Anytime, anywhere banking improving mutuals’ performance

In 2017, Australia’s credit unions, building societies and mutual banks (the ‘mutuals’) performed strongly in a business environment of low interest rates, increased competition, fluctuating property prices and technology disruption. Balance sheets were strengthened with net asset growth of 6.8 percent and residential lending growth of 9.8 percent. Profit was marginally down however, as net interest margins continued to tighten, decreasing 4.3 percent to $605.7 million before tax from 2016. These are the topline results of the Mutual Industry Review 2017.

The present and future of banking lies within the digital world. ‘Anytime, anywhere’ banking was hot on the agenda this year with it being the top strategy for the mutuals to improve the customer experience. From the survey, 68.3 percent considered technological disruption as an opportunity rather than a threat. Yet surprisingly, 63.4 percent do not currently consider themselves to be active disruptors in the industry.

As we move towards a cashless society, customers demand faster and more convenient ways of banking. Almost gone are the days of banknotes and cash payments with digital payments for goods and services the choice for most customers.

As mutuals seek to attract the elusive Gen Y consumers, invisible payments or ‘banking in the background’ becomes even more important. Cashless transactions on mobile devices resonate with this group, who want the convenience of making a payment without having to take out their wallet.

In response to these demands, mutuals have continued to expand their omni-channel capabilities through new mobile functionalities, refreshed web designs and improved digital workflows. Mutuals have also jumped onto the trend by partnering with digital wallets like ApplePay, AndroidPay and SamsungPay. By embracing the potential of mobile technology, mutuals have a strong desire to be at the forefront of the digital age.

But the vision of a technologically-driven business has challenges. One of the biggest impediments to digitisation is the limitations of current IT systems.

It is undeniable that an overhaul of legacy mainframe technologies will require substantial investment by the business in terms of time, cost and resources. This, coupled with a lack of funding and specialised internal skills, make it a mean value proposition where the solutions are often outweighed by the effort involved to implement these technologies solo.

These challenges can be addressed by partnering with fintech companies and niche lender, agile players who can offer capabilities and tools to deliver results in an efficient manner. These providers offer the expertise and dedicated personnel to deliver digital and advanced data solutions that the mutuals have struggled to achieve alone.

Collaboration across the mutuals sector has also enabled the pooling of funds necessary to cover the significant investment spending of technological advancement. These efforts have not only enabled greater returns to be generated, but also improved the customer experience and kept the mutuals on pace with other players in the banking industry. Collaborative movement within the sector is a big opportunity for the mutuals to execute their operational and digital strategies, and use technology as a competitive differentiator.

Read the full report, Mutuals Industry review 2017 for more comprehensive insights into the eight factors driving growth in the sector.

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