Imagine a bank where you’re not just a customer, but an owner. Enjoy better services and rates while supporting an institution committed to you and the wider community – that’s the difference of customer-owned banking.
Here, we dive deep into how credit unions, mutual banks, and building societies offer a unique alternative to traditional financial institutions.
They are owned by their customers
As the name implies, customer-owned banks are owned by their members – their customers. That means customers have a voice in how the bank is run and are invited to attend the annual AGM to ensure decisions reflect their collective needs.
This is vastly different to traditional investor-owned banks, where decisions are made to maximise profits for investors. In contrast, the customer-owned model allows the financial institution to focus on providing value to its members.
They put people and communities first
Because customer-owned banks are owned by their members, they prioritise their needs. This unique approach goes back to the origins of customer-owned banks.
When investor-owned banks said no to hard-working people looking to borrow, groups of like-minded workers and communities came together to create credit unions, mutual banks and building societies. From teachers and nurses to police officers, customer-owned banks emerged to serve communities.
They offer market-leading services
Instead of paying dividends to investors, customer-owned banks reinvest profits to benefit their members. This includes offering competitive rates, providing market-leading service, and making significant contributions to their local communities.
The May 2024 Roy Morgan Customer Satisfaction survey showed COBA members had significantly higher scores than the Big Four – 89.5% for the customer-owned banking sector as a whole, compared to 75.4% for the Big Four.
In the last 20 years, while customer satisfaction for major banks has dipped as low as the mid-50% range, customer satisfaction for mutual banks, credit unions and building societies has consistently remained above 80%.
They offer competitive rates
Because the customer-owned model means decisions are made with the best interests of the customers in mind, this translates to tangible benefits like lower interest rates on loans and higher returns on savings accounts.
Recent research showsstandard headline rates forCOBA members on variable home loans are on average 0.4 percentage points lower than major banks’ rates.
When it comes to savings, comparing advertised term deposit rates shows customer-owned banks offer rates that are on average 0.23 percentage points higher than those offered by the big four banks.
They are profit-for-purpose driven
Customer-owned banks offer more than just financial advantages.
Deeply rooted in their communities, customer-owned banks actively support local initiatives and charities. In the last financial year, customer-owned banks gave to their communities at a rate nearly nine times higher than the major banks.
Ultimately, for customer-owned banks it’s about making decisions that consider the wider social and economic impact, not just the bottom line. By prioritising customer needs, customer-owned banks deliver great value to both individuals and communities.
Are you ready to switch to a customer-owned bank? Find one that aligns with your needs and values by using our Find-a-bank-tool.