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As detailed in Roy Morgan Bank’s Trust and Distrust Scores Report, mutuals are the most trusted banking sector for Aussie consumers.
As voted by 25,000 respondents, the net trust score for mutuals has improved since the last report in 2023.
Commenting on the report, Customer Owned Banking Association (COBA) CEO Michael Lawrence said the sector is thriving with a “people-first approach.”
“Trust is something that is earned, and customer-owned banks’ people-first approach translates to competitive rates, innovative products, superior services, and a strong commitment to local communities, which explains why Australians continue to place their trust in mutual banks,” said Lawrence.
“Customer-owned banks are built differently. We’re owned by our customers, which means our purpose is to create long-term value for them and their communities. Unlike listed banks, financial performance is not our purpose – it enables our purpose.”
The rise in trust for Australia’s mutuals is contrasted by a rise in distrust for traditional lenders.
According to Roy Morgan, banking ranked 24th out of 27 industries for net trust.
Telecommunications, supermarkets, and social media were the only three sectors to rank worse.
Around 3.2 million (14.2 per cent) of Australians aged 14 and over now said they distrust either specific banks or the overall banking sector in general.
Meanwhile, customer-owned banking ranked seventh.
Now, industry heads have come together to give some perspective.
People First Bank’s chief customer officer Maria-Ann Camilleri said the trust is due to customers recognising genuine intentions.
Great Southern Bank deputy CEO Megan Keleher said: “The customer-owned banking model demonstrates how financial institutions can structurally embed customer benefit alongside financial sustainability and customers financial wellbeing.”
Bank Australia managing director Damien Walsh said: “Because we’re owned by our customers, not investors, we’re able to focus on their needs and creating positive impact on their behalf and trust plays a big part in this.”
NGM Group chief distribution officer Paul Juergens said trust isn’t bought, it’s earned.
Increased regulatory scrutiny
Despite the positive news for the mutual sector, there has been heightened scrutiny recently.
APRA came forward in March of this year, urging mutuals to continue to merge.
“For the mutuals, our observation is that some boards lack the necessary skills to guide their banks in a modern banking environment, in particular technology skills. That may require you to upskill existing directors, but you might also need to look beyond your bank’s traditional geographic or industry-based pool to seek fresh talent,” APRA board member Therese McCarthy Hockey said.
The industry has been going merge crazy in recent years, with players like Summerland Bank and Regional Australia Bank, Beyond Bank and Police & Nurses Limited, and Qudos Bank and Bank Australia all part of the phenomenon.
Some reports said that mutuals could total less than 10 in coming years.
“Merging provides smaller lenders greater economies of scale and eliminates material duplication costs. This should make them more efficient and able to price competitively,” said S&P Global Ratings analyst Lisa Barrett.
“Mergers between larger mutual lenders will deliver a bigger bang for your buck by eliminating the disruption and costs associated with integrating many small institutions. Historically most mutual mergers involved large mutuals gobbling up smaller players. This has changed since mid-2021.”
[Related: Mutual banks ‘lack the necessary skills’ to deal with modern risk, says APRA]
