By PETER LOCK | HERITAGE BANK & PEOPLE’S CHOICE CEO
I HAVE a pretty simple question for you…
Would you rather use a business which is absolutely focused on its customers, or one that isn’t?
I’m confident 99% of you would pick the former. Even if the two companies have exactly the same products or services, you’d go with the company which puts customers first and foremost. That’s what every customer would want.
Well, the choice I’ve just outlined is what all Australians have when it comes to banking. The problem is that many people aren’t aware of it.
The reality is that Australian banks are divided into two models.
There are those which exist wholly and solely to maximise profit. They’re the ones listed on the stock exchange. They are owned by shareholders who expect a return on their investment. In other words, these “listed” banks simply can’t put their customers first, because that place has already been taken – by shareholders.
That’s why Australia’s big four banks alone are this year expected to make approximately $33 billion in profit, which is a staggering amount of money.
Thankfully, there is an alternative model. There are banks that are owned 100% by their customers, and which therefore make their customers their absolute focus.
It’s a very simple model. When you become a customer of one of these banks, you become a member, with an equal share in ownership of the organisation.
Traditionally these banks were known by other names – such as credit unions or building societies. The important thing is they were created to harness the collective resources of a group, so individuals could have access to financial services that would otherwise be denied to them. For example, they served specific geographic areas, or particular professions such as teachers, nurses and police officers.
Now known as customer-owned banks, these organisations have been around in Australia for more than 150 years, so they have stood the test of time. And while they may have started small, more than 5 million Australians choose to bank with one of these organisations, which now offer the same types of products and services as the listed banks. Importantly, these banks are open to all Australians.
They also are regulated in exactly the same way as the listed banks, and have to meet the same strict legally-enforceable standards, so they’re just as safe and secure.
Crucially, however, they have retained their core structure and beliefs – they are 100% owned by their customers and those customers come first.
It’s not surprising then that when people are surveyed about the banking industry, customer- owned banks are consistently at the top of the rankings when it comes to customer satisfaction and trust.
Customer-owned banks also outperform their for-profit competitors when it comes to community support, generally providing a much larger percentage of their profits to worthy causes like charities, community groups and events.
In March this year, with the merger of Heritage Bank and People’s Choice – two long-established customer-owned banking organisations – we changed Australia’s banking landscape.
We created Australia’s leading member-owned bank and the first to be included in Australia’s Top 10 largest banks. We’ve gone from the humblest of beginnings in Toowoomba way back in 1875 to now be a truly national presence with over 95 branches.
For me, this is genuinely exciting particularly because it means we can help reset the way people think about banking and help point out the benefits of the customer-owned model on the national stage.
In Australia, banking is highly competitive, and so many of the options can appear very similar. But deep in their foundations, Australian banks are divided into two models.
One that is absolutely focused on its customers, and one that isn’t.
Now that you know there is a difference, which would you prefer?