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What is mutual banking?

Mutual banks, also known as customer-owned banks, are financial institutions that are owned by their members instead of owned by shareholders. This is the main difference between mutual banks and other banks, but the rates and fees charged on various products may also vary.

One member share equals one vote on constitutional matters affecting the customer-owned institution. Profits are reinvested back into the products and services offered by the customer-owned institution, rather than being distributed to shareholders as a dividend.

Many types of financial institution fall under the “customer-owned banking” banner:

  • Mutual banks
  • Credit unions
  • Building societies

Customer-owned institutions provide generally the same consumer banking services as listed banks, including credit cards, personal loans, home loans, savings accounts, internet and mobile banking, and term deposits.

All credit unions, mutual banks, and building societies are regulated under the Banking Act as Authorised Deposit-Taking Institutions (ADIs), so they are as safe as any other banking institution.

Learn more about mutual banks and customer-owned banking here or find out who the mutual banks in Australia are.

How do Canstar’s Bank of the Year Awards Work?

Every year, Canstar researches and rates customer-owned institutions as part of out Bank of The Year Award.

Canstar’s Bank of the Year and Customer-Owned Bank of the Year Awards recognise the banks that provide outstanding value to their banking customers through their product and service offering across key banking products.

Some of the features Canstar considrs when rating mutual banks and customer-owned institutions include:

  • Lending options (home loans, credit cards, and personal loans)
  • Deposit options (transaction accounts, savings accounts, and term deposits)
  • Accessibility of branches and ATMs
  • Online banking and mobile banking
  • Other products and services offered

 

Mutual Banking Glossary Of Terms

Please note that these are a general explanation of the meaning of terms used in relation to mutual banking. Your provider may use different wording and you should read the terms and conditions of your product carefully to understand what fees and charges may apply. Refer to the product disclosure statement (PDS) from your provider for their definitions of terms.

ASIC (Australian Securities and Investments Commission): The Australian government body that regulates mutual banks, customer-owned institutions, banks, and other financial institutions.

Bank: A financial institution authorised under the Banking Act 1959 (Cth) to offer a variety of financial products and services.

Building society: A type of customer-owned financial institution that provides services similar to a bank, but is owned by its members instead of by shareholders. Learn more about customer-owned banking.

Credit union: A type of customer-owned financial institution that provides services similar to a bank, but is owned by its members instead of by shareholders. Learn more about customer-owned banking.

Interest: An amount of ‘extra’ money, based on a percentage of the balance in your savings account, which you earn over time by meeting certain savings conditions. Find out the difference in interest rates offered on various products by mutual banks compared to other banks.

Internet banking or online banking: Banking that is done via the internet on a computer or mobile device. We research and rate online banking platforms on our website.

Mutual bank: A type of customer-owned financial institution that provides services similar to a bank, but is owned by its members instead of by shareholders. Find out the main differences between banks and mutual banks.

Mutual fund: A type of managed fund that is contributed by a group of individuals, professionally managed, and invested in a range of securities. Canstar researches and rates managed funds.

Ombudsman: Australia has two free and independent dispute resolution service that helps consumers make complaints and resolve disputes with their banks, insurers, and other financial institutions: the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman.

Private banking: A service provided by most banking institutions to customers who have more specialised banking requirements than the average customer, such as complex needs related to wealth, business, SMSF, investment, and more.
Written by: TJ Ryan

Mutual banks we research and rate

At the time of writing, Canstar researches and rates mutual banking with the following customer-owned institutions:

  • Australian Military Bank
  • B&E Personal Banking
  • Bank Australia (view Bank Australia home loans and Bank Australia credit cards)
  • BankVic
  • bcu
  • Beyond Bank (view Beyond Bank home loans)
  • Big Sky Building Society
  • Catalyst Money
  • Coastline Credit Union
  • Community First Credit Union
  • Community Mutual Group
  • CUA (view CUA health insurance and CUA credit cards)
  • Defence Bank
  • Easy Street Financial Services
  • ECU Australia
  • Encompass Credit Union
  • Endeavour Mutual Bank
  • FCCS Credit Union
  • First Option Credit Union
  • G&C Mutual Bank
  • Gateway Credit Union
  • Heritage Bank (view Heritage Bank credit cards)
  • Holiday Coast Credit Union
  • Horizon Credit Union
  • Hume Bank
  • Hunter United
  • Illawarra Credit Union NSW
  • IMB Bank
  • Intech Credit Union
  • Macquarie Credit Union
  • My Credit Union
  • Newcastle Permanent (view Newcastle Permanent home loans)
  • Northern Beaches Credit Union
  • Northern Inland Credit Union
  • P&N Bank
  • People’s Choice Credit Union
  • Police Bank
  • Qld Police Credit Union
  • QT Mutual Bank
  • Quay Credit Union
  • Qudos Bank
  • Queenslanders Credit Union
  • SCU
  • SERVICE ONE Alliance Bank
  • Southern Cross Credit Union
  • Summerland Credit Union
  • Teachers Mutual Bank
  • The Capricornian
  • The Mac
  • The Mutual
  • The Rock
  • Transport Mutual Credit Union
  • UniBank
  • Victoria Teachers Mutual Bank
  • Woolworths Employees Credit Union
  • Your Credit Union

 

Important information

For those that love the detail

This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.

Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. You may need financial advice from a qualified adviser. Canstar is not providing a recommendation for your individual circumstances. It’s important you check product information directly with the provider. Consider the Product Disclosure Statement and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the TMD. For more information, read our Detailed Disclosure.

What is a Target Market Determination?

A Target Market Determination (‘TMD’) is a document that explains which people particular financial products may be suitable for (the target market) and sets out any conditions around how financial products can be distributed to consumers.

Why do product issuers provide Target Market Determinations?

From 5 October 2021, TMDs are compulsory for most financial products.

Issuers and distributors of financial products must take reasonable steps that are likely to result in financial products reaching consumers in the target market defined by the product issuer.

We recommend that you consider the TMD before making a purchase decision. Contact the product issuer directly for a copy of the TMD.

Canstar may earn a fee from its Online Partners for referrals from its website tables, and from sponsorship or promotion of certain products. Fees payable by product providers for referrals and sponsorship or promotion may vary between providers, website position, and revenue model. Sponsorship/promotion fees may be higher than referral fees. If a product is sponsored or promoted, it’s an ad and it is clearly marked as such. An ad might appear in different places on our website, such as in comparison tables and articles. Ads may be displayed in a fixed position in a table, regardless of the product's rating, price or other attributes. The location of an ad doesn’t indicate any ranking or rating by Canstar. Payment of fees for ads does not influence our Star Ratings. See How We Get Paid to find out more.