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Australia’s customer-owned (or mutual) banks are incredibly diverse and powerful, with more than 60 mutual banks and credit unions servicing over five million customers. Despite the sector’s size, it is facing a critical period as digital banking takes hold and consumer expectations evolve.

Globally, there has been a significant increase in demand for the personalised products and services that digital banking can offer, with consumers now coming to expect the speed, convenience, and security that digital banking enables to be built into all bank offerings.

With new digital-only banks now competing alongside digital spin-offs of the big banks, it’s vital that customer-owned banks have a clear strategy for digital transformation in place today.

Customers love their mutual banks

The latest Roy Morgan Consumer Confidence report shows that Australian customers of mutual banks are significantly more satisfied than customers of major banks, with 94% of building society customers and 90.9% of credit union customers “satisfied”, compared with 77.4% of customers of the major banks[i]. These high satisfaction ratings are a direct result of the customer-centric approach that these smaller banks take and bode well for the future of the sector.

However, without a clear digital transformation strategy in place, they risk losing their place on the top of the customer satisfaction table as customers switch banks for the digital products and services they want.

Limitations of legacy technology

Most of today’s customer-owned banks are running on decades-old legacy technology which is expensive to maintain and very cumbersome to change. Launching new products can take months (or years!) and any updates can involve significant downtime for customers.

While some processes may already be digitised, like online applications or customer-facing apps, most customer-owned banks do not yet have a streamlined tech-enabled end-to-end process.

This is something these banks need to be aware of, as the hyper-personalisation that customers have now come to expect can only be enabled by agile cloud banking technology that leverages open APIs to bring together best in breed financial and customer experience solutions.

Unless there is an appetite to embrace new technology and leverage digital platforms to launch innovative new products, customer-owned banks will soon face regulatory and compliance challenges on all fronts and will also be left with significant gaps in the customer experience. It’s vital that the tech stack can support real-time decisions and transaction capabilities while being sufficiently agile and flexible to respond to changing consumer demands and market conditions.

While transitioning to a new technology platform is obviously going to incur expense up front, it’s important to consider the long-term benefits –in terms of cost, reputation, and continued customer satisfaction – of an effective digital transformation strategy.

Strength in numbers for customer-owned banks

For customer-owned banks unable to shoulder the cost of a full digital core replacement on their own, an innovative approach to consider is the ‘shared utility model’.

In Australia, customer-owned banks generally have little to no customer crossover and can be willing and able to work together. Banks working together can share the costs of new infrastructure and core banking services while maintaining their individual brands and customer relationships, with recent merger announcements by Heritage Bank and People’s Choice Credit Union, and Newcastle Permanent and Greater Bank, demonstrating this approach in action. When each party maintains a focus on differentiating their services, the shared utility model can be an effective way to join the digital revolution without bearing the full financial impact or all the risk.

To find out how Mambu can help your customer-owned bank join the digital revolution, join us at one of our Australian Meet Ups or simply get in touch at

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Paul Apolony
General Manager of Mambu in Australia and New Zealand
Paul Apolony