Customer-owned banks, including our very own Central Murray Credit Union (CMCU), are giving back to their communities at a rate nearly nine times higher than the major banks, according to the Customer Owned Banking 2024 Impact Report released recently.
Credit unions and mutual banks dedicated 5.2% of their profits to community and charitable organisations, totalling $38.4 million.
In contrast, major banks contributed 0.6% of their profits.
CMCU CEO John Pattison said it is all about the service and providing what the customers are after from their banking institutions.
“The launch went very well. It is just an important report and time for us to get together as local banking institutions servicing the members,” Mr Pattison said.
“The whole thing is dealing with people and not trying to get rid of them to the digital network.
“In Yarrawonga, our community wants to be serviced by people and get answers. You can come in and get an answer on the same day and do whatever you need to do in the one visit.
“We service a great part of the Australian public, it is just a way of how we operate and how we do it differently.
“The biggest issue we have is that people don’t understand what a credit union and building society is, but they dislike the word bank.
“People don’t understand that they are all regulated by the same entity. We are all governed by the bank guarantees that the government brought in.
“Seventy five percent of credit unions or building societies have now conformed into banks and hopefully next year we will look to do the same so that people can say ‘well they’re a bank, they must be alright.
“It is just a perception. People don’t understand that we all provide the same, loans deposits etc, but it is the way you do it.
“It is all about service.”
Customer-owned banks are often leading the way in value. The report, which is written by leading economist Nicki Hutley, found that mutual banks and credit unions offered average variable home loan rates 0.4 percentage points lower than those offered by major banks.
While individual rates vary between customer-owned banks, this average difference equates to over $2,000 in interest saved annually on a $600,000 mortgage.
The report also states Australia ‘fares particularly poorly’ when it comes to competition in the banking sector which is dominated by the big four banks, with regulatory arrangements often disadvantaging smaller players.
“I have been in the banking sector for most of my life, I have been in banks, building societies and credit unions. People don’t understand what a credit union is,” Mr Pattison said.
“Back in the day a credit union used to be for personal loans and building societies used to be for housing loans, but everything has evolved.
“In saying that, bank is a safe word.
“As time goes on you have seen a reduction in banking services in regional areas. We are very fortunate in Yarrawonga Mulwala, we have several banking licenses.
“The national bank has a banking license, so does Commonwealth and your own bank in CMCU has a banking license and they are so hard to get. There are not many around and you own that banking license.
“We are fortunate as the services within the majors decrease, as time goes on, digital banking is going to be number one across the board, but people want to see people.”
With over 11,500 full-time employees and many mutual banks and credit unions headquartered outside major cities, the customer-owned banking sector plays a vital role in supporting regional economies.
Employee satisfaction is strong, as evidenced by an average staff tenure of 7.5 years – more than double the national average of three years and four months.
“You can still come down the street, pop in and see your bank. You still want good service and that is what we are here for. Whether you want digital or personal service, it is all about dealing with people,” Mr Pattison said.
“Every one of our members who walk up to the counter will get most of their answers from the front line staff who are up to date with everything.”
Customer-owned banks also reinvest profits back into better services, which has resulted in market-leading customer satisfaction ratings for the sector compared to the major banks for over two decades.
“Many years ago the government made it that mutual banking institutions were non-profit organisations, everything that we earned we owned it, and everything goes back to improving our services, products, to our members and doing our best to try and get good grades and trying to keep fees down,” Mr Pattison added.
“Everything goes back into the community whereas if you deal with a large bank, it goes back into a big melting pot and very little goes back into the community.
“We support as much as we can because we are part of the community. Our community supports us, we support the community.
“We love what we do. When you think about it, our community has its own institution
“Within our district that we service our members, they are our priority and if we can support them in any way we will.”