Mutual banks ground financial planners

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Small mutual banks are saving money on flying financial planners to remote locations by setting up video calls between them and customers.

Technology is letting the nine mutual banks secure a competitive edge against their larger brethren, says Defence Bank CEO Jon Linehan.

He says 86% of Defence’s transactions are now online – reflecting a diversified client base spread across the northern part of Australia and a young client base with 62% of members between 18 and 45 years old.

“There’s no better example of this than the video centre that was first established by Defence Bank for conferencing between staff, and now is being used to give a human face to our staff as they talk to our more than 90,000 members.

“Not only does it save the cost of flying financial planners to remote locations, but is also addresses the critical issue of trust.

“When people are talking about large sums of money, whether it’s a loan for a house or their superannuation, then they want to put a face to the person they are talking to. The difference between that to-face interaction and a first-name person in a call centre is, in our experience, very significant."

Mutuals have to be smarter and quicker in how they use technology, as bigger banks can catch up and implement it too, Linehan says.

But mutuals can enter this space more quickly as, in many instances, they are less tied to the traditional branch system.

“In saying this I am not decrying the branch network. It will remain integral to the banking system, with the significant transactions such as lending and large investments still the domain of the branches. It reflects the fact that customers still want to see the branches; the bricks and mortar give them a sense of security.

“That said transactions across the counter are expensive, and the banks they move quickly to use the new technologies while still retaining a core branch network will gain a competitive edge,” he says.

Linehan says there is “no doubt in my mind” Australian banking is a long way behind other sectors of the economy in its use of social media.