Australia has one of the largest and most successful customer owned financial services systems in the world.

With over four million customers, Australia’s 81 credit unions, 10 mutual banks and seven building societies provide competition and choice in the consumer banking market.

There are many reasons to consider a credit union, mutual bank or building society over a publicly-listed bank. Perhaps the question you should be asking is: “Why am I not choosing one?”

We offer a genuine alternative for Australian consumers.

Collectively, customer-owned banking institutions rank fifth behind the four major banks in share of household deposits and have more than $86 billion in assets.

And we are subject to the same rules and regulatory frameworks as publicly-listed banks.

But the most important reason for choosing credit unions, mutual banks and building societies is that we are customer owned.

The sector’s business model focuses entirely on the needs of its customers and their communities.

We operate with the purpose of customer and community benefit at the forefront of our operations.

Put simply, unlike the publicly-listed banks, we don’t have the pressure to maximise profits to pay external shareholders.

Instead, we put profits back into providing better rates, fairer fees, responsible lending and outstanding customer service.

This explains why customer-owned banking institutions consistently and strongly outperform the major banks in customer satisfaction ratings.

Customer-owned banking institutions undertake a range of community engagement activities, to help disadvantaged individuals and give back to their local communities.

We also serve a number of important sectors and communities, including regional and remote areas and particular industries or occupations, such as teachers, police and defence personnel.
The strengths of the customer-owned model are strengths for the financial system, contributing to stability and genuine consumer choice.

However, the strong performance of Australia’s financial system during and after the Global Financial Crisis (GFC) is masking an unhealthy and worsening trend: the increasing dominance of four major banks and the medium to long-term risks that this poses to competition, diversity and stability.

The major banks have unfair advantages delivered by the current regulatory framework that they can use to compete aggressively against smaller players.

These unfair advantages in the system have strengthened the market power of the big four banks, meaning less competition and less choice for consumers.

Australians understand this – recent polling shows almost 80% are in favour of examining the market dominance of the big four. 69% of Australians believe there needs to be more competition in the banking sector.

We believe that the system must change to create a level playing field for smaller players in the market.

True competition can only be achieved if barriers and subsidies are removed, so smaller players don’t have to compete with one hand tied behind their backs.

The Financial System Inquiry is a rare opportunity to put consumer interests first and deliver a fairer system for the future.

COBA will continue to take a pro-consumer and pro-competition approach to the Inquiry.

Louise Petschler is the CEO of Customer Owned Banking Association.

For more information on customer-owned banking institutions visit: