The Australian Banking Association wants regulator approval for regional service commitments, a trial of up to 10 regional banking hubs, a joint funding model to back them, and regional service commitments.
But the rival Regional Banking Investment Alliance says the plan falls short, and hubs could only handle a fraction of the services people need.
"They need help with scams, access to cash and somewhere to discuss their finances privately," chief executive at Regional Australia Bank David Heine said.
The alliance had already provided a funding model in response to federal Treasury's levy-based, redistribution model proposed in 2024.
"The government has a practical funding proposal on its desk," Mr Heine said. "It is time to act."
The alliance is made up of 25 regional banks, including customer-owned mutual funds and supporters.
The banking association represents 20 institutions, including the big four banks, regional banks turned national, and international banks operating in Australia.
The latter's plan, which has been submitted to the Australian Competition and Consumer Commission for approval, could ensure regional customers can bank in the ways that suit them, chief executive and former federal Liberal finance minister Simon Birmingham said.
"Banks recognise that some customers still prefer face-to-face options even though the number of transactions in branches has plummeted, challenging their viability," he said.
In-branch interactions in regional Australia have tumbled 63 per cent since 2019, while cash payments account for 15 per cent of total transactions, down from 70 per cent in 2007, industry and government figures show.
Hub models already exist in the United Kingdom and New Zealand.
"Branches will continue to be an option for regional customers," Mr Birmingham said.
"However, this hub trial explores new ways to deliver face-to-face banking services in communities that currently don't have a branch."
Nearly 850 banks have closed across regional, rural and remote Australia between mid-2017 and mid-2025, according to prudential regulator data.
The wave of closures has left an estimated 600 towns without a bank.
The current figure, and the impact of a federally imposed moratorium on regional branch closures, won't be known until 2026 financial year data is released later in October.
While some major banks had opted to extend a government-imposed moratorium on regional branch closures, they failed to bring back shuttered outlets, and many were operating with reduced hours and services, Traditional Credit Union chief executive Simon Lyons said
"Banking hubs and Bank@Post can help, but they cannot be the whole answer," he said.
"Communities need trained people who understand their circumstances and can help when a banking problem becomes urgent."
Last week, Commonwealth Bank extended its moratorium on regional branch closures until the end of the decade. Westpac gave a similar guarantee in November last year.
National Australia Bank and ANZ remain committed to an earlier industry-wide closure pause until mid-2027, with ANZ boss Nuno Matos previously expressing his support for banking hubs.
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