'We're seeing a period of consolidation in the mutual banking sector,' says Bank Australia's Matt Wood
This week’s formal marriage between Bank Australia and Qudos Bank, which formed a customer-owned bank powerhouse comprising 300,000 members, was just another in the long line of merger activity to hit the Australian mutual banking sector in recent years.
Merger discussions are currently underway between Teachers Mutual Bank and Australian Mutual Bank, while Regional Australia Bank and Summerland Bank secured board approval to merge in April.
There was also the high-profile Heritage Bank and People’s Choice combination in 2023 to create People First bank, with People First signalling that its acquisitive appetite might not be sated yet.
In fact, the consolidation trend has been happening for decades. Once numbered in the hundreds, there are now closer to just 50, while S&P Global reckons there could be no more than 10 Australian mutual lenders in the years to come.
In a discussion with MPA following Tuesday’s merger, Bank Australia’s national manager, broker Matt Wood (pictured) agreed that there are more mergers in store for Australian mutuals.
A growing presence
“We’re seeing a period of consolidation in the mutual banking sector, with rising regulatory costs and tech demands at the centre of the changing landscape,” said Wood.
“Over the coming years, we expect continued changes across the sector to ensure customers receive the best experience possible when engaging with their bank."
Now that the merger is sealed, Bank Australia and Qudos Bank – which will retain their distinct market branding for the time being – intend to grow their presence in the broker market.
“We’ve combined our broker distribution teams to better support both brands and explore new opportunities,” said Wood.
Wood stressed to brokers and their clients that there will be no change to the values of both banks, nor will they need to change how they access each banks’ services. “The dual brand strategy means it’s business as usual, with the same access and support."
Nonetheless, there could be fresh strategies to share between both brands.
What’s in store next?
“It’s early days in our position as one entity – although with a larger, skilled workforce of 900 employees, we’re focused on adopting the best of each bank to ensure we implement the best systems and processes we can for our partners and customers," Wood said.
“We’ve combined our broker-facing teams from 1 July to help us identify what is required for our partners over the coming months.”
And for the record, there is more merger activity on the horizon as the merged Bank Australia-Qudos Bank entity looks to finalise the acquisition of Australian Unity Bank’s 25,000 members later this year.
Once that deal closes, the group will move closer to $20 billion in assets. Watch this space.
