• Financial hardship & your credit report: Legislative changes from 1 July 2022 to financial hardship arrangements that impact your credit report. Find out more.


With banking often featured in the news, there has also been discussion recently around alternatives to the bigger banks. You may have heard the term “mutual Bank” or “Customer owned” bank – so what do these terms mean? And how do they differ from the major banks? We’ve explained, below. 

What’s the difference? 

The key distinction between retail banks like the big four (NAB, CBA, ANZ and WestPac) and customer owned or mutual banks is, as you’d expect, ownership

Major banks are publicly traded companies, where people can purchase shares and become part owners of the company, regardless of whether they are customers of that bank. 

In contrast, customer owned or mutual banks are, as the name suggests, owned by their customers. This means that each customer (or member, as they’re often called) is an equal shareholder, regardless of the value of their investments or accounts.

Where do the profits go?

For the big banks, the profits are essentially owned by the shareholders. These can be given directly in the form of dividends (a payment based on how much the bank made that year), or invested back into the business to help grow the business. This also benefits shareholders, as the business has more capacity to earn, and potentially increase the value of their shares. 

For mutual or customer owned banks, the story is different. 100% of the profits are reinvested in the business to help provide better services and to support the communities they serve. 

Who makes the decisions?

For the big banks, the shareholders are entitled to vote at annual general meetings, including the election of board directors and their salaries. 

The same is true for mutual or customer owned banks, where every customer is also a shareholder and has a voice at the annual general meeting and on board director elections.

Who regulates the banks? 

Mutual or customer owned banks are governed by the same regulation under the Banking Act as the big banks and deposits are covered by the Government Guarantee.

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