The tide of bad news stories flushing from the banking Royal Commission for the past two months hasn’t been such bad news for one section of the finance industry.
Customer-owned banks, building societies and credit unions are enjoying surging inquiry and new customer activity as public opinion about the big corporate banks continues to chill.
In fact, the “mutual” membership institutions, which traditionally have a distinct second tier position behind Australia’s “big four” banking giants, say the swing has been evident for more than a year.
“We’re on track to achieve 10 per cent growth in home lending this year – four years ago that loan segment wasn’t growing at all,” said Greater Bank chief executive officer, Scott Morgan.
We’re building acceptance and relevance as a viable alternative because we always really do have the customer at the centre of what we do
- Scott Morgan, Greater Bank
Greater – once called Greater Newcastle Building Society – has 60 branches spread from NSW’s South Coast and Central West regions to southern Queensland.
A broad cross section of new customer growth is trending at 4pc this financial year, at least double the average population growth in the regional areas serviced by the mutual banker.
The Greater’s experience is supported by an Essential Media poll which last week found one in three people now more likely to consider switching their banking institution, and 8pc already had.
A further 17pc said the Royal Commission had led them to consider changing, but they had not yet done so.
“Until recently, it’s fair to say the customer-owned banking sector struggled to really demonstrate our value proposition to the community, but in the past year there’s been a definite lift in our business – more than I’ve seen in over 10 years in this industry,” Mr Morgan said.
“We’re building acceptance and relevance as a viable alternative (to the major banks) because we always really do have the customer at the centre of what we do.
“Our perspective at the Greater is very much a strong regional focus and empathy with the needs of 260,000 customers in our market territory.”
Repeated allegations of dodgy financial sector behavior at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Sector have dismayed and annoyed grass roots retail banking borrowers, savers and credit card customers.
“After 150 years dominance by the major banks, we think there is going to be a bit of a revolution in the industry given the level of requests our members have been inundated with,” said Customer Owned Banking Association (COBA), CEO, Michael Lawrence.
COBA, which represents 75 mutual lender organisations, says the nation-wide uptick in inquiries is directly related to the fact “people are shocked by stories they’ve been hearing in the Royal Commission”.
Its mutual bank members already have about 4 million customers on their books and about $111 billion in savings and loan assets, but they are seizing on public feedback to launch an “Own Your Banking” campaign pitched at attracting more traffic into their branches.
“Our model is the only alternative that can claim it is solely customer-focused because 100 per cent of our profits are used to benefit customers,” Mr Lawrence said.
Nothing needs to go into a dividend bucket for shareholders
- Michael Lawrence, Customer Owned Banking Association
“We hope ‘Own Your Banking’ shows consumers there are plenty of alternatives in the banking market that can be trusted to put them first.
“We really are market leaders in customer satisfaction and offer award winning loans and low rate credit cards.”
He said people were genuinely walking away from, or scaling back, their relationships with one or more of the big four – ANZ, Commonwealth, National Australia Bank or Westpac – or other sharemarket-listed lenders such as Suncorp, Bank of Queensland or Macquarie.
“They’re finding member-owned institutions do offer products and rates as good, or better than, the majors because all profits go back to that institution,” Mr Lawrence said.
“Nothing needs to go into a dividend bucket for shareholders.”
He cited innovative banking options such as popular credit card alternatives Apple Pay and Google Pay via smartphones, which some mainstream banks were still to embrace.
Banking services like ours are been bringing new investment and capabilities into country communities
- Scott Morgan, Greater Bank
Support for the mutual sector was also coming from the federal government and banking system regulators, with changes soon likely to enable member-owned institutions to raise extra outside capital without dismantling the mutual industry’s one member, one share structure.
Canberra also wanted customer data to be more easily transferable between institutions, which would make opening an account with a building society, credit union or mutual bank much easier.
Greater Bank’s Mr Morgan regarded Australia’s significant regional mutual banking network as a great regional business success story.
“Banking services like ours are been bringing new investment and capabilities into country communities,” he said.
In fact, the success of the mutual network with rural customers of all backgrounds was now faced with the challenge requiring more people with finance sector skills.
“We actually need to attract more skills to move from capital cities to help us provide the sort of services we do.”
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
