Michael Lawrence, chief executive of the Customer Owned Banking Association (COBA), gives a deep dive into what was a defining year for the mutual banking sector
As the year comes to a close, MPA catches up with the biggest names in mortgage finance to get the lowdown on the year that was, while looking towards the year ahead.
In this installment, Michael Lawrence, chief executive of the Customer Owned Banking Association (COBA), provides a thorough analysis of the biggest issues impacting the mutual banking sector heading into 2026.
What were the trends that defined the customer-owned banking space in 2025?
2025 was a significant year for customer-owned banking, shaped by growing recognition of the sector’s role in competition, trust and diversity in Australia’s banking system.
The sector now serves 5.4 million Australians, or around one in five people, making customer-owned banks collectively the fifth-largest household banking provider in the country. With $191 billion in assets and 8.6% housing lending growth, the sector continued to grow despite intense competition in home lending.
Importantly, customer-owned banks were again named Australia’s most trusted banking sector at a time when trust in banking more broadly declined.
A defining development during the year was the increased focus by government and regulators on competition in banking and the importance of a diverse financial system.
The release of the Council of Financial Regulators’ review into small and medium-sized banks, and the Government’s acceptance of most of its recommendations, reflected a clear acknowledgement that customer-owned banks play an essential role in delivering choice and competitive pressure, particularly in mortgage lending.
That focus has begun to translate into practical outcomes. The expansion of the Home Guarantee Scheme and the move to diversify the lending panel will allow more customer-owned banks to participate, giving first home buyers greater choice and strengthening competition in the housing market.
Overall, 2025 reinforced that customer-owned banks are not just values-led institutions, but a credible and competitive part of Australia’s mortgage landscape.
What were some of the biggest highlights for COBA over the year?
One of the biggest highlights for COBA this year was the strength and impact of our advocacy on behalf of the customer-owned banking sector.
With strong backing from members, COBA made a significant number of submissions and engaged extensively with government and regulators to ensure the sector’s role in competition, housing access, consumer protection and community outcomes was clearly understood. This advocacy reflects the outsized impact customer-owned banks deliver across communities, particularly in regional Australia.
A major milestone during the year was the release of the Council of Financial Regulators’ review into small and medium-sized banks, alongside the Government’s statement of intent. This marked an important step forward in recognising the contribution of customer-owned banks and the need to better consider how policy and regulatory settings affect a diverse banking system.
Another highlight was the shift in the regulatory conversation itself. There is now greater acknowledgement that regulation must support productivity, competition and innovation, not just manage risk. That change in framing reflects years of sustained engagement by COBA on behalf of the sector.
On a personal level, what were your career highlights over the year?
This year has been particularly meaningful, both domestically and internationally.
In Australia, one of the most significant highlights was seeing the role of customer-owned banks more clearly recognised at the highest levels of government. The release of the Council of Financial Regulators’ review, and the Treasurer’s acknowledgement that there is still more work to do, reinforced that the sector’s voice is being heard in shaping a more competitive and diverse banking system.
At an international level, the year also marked an important transition through my role as Chair of the World Council of Credit Unions, with the appointment of a new CEO in August bringing renewed focus to WOCCU’s global advocacy work at a time when regulatory pressure is emerging as a defining challenge for credit unions worldwide.
While much of this work happens behind the scenes, it matters because many financial rules are shaped internationally before being implemented domestically. Staying engaged at that level helps ensure the customer-owned banking model is understood as global standards evolve.
So this year really reinforced the value of consistent advocacy and collaboration in strengthening the customer-owned banking sector.
Looking ahead, what factors will influence the mutual banking space in 2026?
Looking ahead to 2026, the operating environment for customer-owned banks will continue to be shaped by cost-of-living pressures, housing affordability challenges and a volatile global economic and geopolitical landscape.
Policy and regulation will be a key influence. There is increasing recognition of the role customer-owned banks play in maintaining diversity and competition as banking becomes more concentrated. Ensuring regulatory settings properly reflect that role, and do not unintentionally disadvantage smaller, member-owned institutions, will be critical to long-term sustainability.
At the same time, the review marks the beginning of a longer reform journey. While the current framework is not intentionally anti-competitive, it has contributed to an uneven playing field, particularly in areas such as capital settings, liquidity support and funding, which tend to advantage large, investor-owned banks.
For customer-owned banks, this means it can cost significantly more to operate – around 60% more in relative terms – driven both by systemic settings and our commitment to investing heavily in service, and capability.
In home lending, mutual banks are also required to hold more capital against the same mortgage risk than major banks. Despite these structural disadvantages, customer-owned banks remain highly competitive, which speaks to the strength and discipline of the sector.
Technology will also play a growing role. Customer-owned banks are already using technology, including AI, to improve efficiency, strengthen risk management and enhance service delivery.
There is further scope to do more collaboratively across the sector, particularly where shared solutions can reduce duplication and accelerate benefits. This remains an area of focus following the Council of Financial Regulators’ review, alongside ongoing structural cost and scale challenges.
Sustainability will therefore remain a central theme in 2026. For some institutions, that may involve deeper collaboration or partnerships; for others, merger activity. Where mergers occur, they are driven by what is in the best interests of members and communities, and reflect the sector’s people-first ethos.
Overall, the road ahead will be about ensuring customer-owned banks have the capability and policy settings they need to remain strong contributors to Australia’s banking system.
Do you see the mortgage finance sector becoming even more competitive?
Yes, competition in mortgage finance is expected to remain strong in 2026, with an increasing focus on value and long-term outcomes rather than short-term incentives.
Customer-owned banks play an important role in this environment. They are, at their core, housing lenders, with 95% of lending across the sector in home loans, giving them deep expertise in housing finance and a strong understanding of borrower needs.
Importantly, the sector provides genuine competitive pressure. COBA research shows customer-owned banks offer home loan rates around 0.4 percentage points lower than the major banks, and in 2025 the sector was the first to offer a mortgage rate beginning with a 4. This competition delivers real benefits for borrowers across the market, not just those who bank with mutuals.
Are there any major milestones coming up for COBA or the mutual banking space in general in 2026?
A major milestone for the sector in 2026 will be the World Credit Union Conference, co-hosted by COBA and the World Council of Credit Unions in Sydney from 19–22 July. It will be the first time the event has been held in Sydney and provides a significant opportunity to showcase the strength and diversity of Australian customer-owned banking.
More than 2,500 delegates are expected to attend from over 60 countries, creating a unique forum for sharing insights, building relationships and strengthening collaboration across the global cooperative banking movement.
2026 will also be an important year as regulatory reforms progress from review into implementation, with a continued focus on ensuring changes support competition while maintaining strong protections for customers and the financial system.
How are you personally spending the holiday season?
I’ll be staying home this year and spending Christmas and the New Year with immediate family in Sydney, rather than making the usual trip back to Melbourne to see extended family. It will be a good chance to slow down and recharge before heading straight back into what is shaping up to be an even bigger year in 2026!
