off paper. These include government departments and companies that issue share dividends by cheque, including Vector-linked Entrust, which pays an annual dividend to 300,000 Auckland households, often by cheque.

Hanny Naus is a professional educator at Age Concern, with a focus on elder abuse and neglect. She says she is worried about the most vulnerable group of older people who might not be computer literate, and are housebound, so not able to get out to an education class.

“They are vulnerable to abuse if they are relying on family and friends. Paying their bills by cheque is a safeguard. An alternative is having cash in the house, which is also unsafe,” Naus says.

“We are happy that Kiwibank is being proactive and offering programmes. It’s a help, but it won’t stop every problem.”

Naus says most people are able to learn new digital systems, but it takes time. Kiwibank needs to make sure its support doesn’t just happen in the buildup to cheques being stopped but continues afterwards.

And with bank branches closing, the bank needs to make sure it’s offering real humans to help, not just a machine at the end of an 0800 call.  

Grey Power’s Welch says it’s a question of confidence for many older people.

“I got my first cheque book when I was 15 and cheques have never let me down. I trust myself with a cheque book, but I don’t trust myself with a computer.”

Meanwhile, Naus is worried that Age Concern, like many charities, gets a significant proportion of its funding from people writing cheques - often in response to an immediate appeal.

“They might hear something on TV or radio, or get something in the post. And they’d write a cheque. But without that, they might just think ‘This is too hard to find their bank account and work out how to make a payment on screen', and they might not go through with it.”

Welch, who works from Grey Power’s Coromandel branch, says 40 percent of their membership fees are paid by cheque.

He can’t understand why it’s the government-owned bank which is the first cab off the rank going cheque-free.

“Why is Kiwibank making the move first? Why doesn’t it leave the Aussie banks to do it?”

Steve Wiggins is chief executive of Payments NZ, the organisation which manages New Zealand’s payment clearing systems.

He says he’s not surprised at Kiwibank’s decision. With the number of cheques in the system going from 53 million in 2013 to 18 million last year, there’s a lot of excess capacity - and that’s expensive for banks, he says. He compares it with the problems faced by NZ Post.

“It’s one of those systems where volumes are low and the cost of transactions are high and cross-subsidisation happens. Banks should be looking at how to move to the digital space.”

Jurkovich says while Kiwibank is the first of the big five NZ banks to make the move, newer arrivals into the country - the China Construction Bank and the Bank of China, for example - never introduced cheques in the first place.

And cheques are gradually being phased out in some other countries, particularly in Europe.

Dutch banks haven’t accepted personal cheques since 2001 and in Finland they haven’t been used since 1993.

Jurkovich is punting his New Zealand banking competitors will follow Kiwibank's lead.

"My view is that over the next 3-5 years we'll end up like Holland and Scandinavia with cheques disappearing from the system because there are much better ways to do it."


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