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Mutuals Industry Review 2018

Mutuals Industry Review 2018

KPMG's Mutuals Industry Review 2018 highlights that Australia's mutual banks, building societies and credit unions (the 'Mutuals') performed well in 2018 despite a sustained low interest rate environment, an increasingly competitive market, heightened regulatory focus and an industry being reshaped by a new wave of technological innovation and evolving customer preferences.

Brendan Twining

National Sector Leader, Mutual Banks

KPMG Australia


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The industry is also facing unprecedented political, regulatory and media scrutiny and ultimately, challenges in arresting a decline in trust. However, it’s not just in Australia where trust in financial institutions has diminished – this is also occurring globally. APRA explains 'trust is the currency of banks'. However, this currency cannot be bought, sold or demanded, rather it is built over many years. And as we have observed, it can also be lost quickly. This report explores a number of similar considerations and aims to provide insight into what is on a Mutual’s mind when it comes to 'maintaining trust in turbulent times'.

Key highlights from the report

  • Residential lending increased by 6.6 percent (2017: 10.4 percent)
  • Deposits increased by 5.0 percent (2017: 10.8 percent)
  • Technology spend increased by 5.7 percent (2017: 16.4 percent)
  • Net interest margin increased by 1 bp to 2.04 percent (2017: declined by 11 bps to 2.03 percent)
  • Non-interest income decreased by 1.9 percent (2017: grew 1.2 percent)
  • Impairment expenses remained steady at 0.04 percent of average gross receivables (2017: 0.04 percent)
  • Capital levels increased by 30bps to 16.36 percent (2017: 16.06 percent).

Key themes

  1. The Trust Agenda – Why trust is important, and what framework to utilise to measure and foster trust.
  2. Customer branding and loyalty – How to utilise existing branding of a Mutual to demonstrate trust.
  3. Emerging technologies – What are the new upcoming technologies on the horizon for the sector. How can a Mutual leverage its size, relationships and often limited budgets to gain exposure to these new technologies?
  4. New Payments Platform (NPP) – The progress of NPP and its take-up in the Mutual sector. What will the current and future state of NPP look like?
  5. Open Banking – How is Open Banking regulation worldwide shaping the current state of Open Banking in Australia and are the Mutuals prepared for this?
  6. Workforce of the future – How robotics process automation (RPA) or artificial intelligence (AI) are currently shaping the workforce and how they may shape the workforce of the future.
  7. Royal Commission – What were some of the key interim findings, how will they impact on trust in the financial services sector and what lessons can a Mutual learn from the commission.
  8. Banking Executive Accountability Regime (BEAR) – What are the right tools for building accountability in all facets of the business? This is in the presence of the sector campaigning for a '#MoreThan4' proportionate regulation.
  9. Regulatory changes – How do we utilise the cybersecurity governance regulation to build resilience in our data governance & reporting processes? Further, how can a mutual utilise additional capital raised through Mutual Equity Interests (MEIs) effectively.
  10. Tax developments – Managing expectation of all stakeholders, including communities that depend on government funding, the ATO and members in relation to tax.

Further information

Mutuals Industry Review

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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