Global conference highlights potential to re-establish mutual model as a trusted alternative

Recently I had the honour of sharing Heritage Bank and People's Choice Credit Union 's merger success story on a global stage at the World Credit Union Conference in Vancouver.

By bringing together two relatively large organisations in a merger of equals, we’ve not only become Australia’s leading member-owned bank, but also one of the largest customer-owned banks in the world.

That’s something we’re very proud of.

The story of our merger is drawing global attention for several reasons.

First, because it has been such a seamless and successful transition. Our experience has made clear how important it is to have alignment of culture, values and vision when you bring organisations together.

Even with the best of intentions, unless you have a cultural alignment, a merger isn't going to work. The success of our merger has come down to sharing a common purpose and strategy, and being values-driven, with the core non-negotiable of maintaining our mutual status.

Second, because customer-owned banks around the world are experiencing similar challenges to meet the necessary investments in technology and regulation, many are exploring or going through mergers. That’s creating larger customer-owned institutions which have greater capabilities and traction thanks to their increased scale. It’s also creating plenty of interest in our merger process.

But the conference also strongly reaffirmed to me the opportunity that exists to elevate the customer-owned model to greater prominence as a viable alternative to the shareholder-owned model, not just in banking, but in business as a whole.

Reputation and consumer mistrust

There’s no doubt that trust in many shareholder-owned business institutions has fallen recently. In Australia, even previously highly trusted organisations like Qantas, AMP, PwC and Rio Tinto have seen hits to their reputation.

In fact, the most recent Roy Morgan Trust Survey from August this year found that Australians have never been more distrusting of corporate Australia. ?

So, what’s driving that? I believe a lot of it has to do with the profit-maximisation motive of shareholder-owned businesses. By definition, these businesses exist to pay dividends to their shareholders, so making as much profit as possible is their number one goal.

It can be hard for people to trust these organisations when they fear their actions are motivated by greed and profit above all else.

That’s where the customer-owned sector – cooperatives and mutuals – comes into its own. Mutuals like Heritage and People’s Choice exist to serve their members. There is no doubt about their motives, because their members are their owners. With no shareholders to pay dividends to, there is not the same drive to maximise profits.

As a result, mutual organisations are much more trusted by their members. They also generally outperform profit-maximisation competitors when it comes to community support by investing more in worthy causes like charities, community groups and events.

Final thoughts

Attending the conference in Vancouver highlighted that the loss of trust in big business is happening all over the world, and that a resurgent era of mutuals could be just around the corner.

Consumers are looking for more trustworthy, responsible and community-focussed organisations, and that’s what mutuals can deliver.

What Heritage and People’s Choice is doing is bringing back the concept of the iconic, national mutual financial institution, one that is community-focussed, cooperatively-owned and with the members’ interests at heart. It’s something that hasn’t been seen in Australia scene for years, since the demutualisation of organisations like AMP and National Mutual.

To me, our merger is genuinely exciting because it means we have a fantastic opportunity to help reset the way people in general think about business in this country, and even internationally.

Our story definitely resonated with everyone I spoke to in Vancouver, and I know the sector worldwide is watching closely to monitor our progress.

When it comes to business models, people do have a choice. And by sharing our journey with our members, nationally and on a global stage, we are firmly establishing our organisation as Australia’s leading mutual and a trusted alternative – one that is purpose-driven and recognised for doing the right thing by members and communities.