Broader Appeal

Shrinking banking competition was high on the agenda for Australia’s media last week with the Australian Competition & Consumer Commission (ACCC) driving the argument.

However, despite the large acquisitions by the majors in recent times, are some smaller lenders actually trying hard enough?

Take the example of the mutual sector, which comprises 11 building societies and 120-odd credit unions.

Member focused mutuals hold a combined $43 billion in mortgages, around 4.3 per cent of the Australian market, and as a combined entity are the third biggest holder of retail deposits at $58 billion.

Yet any new customer acquisition strategies by the mutual sector appear to be missing their mark, with new research showing their core customer base continues to age.

Just 5.5 per cent of 21-30 year olds have their primary mortgage with a mutual, increasing slightly to 5.6 per cent for the 31-40 year age bracket.

Further out along the age timeline and 7.7 per cent of those aged 41-50 hold their mortgage with a mutual, growing to 10.3 per cent for the 51-60 age bracket and 11.1 per cent for 61 & above, according to information in CoreData’s latest quarterly Australian Mortgage Report.

The mutual sector as a banking alternative lacks sufficient awareness among the young it would seem, with a greater customer acquisition effort required to boost the penetration of this segment of the market.

Without improved mutual awareness, customers will continue to head to the brand strong and heavily advertised big four banks, with some even unaware of the mutual banking option.

Irrespective of the rush to the big banks in these times of uncertainty there are clearly both challenges and opportunities facing the mutuals.

Meanwhile the worrying ageing trend continues for retail deposits.

Only 5.7 per cent of 21-30 year olds have their primary cash account with a mutual, rising to 9.6 per cent for the 31-40 age bracket and to 14.7 per cent for the 41-50 age bracket.

Mutual retail deposit holders peak in the 51-60 age bracket at 24.4 per cent, with those aged 61 & above 15.5 per cent, according to CoreData’s latest Australian Cash Report.

Many a marketing and strategy manager within the various mutual organisations must be already well aware of the need to appeal to a younger customer base – the question to be answered is how to achieve this when the banks have become even more powerful over the past year.