RACQ/QT Mutual Bank merger an example of smart disruption

QT Mutual Bank merger with RACQ to create new force in banking

In April 2016 RACQ and QT Mutual Bank announced plans to create a new customer-owned force in banking, leveraging the considerable assets and capabilities of Queensland’s largest club. The merger would create an entity with 1.6 million members and approximately $3.9 billion combined assets and voting on the proposal opened on 20th August.

The proposed merger with QT Mutual Bank would establish a banking subsidiary within the RACQ Group, alongside its assistance, insurance and lifestyle operations which service more than 1.5 million members across Queensland. QT Mutual Bank CEO Steve Targett and Chair Peter Whitelaw are hitting the road between 22 August and 7 September to speak with members about the proposed merger with RACQ; their tour will see stops in:

• Cairns – Monday 22 August
• Townsville – Tuesday 23 August
• Brisbane East – Wednesday 24 August
• Brisbane West – Monday 29 August
• Brisbane North – Thursday 1 September
• Brisbane Central – Monday 5 September
• Gold Coast – Tuesday 6 September
• Toowoomba – Wednesday 7 September

RACQ Group CEO Ian Gillespie and  CEO Steve Targett said the vision was to use the strong RACQ brand and resources along with the banking expertise and products of QT Mutual Bank to establish a highly scale-able, customer-owned banking platform which could achieve significant growth and expansion.

“We want to be a trusted alternative to the shareholder-owned, profit-driven banks,” Mr Gillespie said.

“The merger will offer greater benefits to members of both organisations, with a highly compatible suite of premium products and services and a common focus on delivering exceptional service and value.”

If successful, the formal merger of the two organisations is expected to be completed by the third quarter of 2016.

“RACQ wants to diversify into banking while QT Mutual Bank wants scale and investment in technology to achieve growth, that’s why this deal makes sense,” Mr Gillespie said. “Together we can achieve things for our members that we can’t do on our own.”

Merger would build scale

Canstar Blue research of more than 5,000 banking customers in 2015 found that in almost all age categories, challenger and customer-owned institutions had a slightly greater percentage of satisfied/very satisfied customers than the major banks. The challenge for customer-owned institutions, though, is gaining those customers in the first place.

Despite the existence of more than 100 lenders in the Australian marketplace, many Australians bank with one of the Big 4. Smaller institutions, with limited marketing budgets and physical footprint, can struggle to gain customer awareness.

QT Mutual Bank CEO Steve Targett said the proposed merger supported QT Mutual Bank’s long-term growth strategy to bring products and services to a far wider customer base.

“We believe the trusted RACQ brand, resources and existing member base, combined with QT Mutual Bank’s banking knowledge, experience and personalised service will provide Queenslanders with a real choice in the competitive financial services market,” Mr Targett said.

“For QT Mutual Bank members, many of whom are also RACQ members, this merger will deliver an enhanced banking experience through an expanded product offering, investment in technology and new digital capabilities, and a wider service network with 24-hour contact centre.”

What do bank customers want?

The most recent Accenture Global Consumer Pulse Research study of more than 23,000 customers – Banking Customer 2020 – highlighted the following future trends, among others:

• Customers are likely to be less loyal to one primary institution. This is both an opportunity and a challenge for customer-owned institutions, but the report found that good competitive pricing, high quality customer service and good value for money are the top three dominant factors that convince customers to switch to another bank.
• Customers want great service, and they want that service online.
• Non-traditional competitors are gaining ground. According to Accenture, consumers are increasingly willing to consider financial products from other institutions that they are familiar with.

All of these trends would appear to bode well for a RACQ/QT Mutual Bank merger. The proposal requires at least 25 percent of members to vote, with 75 percent of those members in favour.