What is a mutual bank?

TAMIKA SEETO
Finance Journalist · 13 October 2021
Are you thinking about switching banks? If you are wanting to go with a bank that is owned by its customers (rather than shareholders), you might be interested in exploring a mutual bank.

What is a mutual bank?

A mutual bank is a bank that is owned by its customers, who are also referred to as members. Mutual banks offer the same types of products and services as traditional banks, such as transaction accounts, savings accounts, home loans and credit cards. They are also typically community-focused.

Mutual banks are also known as customer-owned banks. Unlike traditional banks where profits are paid to shareholders, customer-owned bank profits are used to benefit customers. This may be seen through better rates and fees, socially responsible lending and customer service, according to the Customer-Owned Banking Association, a representative body for the sector. Customer-owned banks also include credit unions and building societies.

What is the difference between a bank and a mutual bank?

The main difference between a bank and a mutual bank is the ownership structure. Traditional banks are often listed on the share market and are owned by shareholders. These shareholders may not be customers of the bank. Bank profits may be paid to shareholders through dividends.

In contrast, mutual banks are owned by their customers. Mutual bank profits are then reinvested into the business to help benefit customers. Each customer typically has an equal share in the mutual bank, irrespective of the value of their accounts.

Are mutual banks safe?

Mutual banks, credit unions and building societies are regulated in much the same way as publicly-listed banks. Customer-owned banks should be registered as Authorised Deposit-taking Institutions (ADIs), meaning they must follow the same legal standards under the Banking Act and are overseen by the Australian Prudential Regulation Authority (APRA), just like traditional banks.

Deposits are also protected by the Australian Government’s Financial Claims Scheme (FCS), which provides a safety net for deposits of up to $250,000 per account holder per ADI.

What are the customer-owned banks in Australia?

We’ve put together a list of the mutual banks, credit unions and building societies currently on Canstar’s database:

What are the mutual banks in Australia?

Below are the mutual banks currently on Canstar’s database:

Australian Military BankAustralian Military Bank Credit Cards

Australian Military Bank was founded in 1959 and is Australia’s longest-serving financial institution for defence personnel and their families. Although it focuses on the defence community, its products and services are also available to the general public.

Australian Unity

Australian Unity was established in 1840 and describes itself as Australia’s first member-owned wellbeing company, offering health, wealth and care services. It was originally formed as a friendly society in Melbourne.

Bank Australia

Bank Australia - Outstanding Value Award Winner

Originally starting in 1957 as the CSIRO Co-Operative Credit Society, Bank Australia describes itself as Australia’s first customer-owned bank. Bank Australia says it does not lend to industries that do harm, like fossil fuels or live animal exports. Instead, it seeks to lend to those having a positive impact, such as individual customers and community renewable energy.

Bank FirstBank First

Bank First, formerly Victoria Teachers Mutual Bank, was founded in 1972 by a group of educators. It focuses on providing banking to those in the education and healthcare communities, but also provides banking services to the wider community.

Bank of us

Bank of us says it is the only Tasmanian customer-owned bank. The bank originally began in 1870 as the Launceston Equitable Building and Investment Society, with the aim of providing housing finance through a co-operative venture.

BankVicBank Vic

BankVic originally began in 1974 to serve members of the Victoria Police and their families. Its services now extend to members of the health, emergency and public services sectors.

bcu

bcu was formed in the 1970s to provide banking services to those on the NSW North Coast. It says it continues to provide localised service and expertise from Port Macquarie to the Sunshine Coast. It is a division of Police & Nurses Limited, along with P&N Bank.

Beyond BankBeyond Bank: Outstanding Value Award Winner | Canstar

Beyond Bank was established over 60 years ago. Headquartered in Adelaide, it is one of Australia’s largest customer-owned banks, with branches in New South Wales, South Australia, Victoria, Western Australia and the ACT.

Defence BankDefence Bank logo

Defence Bank commenced operations in 1975 as the Defence Force Credit Union Limited. It provides financial products and services to the Australian Defence Force, as well as the broader community.

Endeavour Mutual BankEndeavour Mutual Bank

Endeavour Mutual Bank is a division of Australian Mutual Bank, along with Sydney Mutual Bank. It says it has been providing banking services to the community for over 65 years.

First Option BankFirst Option Credit Union

First Option Bank was started in 1965 to provide on-site banking facilities to employees across various industries like arts and recreation, technology, manufacturing and energy. It now provides full banking services to members.

G&C Mutual BankG&C Mutual

G&C Mutual Bank was established in 1959 as the Public Works Department Staff Cooperative. It has a number of service centre locations across New South Wales and Melbourne.

Gateway Bank

Gateway Bank was founded in 1955 and is headquartered in Sydney. It says it has been certified by Climate Active as a carbon-neutral organisation.

Geelong Bank

Geelong Bank was originally founded as Ford Co-operative Credit Society Limited (FCCS) in 1974 to provide financial services to Ford employees and their families in Geelong. In 2018, it changed its name to Geelong Bank, which it says reflects its community focus.

Greater BankGreaterBank

Greater Bank says it has served communities in New South Wales and South East Queensland for the past 75 years. It is headquartered in Newcastle.

Heritage BankHeritage Bank logo

Heritage Bank says its origins can be traced back to 1875, when the Toowoomba Permanent Building Society was established. It later merged with the Darling Downs Building Society. Heritage Bank is based in Toowoomba and has a number of branches across South East Queensland and Western Sydney.

Hume BankHume Bank logo

Hume Bank says it has been part of the Albury-Wodonga region for over 60 years. It was originally founded by a group of Albury residents and currently has its headquarters in Albury.

IMB Bankimb bank

IMB Bank was established in 1880. Now, it says it has a growing branch network throughout the Illawarra, Newcastle-Hunter, Sydney, New South Wales South Coast, the ACT and Melbourne.

P&N BankMutual Banks in Australia - Police-&-Nurses-Credit-Society-logo

P&N Bank is a division of Police & Nurses Limited, along with bcu. It is based in Western Australia and has branches in Perth, Mandurah and Bunbury.

Qudos Bank

Qudos Bank was founded in 1959 by a group of Qantas employees to serve Qantas employees, their families and their community. Its services and products are now available to all Australians.

Queensland Country BankQueensland Country Bank

Queensland Country Bank was originally formed as the Isa Mine Employees’ Credit Union Limited in 1971. It later expanded its services to sugar employees in Northern Queensland. It says it now provides financial services to members across Queensland and beyond.

RACQ Bank

RACQ Bank was launched by Queensland-based car insurer RACQ in 2017, to provide financial services to Queenslanders. The launch of RACQ Bank followed a merger with Queensland Teachers Mutual Bank in 2016.

Regional Australia Bank

Regional Australia Bank has been serving regional Australians for more than 45 years. It says it pledges more than 5% of its profits back into grassroots community initiatives.

SERVICE ONE Alliance BankService One Alliance Bank

SERVICE ONE began as a community credit union in the South Coast region of New South Wales almost 60 years ago. It has since established itself in the ACT and the surrounding parts of NSW. SERVICE ONE is also a social enterprise and it supports social enterprises in its region.

Sydney Mutual Bank

Sydney Mutual Bank says it has been providing financial services to the people of Sydney and beyond for over five decades. Sydney Mutual Bank is a division of Australian Mutual Bank, alongside Endeavour Mutual Bank.

Teachers Mutual Bank

Teachers Mutual Bank Limited has five divisions: Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank, UniBank and its digital bank Hiver Bank. Through these divisions, it provides financial services to essential workers in the education, emergency services and healthcare sectors.

The Mutual Bankmutual bank logo

The Mutual Bank was founded in 1888 by a group of Maitland locals. Today it continues to serve the people of Maitland, Newcastle and the Hunter Region.

Unity BankUnity Bank

Unity Bank originally started in 1970 with the purpose of providing financial services for maritime workers and their families. It has now expanded and includes members in the mining and power industries, their families and their local communities.

What are the credit unions in Australia?

Credit unions are also owned by their members and offer traditional banking services. Credit unions can vary in size, with some larger credit unions operating across Australia and others servicing targeted local communities. When you join a credit union, you may need to pay a nominal amount for a membership share, as is the case with some mutual banks.

The following credit unions are currently on Canstar’s database. Note that while some of these institutions may use the word ‘bank’ in their business or trading names, the list below is based on whether their official name on APRA’s register of ADIs describes them as a credit union:

Community First Credit UnionCommunity First Credit Union

Community First Credit Union started over 60 years ago as the Sydney Water Board Officers Credit Union Co-Op. Easy Street is a division of Community First Credit Union.

Credit Union SACredit Union SA logo

Credit Union SA was formed in 2009 by a merger between two South Australian credit unions, which had origins in the education and industrial sectors. It is headquartered in Adelaide.

Great Southern BankGreat Southern Bank

Great Southern Bank says it is Australia’s largest customer-owned bank. It was formerly called CUA (Credit Union Australia) and still holds its ADI licence under that name. It was originally established in 1946.

Horizon Bank

Horizon Bank says it has been serving the South Coast of New South Wales for over 50 years. It is headquartered in Wollongong. It changed its trading name to Horizon Bank in 2019 but still holds its licences under the name Horizon Credit Union Ltd.

Illawarra Credit Unionillawarra credit union wins Canstar Outstanding value award

Illawarra Credit Union says it has been serving New South Wales customers since 1972. It is headquartered in Wollongong.

LCULCU Laboratories Credit Union

Laboratories Credit Union (LCU) was established in 1954 by CSIRO staff members in North Ryde. Its membership now extends beyond CSIRO staff and their families.

People’s ChoicePeople's Choice logo SR

People’s Choice was established in 1949. It is currently headquartered in Adelaide. People’s Choice says it is member and community-focused and does not invest in fossil fuels.

The MacThe Mac- Macarthur Credit Union: Outstanding Value Award Winner | Canstar

The Mac was originally established in 1971 to provide financial services and products to local employees of the Clutha coal mines in New South Wales. It expanded to serve the Macarthur and Wollondilly communities and now has branches in Camden, Picton and Tahmoor.

Macquarie Credit Unionmacquarie credit union logo

Macquarie Credit Union was formed in 1964 by Macquarie County Council electricity workers. Today, it is headquartered in Dubbo and membership is open to everyone residing in the local government areas of Narromine, Gilgandra, Warren, Cobar, Coonamble and Nyngan.

MOVE BankMove Bank

Founded in 1968 as Railways Credit Union (and still holding its ADI licence under that name), MOVE Bank was originally aimed at railway workers and their families. It now says it is committed to serving the broader transport and logistics industry at a national level.

Northern Inland Credit UnionNorthern Inland CU

Northern Inland Credit Union is headquartered in Tamworth and says the fact it is locally owned and operated means it can tailor its offerings to the people of Northern Inland New South Wales. Northern Inland says it has over 50 years experience providing financial services.

QBANKQbank logo

QBANK was established as the Queensland Police Credit Union (QPCU) in 1964 and still holds its banking licence under that name. QBANK says it is one of the only dedicated providers of banking products and financial services to the Queensland Police and Emergency Services sector.

Summerland Credit UnionSummerland Credit Union

Summerland Credit Union was founded in 1964. It says it has no direct investments in – and does not lend to – the fossil fuel or coal seam gas mining industries.

The CapricornianThe Capricornian: Outstanding Value Unsecured Personal Loans

The Capricornian says it is the only local customer-owned financial institution in Central Queensland. It was established as a credit union in Rockhampton in 1959.

Transport Mutual Credit Union

Transport Mutual Credit Union was originally established in 1964 as Mains Roads Staff Credit Union, to support staff of the NSW Department of Main Roads and their families. The credit union now offers a range of financial products and services to the broader transport industries, as well as members from other employment backgrounds and communities.

WAW Credit Unionwaw-logo

WAW says it is a local banking institution and has been part of many of its communities in North East Victoria and Southern New South Wales for over 50 years. It is headquartered in Wodonga.

What are the building societies in Australia?

Building societies are community-based financial institutions that are owned by members. They offer traditional banking services. They currently make up a small part of the banking market.

There is currently only one building society on Canstar’s database.

Newcastle PermanentNewcastle Permanent: Outstanding Value Unsecured Personal Loan

Newcastle Permanent is a mutual building society. It says it is Australia’s second-largest customer-owned financial institution and has been servicing customers for over 117 years.

Cover image source: Rawpixel.com/Shutterstock.com


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