Australian consumers benefit from mutuals keen to challenge big end of town, BCCM says

04 July 2023

The Business Council of Co-operatives and Mutuals (BCCM) today said ongoing expansion by its members in the financial services sector will provide added benefits to consumers and a strong alternative to the big four banks.

BCCM Chief Executive Melina Morrison said the recent purchase by South Australian specialist financial services company KeyInvest of a 50 percent stake in mortgage fund manager Keystone Capital will boost competition and consumer choice in a key part of the national funding market.

“This partial acquisition will help KeyInvest scale-up to better compete with the big end of town, which is a challenge many of our members are keen to embark on and which has recently been successfully undertaken via the merger of Heritage Bank with People’s Choice,” Ms Morrison said.

She said KeyInvest has been a respected part of the national financial services landscape for 145 years. Initially known as IOOF-SA when it was formed in 1878, its skills in the commercial world and its sense of community as a mutual is spurred on by a commitment to always act in the best interest of members. The company offers significant expertise in funds management, funds distribution, strategic initiatives and management expertise and is dedicated to working with clients, their advisors and their families to achieve their combined goals.

KeyInvest Chief Executive Craig Brooke said the purchase will allow KeyInvest to combine its tailored financial solutions in funds management, funds distribution, strategic initiatives and management expertise with Keystone Capital’s private credit property-backed strategic skills and reach.

“There have been some great stories across the country in past decades of non-bank lenders stepping into the void where traditional lenders have chosen not to participate, and given Keystone Capital’s national network, it has a strategic edge that allows it to add to those helping to fund the future of Australia,” Mr Brooke said.

Ms Morrison said the mutual model has the customer at its core and over time, mutuals consistently provide better-value products to their customers because their businesses are focused on long-term plans rather than short-term market disruption.

“In a market where trust is generally low, customer owned banks and financial service firms provide an alternative to the profit-maximising big banks and other large listed companies by consistently focusing on the needs of customers rather than shareholders. Across Australia, demand for ethical financial services has increased sharply since the Hayne Royal Commission,” she said.

Ms Morrison said the latest annual National Mutual Economy Report, issued by the BCCM earlier this month, showed that members in the financial services sector represented the largest bloc in the top 100 CME (Cooperative and Mutual Enterprise) group by asset and turnover.

She said the top 100 defied a raft of global and domestic economic headwinds to boost revenue by 10.8 per cent to $37.7 billion in the 2022 financial year.

Earnings across the top 100 continued to grow at an average annual rate of 27.1 per cent, although profitability in the largest sectors of agribusiness, financial services, health insurance and motoring was impacted by global energy and commodity price volatility. Over five years, the median rate of earnings before interest and tax growth in the financial services remained positive, albeit at 0.3 per cent, with ebit in the agribusiness down more than 11 per cent.

Ms Morrison, said the report demonstrated the robust nature of member-owned businesses, which were well positioned to withstand periods of economic uncertainty due to their lean operating structures.

“With global instability, the post pandemic world and climate concerns looming large, co-operative and mutual enterprises are more vital than ever to lead the way towards sustainable and equitable futures,” she said.

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Ian Pemberton
P&L Corporate Communications
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