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The difference between a customer-owned bank and the Big Four


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It has been nearly 18 months since Commissioner Kenneth Hayne handed down his final report on the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

While the commissioner's findings against some of the banking sector's biggest names were quite damning, it also highlighted that customer-owned banks offer a competitive banking option with outstanding customer service, an ethos that is committed to local communities, lower and fairer fees and competitive mortgage rates.

Fast-forward to today and while there is a renewed focus for customer-owned banks to provide an even better customer experience, much has changed for the bigger players within the industry as a result of the implementation of government and regulatory recommendations that were handed down by the commissioner.

customer owned bank

One thing that has remained though is the fundamental difference between the customer-owned and major listed banks, which is the alignment of interests.

Be it a mutual bank, building society or credit union, we are structured in a way that our customers are our members, meaning our long-term interests are firmly aligned with their needs. Our customers are who we work for and to whom we are answerable. It's how we always have and always will continue to operate.

For the listed entities such as the biggest players in our market, they can't escape the rigid dichotomy that exists when needing to serve two masters - customers and shareholders. There is no doubt the big banks have been forced to refocus on better serving the needs of their customers, however, they can't escape their alignment to their shareholders who are looking for maximum returns.

It's fundamental to their structure and why return on investment remains one of their key performance metrics year on year.

This is the underlying difference between the two and should always be at top of mind for customers when choosing who they bank with, as well as comparing interest rates and fees across all lending products and even credit cards. The real difference in costs can be considerable, and possibly not as obvious as many would think.

Now, the big banks will argue that we operate to make a profit as well, and we do. But it's what we do with the profits that again highlights the difference in the alignment of interests.

Our profits are reinvested into our business to provide better value products and services, develop our technological platforms to ensure we continue to service our customers well into the future and to foster and support the communities in which we operate.

Customer-owned banks believe in long-term reputation, providing a strong value proposition and developing relationships over the course of your loan. What we offer our customers is sustainable value across a suite of personal and business products and services, sustainable levels of satisfaction and sustainable relationships.

While we may not necessarily always have the best rate in market, we know that in the long term we look after our customers' best interests.

Choosing your financial institution will be one of the biggest decisions you will ever have to face.

The greatest piece of advice I could give anyone is to look beyond the lowest number and do your research. Get an understanding of what fees and charges you will face, what the comparison rate is on the loan and who will look after your long-term financial interests.

More often than not, you will find that it is a customer-owned bank that will come out in front.


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Scott Morgan joined Greater Bank in 2007 as chief risk officer before being appointed chief executive officer in 2014. Prior to this he was a senior manager with PricewaterhouseCoopers. Scott has a Masters in Risk Management from the University of NSW and is a member of the Institute of Chartered Accountants.
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