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Mutuals and Community Banks - The Strategic Lessons

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  • 111 Pages
  • Timetric

Synopsis

  • The content provides a high level perspective of the mutuals and community banks sector, touching on key issues such as the preferential tax status of US credit unions
  • The many case studies within this report will reveal much about the sector that is innovative and exemplifies global best practice
  • Sectors discussed are subject to a number of ongoing pressures which may threaten the survival of individual organisations and the business models concerned
  • An aggregation of best practice, drawn only from the case studies within this report, would provide an industry-leading model through which to offer retail financial services in the 21st century

Summary

There is increasing scrutiny by listed institutions of any perceived or real unwarranted advantages enjoyed by the organisations discussed in this report. And their concerns about the lack of a level playing field continue. In the US, it is hard not to sympathise with a banking system that is both subject to the rigours of meeting stock-market expectations, while competing with the credit union movement. Many of the credit unions have the size, strength and product range of the banks with which they are competing - but also continue to enjoy tax-exempt status. Moreover, as the case study reviewing the position of the Delta Community Credit Union reveals, this type of institution is able to widen the qualifying criteria for membership should the need arise. Overall, this debate in the US seems unlikely to subside without some movement. The European Union did rule in favour of the withdrawal of valuable German state guarantees, which were an advantage enjoyed by the savings bank movement and other organisations. The movement has come to terms with the increased cost of funding that this created. Developments in the German banking sector in 2010-11 have had the effect of placing much of the system under renewed and severe scrutiny. The activities of the Landesbanken have been an issue for many years, and their underperformance has placed a strain on the whole of the community, mutual and state banking sector.

Scope

  • The report assesses the state of distinctive sectors that are not subject to the disciplines of global stock markets
  • It concerns itself with the provision of 'retail banking services' through institutions owned by members, communities or municipalities
  • The institutions examined include building societies, co-operative banks, credit unions and various types of community banks
  • A common approach of many mutuals is the extent to which they have benefited from economies of scale offered by dedicated service providers, which are discussed in the report

Reasons To Buy

  • Consider the areas in which these types of institution have found particular success
  • Content in this report illustrates the extent to which these types of organisation enrich the retail financial services sector by offering a real alternative to clients across all major segments
  • While animosity towards the sector may continue in some markets, a key insight from this report is that there is much to learn from the innovatory work of mutuals and community banks
  • An aggregation of best practice from this report would provide an industry-leading model through which to offer retail financial services in the first half of the 21st century

Table of Contents

Executive Summary

Table of Contents

Table of Figures

Table of Tables

1 Overview

  • 1.1 The scope of this report
  • 1.2 The business models
  • 1.3 Co-operative banks
  • 1.4 National Agricultural Co-operative Federation, South Korea
  • 1.5 Credit unions
  • 1.6 Community banks
  • 1.7 Heightening competition
  • 1.8 The arguments
  • 1.9 The Golden 1 Credit Union
  • 1.1 Global best practice
  • 1.2 A history…and a future
  • 1.3 Conclusion

2 The UK building society sector

  • 2.1 Introduction
  • 2.2 A new era
  • 2.3 The Building Societies Association
  • 2.4 Conclusion

3 Nationwide Building Society, UK

  • 3.1 Preamble: before 'Nationwide'
  • 3.2 The world's largest building society
  • 3.3 Dunfermline Building Society: transfer of assets to Nationwide Building Society
  • 3.4 Members and customers
  • 3.5 Defending its mutual status
  • 3.6 Mutually-orientated channel strategy
  • 3.7 Supporting communities
  • 3.8 Investing in colleagues
  • 3.9 The evolving business model
  • 3.10 Building for the future

4 Abacus - Australian Mutuals

  • 4.1 The Australian mutual sector: an overview of associations and service companies
  • 4.2 CUSCAL
  • 4.3 Indue
  • 4.4 Future prospects

5 Heritage Bank, Australia

  • 5.1 Background
  • 5.2 Business highlights at June 2011
  • 5.3 Product delivery
  • 5.4 Member and customer relationships
  • 5.5 The Heritage Community Branch model
  • 5.6 Compliance and the Heritage
  • 5.7 Conclusion

6 Newcastle Permanent Building Society, Australia

  • 6.1 Background
  • 6.2 The Newcastle today
  • 6.3 Financial Year Highlights 2011
  • 6.4 Delivery channel development
  • 6.5 Products
  • 6.6 Returning value to members and communities
  • 6.7 Conclusion

7 Community banking in the US

  • 7.1 Background
  • 7.2 Mutual Holding Companies
  • 7.3 American Bankers Association (ABA)
  • 7.4 Demutualisation
  • 7.5 The issue of taxation
  • 7.6 Conclusion

8 Bendigo and Adelaide Bank, Australia

8.1Background

  • 8.2 The merger with Adelaide Bank
  • 8.3 The community banking model
  • 8.4 Community bank start-ups

9 Community banking in Germany

  • 9.1 Introduction
  • 9.2 The Savings Bank Finance Group Management structure
  • 9.3 Group businesses
  • 9.4 Maintaining a strong financial base
  • 9.5 Landesbank Berlin
  • 9.6 A customer for life
  • 9.7 The Mittlestand - at home and abroad
  • 9.8 Future expectations - DSGV research
  • 9.9 In the community

10 The German Sparkassen

  • 10.1 A major force
  • 10.2 Branch innovation
  • 10.3 Accommodating the young consumer
  • 10.4 Sophisticated self service facilities
  • 10.5 Conclusion

11 The European co-operative banking sector

  • 11.1 Size, strength and diversity
  • 11.2 The European Association of Co-operative Banks
  • 11.3 Membership and objectives
  • 11.4 The role of co-operative banks
  • 11.6 Credit Agricole
  • 11.7 Raiffeisen Zentralbank Oesterreich
  • 11.8 Raiffeisen Bank International
  • 11.9 Unico Banking Group
  • 11.10 Conclusion

12 Rabobank Group, The Netherlands

  • 12.1 Background
  • 12.2 The origins of Rabobank
  • 12.3 Today's Rabobank
  • 12.4 Group Strategy 2013-2016
  • 12.5 Recent developments
  • 12.6 Membership development
  • 12.7 Delivery channel strategy
  • 12.8 Conclusion

13 The Co-operative Bank, UK

  • 13.1 A democratic ownership
  • 13.2 The growth of the Bank
  • 13.3 Laying the foundations
  • 13.4 Co-operative banking principles
  • 13.5 Profit generation to create a sustainable model
  • 13.6 Market-leading colleague satisfaction
  • 13.7 Market leading customer satisfaction
  • 13.8 Membership growth
  • 13.9 Co-operative banking in practice
  • 13.10 Ethical finance
  • 13.11 Financial inclusion
  • 13.12 Environment
  • 13.13 Conclusion

14 Members and Education Credit Union, Australia

  • 14.1 Background
  • 14.2 Employee focus
  • 14.3 A differentiated credit union
  • 14.4 The Bankmecu sustainability strategy
  • 14.5 Looking to the future

15 The US credit union movement

  • 15.1 Origins and growth
  • 15.2 Credit union key statistics - 2011
  • 15.3 The Credit Union National Association
  • 15.4 The CUNA Mutual Group
  • 15.5 Tax exempt status
  • 15.6 Conclusion

16 The US credit union movement service corporations

  • 16.1 The developing credit union service organisations
  • 16.2 Credit Union Service Corporation
  • 16.3 CO-OP Financial Services
  • 16.4 PSCU Financial Services

17 Delta Airlines: the employer

  • 17.1 The credit union
  • 17.2 History and the broadening franchise
  • 17.3 Delivery channels
  • 17.4 Looking to the future

List of Tables

Table 1.1: UK building societies, ranked by group assets (May 2012)

List of Figures

Figure 1.1: History of the National Agricultural Co-operative Federation

Figure 4.1: Abacus coverage across Australia

Figure 4.2: Total Australian domestic resident assets ($'billion) as at December 2011

Figure 4.3: Market share - Australian household deposits March 2012

Figure 8.1: Bendigo and Adelaide Bank, a multi-brand strategy

Figure 12.1: Rabobank loan portfolio in billions of Euros

Figure 12.2: Rabobank net profit in millions of Euros

Figure 12.3: Rabobank key figures (2007-2011)

Figure 16.1: Growth of PSCU credit, debit and bill pay accounts

Figure 16.2: PSCU credit and debit transactions

Figure 17.1: Delta Community Credit Union (DCCU) Key Figures (2005-2011)

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