The future of mutual banking: Insights from industry leaders

Australia’s mutual banking sector is navigating unprecedented challenges whilst discovering new opportunities for growth and innovation. At the recent NextGen Mutual Bank Sales Leaders Forum, we brought together senior sales and distribution professionals to discuss the unique challenges and opportunities facing the mutual banking sector. Leaders shared candid insights about the realities of competing in today’s financial services landscape.

Differentiation through values

Mutual banks are increasingly leveraging their core values to stand out in a commoditised market, with several organisations finding that authentic values-driven positioning creates genuine competitive advantage.

Matt Wood, National Head of Broker at Bank Australia, highlighted how values-based positioning drives tangible results: “Many of our customers join Bank Australia because they want their money to be used in ways that align with their values. With our competitive products, we’re proud to have a conversion rate of nearly 80%”.

Wood detailed their comprehensive approach: “Our commitment to clean money means we focus our lending and investments in areas that do good not harm, for people and planet. At the centre is our responsible banking policy, which guides all our lending decisions and what we do and don’t invest in. We don’t lend to harmful industries like fossil fuels, live animal exports, intensive animal farming, tobacco, arms, and gambling”.

This values-led approach creates genuine customer loyalty that extends well beyond simple price competition.

Mark Middleton, Head of Third Party Distribution at Teachers Mutual Bank, reinforced how this approach resonates with consumers seeking alternatives to traditional banking: “There are customers who are looking for solutions that clearly demonstrate those values and make a choice over the big four. We honestly care about the customer, and that comes out in conversation”.

The broker channel reality

The discussion revealed universal acceptance of the broker channel’s growing dominance, with leaders acknowledging that this shift represents a fundamental change in how consumers access lending services. Rather than viewing this as a challenge, participants highlighted how embracing broker partnerships has become essential for growth.

A senior executive from a leading mutual bank emphasised the channel’s inevitable expansion: “The broker market share is only going to go one way”.

For many mutual banks, broker channels have unlocked geographic expansion opportunities that would have been impossible through traditional branch networks. Middleton explained the strategic value: “Being able to take our proposition nationally has been a game-changer for our bank. How do you get your brand out there amongst 22,000 brokers?”

Ben Irons, General Manager Member Experience at Community First Bank, highlighted how thoughtful broker partnerships can complement existing strategies: “We’ve used brokers to supplement our growth ambitions and expand beyond our local market presence”.

Technology and operational efficiency

Technology emerged as both the greatest opportunity and most significant constraint facing the sector. Whilst leaders celebrated substantial improvements from platform modernisation, legacy systems continue to create operational bottlenecks that impact customer experience.

Wood shared impressive results from their digital transformation: “Our new loan origination system is a key milestone in our digital transformation program. The new system means our lending team can handle more applications with fewer manual steps, making the process smoother and faster for both customers and employees. This is reflected in our conversion rate, which increased from 73% to 80%”.

Several organisations are pursuing ambitious automation strategies to remain competitive. Irons outlined Community First Bank’s goals: “We are looking to significantly improve our straight-through processing capability to improve the customer and broker experience through automation of data collection and removing friction points across the application process”.

However, the tension between legacy processes and modern customer expectations remains a persistent challenge. Casie Michael, Head of Member Services, Support and Solutions at Bank First, noted: “We’re focused on updating our lending processes to ensure they deliver the best possible experience for our customers while maintaining strong risk management”.

Resource allocation and competing priorities also create implementation challenges. Greg Ferris, Head of Broker at Newcastle Permanent, noted the practical constraints many organisations face: “For us, it’s prioritisation and just having the resources to be able to execute on some of the things we want to do from a loan processing point of view”.

For some organisations, external partnerships have provided the catalyst for meaningful operational change. One participant shared how technology implementation drove broader transformation: “As part of implementing new loan origination systems, we changed all our policies to meet market standards. We’ve made more changes in the last 18 months than we made in the previous ten years”.

Industry consolidation and future outlook

The sector anticipates continued consolidation driven by capital constraints and regulatory pressures, with realistic estimates suggesting significant reduction in the number of operating mutual banks within the next five years.

Irons identified the fundamental challenge facing the sector: “Capital can hold mutuals back. The sector is only around 3% of the total market and it is more challenging to grow sector market share materially more whilst capital constraints exist”.

Successful organisations are taking a long-term perspective on strategic investment and positioning. Middleton emphasised the importance of building sustainable competitive advantages: “We’ve got to invest back into the business to make sure we are delivering for our members today while setting ourselves up for future growth”.

The power of collaboration

Perhaps most importantly, the Forum demonstrated the unique value of peer collaboration within the mutual sector. Unlike traditional competitive dynamics, mutual banks share common challenges that benefit from collective problem-solving approaches.

As Middleton reflected: “We can share ideas and benefit our members collectively. When we work together, we can have a much bigger impact”.

This collaborative spirit, combined with strategic technology investment and clear value propositions, positions the mutual banking sector for continued relevance in Australia’s evolving financial landscape.

The NextGen Mutual Bank Sales Leaders Forum revealed a sector in transition, with leaders demonstrating remarkable clarity about both the challenges ahead and the opportunities within reach. Whilst capital constraints and technological legacy issues remain significant hurdles, the mutual banking sector’s commitment to authentic values, strategic broker partnerships, and collaborative innovation provides a strong foundation for future growth.

The discussion highlighted that success in the evolving financial landscape will depend not on competing with the big four banks on their terms, but on leveraging the unique strengths that define mutual banking: genuine customer care, community focus, and the agility to adapt quickly to market needs.

Most encouragingly, the forum demonstrated that mutual banks are no longer operating in isolation. By sharing insights, challenges, and solutions, these organisations are building collective strength that benefits not only their individual institutions but the entire customer-owned banking sector. This collaborative approach may well prove to be the mutual sector’s greatest competitive advantage in the years ahead.

NextGen looks forward to continuing to support the mutual banking sector through both innovative technology solutions and industry collaboration that brings leaders together to tackle shared challenges and opportunities.

Watch behind-the-scenes moments and participant perspectives from the NextGen Mutual Bank Sales Leaders Forum below.