customer owned

What does “customer-owned” mean in banking?

Beyond Bank is a 100 per cent customer-owned bank. We take pride in our history of helping local communities and supporting our customers. But the term “customer-owned” can read as a little ambiguous – particularly for younger customers coming into financial responsibility and finding themselves bogged down by industry jargon.

So, let’s shed some light on exactly what it means to be a customer-owned bank and how that puts Beyond Bank well ahead of major competitors.

What is a customer-owned bank?

Customer-owned banking, also called mutual banking, is the embodiment of “the customer is always right” when it comes to financial institutions. You can complete all manner of transactions through a customer-owned bank, just as you would with a major bank, whether you want to apply for a car loan, organise your credit cards online, or simply grow your savings.

The Customer Owned Banking Association (COBA) reports that as of August 20171, the customer-owned banking sector in Australia consists of the following:

  • 54 credit unions
  • 19 mutual banks
  • 4 building societies

While there are minor differences between these models of customer-owned financial institutions, they all share the same key goal of benefiting their customers.

While major banks such as the Big Four are owned and influenced by private shareholders – that is, entities that receive dividends, or profits, into their own pocket – the shares of customer-owned banks are held fully by the customers.

The COBA factsheet highlights that the sector holds $106 billion worth of assets. Collectively, customer-owned banks stand up to the Big Four as the fifth pillar of Australian banking.

How is it different from other banks?

Retail banks are listed on the stock exchange for anyone to buy or exchange shares with little regard to their relationship with the bank. Shares of customer-owned banks however, are only attainable by opening an account with the bank.

As such, all profits of the bank return to the customers – not to some faceless shareholder.

All customer-owned banks are Authorised Deposit-taking Institutions (ADIs), and are subject to strict supervision under the Banking Act. This means that although customer-owned banks are smaller in size, they still meet the high-standards of regulation as major banks.

What is the benefit to the customer?

Customer-owned banks exist to benefit you. A June 2016 Canstar Blue survey of 1,898 mutual bank customers revealed that 83 per cent were highly satisfied.

As customer and shareholder are one and the same, no conflicts of interest can exist. Profits are funnelled back to customers in the form of consistently better interest rates, fair fees, and community initiatives. We work closely with not-for-profit and community organisations to contribute to the ongoing improvement of the world we live in.

For example, here at Beyond Bank we support the Hutt St Centre in Adelaide, a leading agency for homeless and vulnerable people. Simply by opening an account with us, customers help to provides shelter for those in need.

Another great contribution of customer-owned banks is increased diversification of the market. That sounds complicated, but quite simply, customers of mutual banks help to generate competition and consumer choice within the banking sector.

Where do I sign up?

If everything above has you ready to use your bank account to make a meaningful contribution not just to yourself, but the wider community, open an account with Beyond Bank today. As the first Australian bank to become B-Corp certified, meaning we meet rigorous standards of social, environmental and economic responsibility, performance, and transparency, we are dedicated to harnessing the power of business to effect positive social and environmental change.

We have over 40 branches with upwards of 200,000 customers across Australia, which has allowed us to invest more than $15 million into community programs since 2007.

Drop into any of our branches, or contact us via our Australian-based call centre, to find out more.

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