The mutual makeover

The member-owned banks are evolving, but their core focus on customer and community remains the same

Australia’s big four banks have motored through Australia’s cost-of-living crisis, supported by profits measured in the billions. ANZ, Westpac and NAB have each notched up half-yearly profits of $3 billion-plus. CommBank has declared a six-month profit of $5.15 billion.

That may be great news for bank shareholders, but it’s not always so rewarding for their customers. Many of them may be galled to see their bank reporting 10-digit profits while personally feeling the squeeze of higher home loan rates and returns on savings that have failed to keep pace.

For consumers fed up with helping their bank earn bumper profits at a time when many of them are tightening their belts, there is an alternative.

“Australian banks are divided into two models,” says Peter Lock, chief executive officer of Heritage and People’s Choice.

“There are those that exist wholly and solely to maximise profit – they’re the ones listed on the stock exchange. These listed banks simply can’t put their customers first because that place has already been taken by shareholders.”

On the other hand, a number of banks are 100% owned by their customers. And according to Lock, these banks “make their customers their absolute focus”.

Committed to mutual model 

Customer-owned financial institutions, also known as mutuals, are not new. Many have been part of the Australian financial scene for decades. Some have a history spanning more than a century. Along with having a proven track record, mutuals are regulated in exactly the same way as the big banks, having to meet the same strict, legally enforceable standards of safety and security.