Banking and financial services
Customer owned banks…
- Offer better-value financial services products
- Provide price competition against profit-maximising competitors
- Provide better customer service
- Are more ethical businesses that are demonstrably honest
- Operate different business strategies, helping to mitigate against the overall risk of the sector to the economy
- Remunerate their executives reasonably
- Share a higher percentage of their profits with their community
Offer better-value financial services products
Over time, mutuals consistently provide better-value products to their customers because their businesses are focussed on long-term plans rather than short-term market disruption.
Provide price competition against profit-maximising competitors
The existence of customer owned banks in a market dominated by large profit-maximising banks means that they are able to provide the only meaningful competition on the basis of service proposition and price.
Provide better customer service
Customer service is the focus for customer owned banks and they consistently provide high-quality service and greater customer satisfaction in comparison to the biggest banks.
Are more ethical businesses that are demonstrably honest
In a market where trust is generally low, customer owned banks provide an alternative to the profit-maximising banks by consistently focussing on the needs of customers rather than shareholders. Across Australia, demand for ethical banking has increased four-fold in three years.
Operate different business strategies, helping to mitigate against the overall risk of the sector to the economy
In economies hit hard by the global financial crisis, customer owned banks acted as a bulwark against large banks which all operated according to the same business strategy. The fact that they were less damaged by the crisis helped to mitigate risk in those economies and ultimately reduced costs to the taxpayer.
Remunerate their executives reasonably
Spiralling executive remuneration in listed banks has become a problem in Australia, with the added agency risk of short term performance being linked to pay. This has driven behaviours that are not present in customer owned banks, where salaries are cash based rather than incentivised by shareholding.
Share a higher percentage of their profits with their community
Customer owned banks are smaller than shareholder-owned banks but still manage to return a higher proportion of their profits to communities, charities and member-supported activities.