The feelings mutual with australias new breed of banks

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IT’S banking, but not as we know it.

Mutual banks didnt exist a decade ago, but today count close to one million Australians as their customers and owners thanks to their strong customer focus and competitive rates.

Most of the nations 18 mutual banks are former credit unions and building societies that changed their name after regulatory changes a few years ago allowed them to use the term bank.

There are still 61 credit unions and four building societies operating in Australia and, with the mutuals, make up the customer-owned banking industry, which has four million members, no shareholders to satisfy with dividend payments, and operates on a one-vote-per-customer model.

Mutual banks achieve higher customer satisfaction scores than retail banks such as the Big Four, says research group Canstar, and their credit card and home loan interest rates are consistently lower than the major banks.

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For example, standard credit card interest rates average 12.57 per cent, below the retail bank average of 17.82 per cent and also below the credit union average of 12.9 per cent. Interest rates paid on online savings accounts and term deposits are also slightly higher than traditional banks.

Beyond Bank Australias general manager of customer experience, Nick May, says it is a challenge to attract new customers without the marketing dollars of the big for banks, but those who do join a mutual bank rarely leave.

Our customers are our owners and so everything we do has our customers at the centre of our thinking, he says.

Pippa Wanganeen switched from a big four bank to Beyond Bank two years ago because of its friendliness and customer service.

I like this bank because it offers a full banking solution and also they are very community-minded, and that really appealed to me, she says.

Canstar spokeswoman Justine Davies says the name changes to mutual banks in the past five years have mainly been marketing-related, aiming to appeal to older members and also attract younger members who may be unclear about what mutuals offer.

Back in 2010 when the federal government announced a reform to allow credit unions and building societies to adopt the term bank in their name if they met certain capital requirements, there was some concern that some people might be mistakenly worried about the security of their money in a building society or credit union, she says.

Its a false worry, but older generations particularly might still remember various building society crashes in the late eighties and early nineties. Even though we do like to bank-bash, we also recognise reluctantly that our banks are safe.

The $250,000 Federal Government guarantee on customers deposits applies to all regulated financial institutions, including mutual banks and credit unions.

A Customer Owned Banking Association spokesman says regulator data shows that mutual banks assets grew 50 per cent faster than the major banks last financial year, and their home loan growth was almost twice as strong.