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The mutual banking landscape is set to “reshape the competitive landscape” after posting strong results despite a challenging environment in the past year, according to a new report.
KPMG’s Mutual Industry Review 2017 found strong growth of Australia’s credit unions, building societies and mutual banks, despite a challenging environment characterised by low interest rates, increased competition, fluctuating property prices and technology disruption.
The report found that mutuals’ balance sheets were strengthened with net asset growth of 6.8 per cent and residential lending growth of 9.8 per cent.
KPMG Australia national head of banking, Ian Pollari, expressed confidence that the government’s acceptance of all 11 recommendations by the independent Hammond Review on the ‘Reforms for co-operatives, mutuals and member-owned firms’ would position the sector for future growth.
“With new regulatory rules set to reshape the competitive landscape, Australia’s mutuals sector is in a position to continue their growth in 2018,” he said.
“They have demonstrated that, even faced with difficult market conditions, they can offer customers a compelling alternative.
Looking ahead, they will need to balance profitability with expansion, as well as creating capacity to invest in digital technologies.”
Chief executive of the Business Council of Co-operatives and Mutuals, Melina Morrison, welcomed the KPMG report.
“The report shows consumers already consider mutual banks a strong alternative to the big banks. They are in an excellent position to take advantage of the levelled playing field when the Hammond reforms are made,” she said.
“Mutual banks have a natural trust advantage for consumers looking for an alternative to the shareholder owned big banks.
“At the same time, the mutual banks are investing in new technologies. This is an area in which mutual banks have always been innovators – it’s a little-known fact that the first ATM was made available to the public by a mutual bank. Their ongoing focus is to serve their customer-owners better.”
The report also found that six out of the top 10 mutuals have already invested in new and emerging payments platforms such as Apply Pay, Android Pay and Samsung Pay systems, compared to just one of the majors.
Customer Owned Banking Association (COBA) acting chief executive Dominic Dunn said the report reflected the “compelling and strong alternative” that mutuals provided.
“The review notes our strong performance in a challenging operating environment,” Mr Dunn said.
“Importantly it found that banking competition reforms will help the customer-owned sector continue to grow and offer more products and services to more Australians.
“Today’s annual review from KPMG is further evidence of why consumers should consider switching to a customer-owned banking alternative.”