Credit union chief Mike Lawrence moves to capture moment

Mike Lawrence is the CEO of the Customer Owned Banking Association, which is ready to exploit the troubles of banks in the royal commission

Customer Owned Banking Association chief executive Mike Lawrence. Picture: Hollie Adams

Have you noticed a resurgence of interest in credit unions following the royal commission?

Absolutely. Our chief executives are receiving an enormous number of inquiries and a lot of people are looking to switch over from the majors to the customer-bank sector. People are disenfranchised, they’re disappointing with what they’re reading and they realise there is a viable alternative which is customer focused.

Your credit unions can offer deposit accounts and mortgage and credit cards. Why do more people not use customer-owned banks?

Well, we look after more than 4 million customers. But it’s fair to say the major banks have over 80 per cent of the market. Some of those banks have been around for 150 years. The challenge for our sector is getting more awareness of the member-owned option. Our members are authorised deposit-taking institutions, we’re strongly regulated, we’re well capitalised, we’re well-run.

I know there are police and teachers credit unions but they seem to be better known in regional Australia … why is that?

It’s the support of the local community. We’re seeing another wave of branch closures in regional centres; the big banks are deserting them. But I think it’s the same in the cities with customer-owned banks. We have branches on every second corner but our city members are very community minded.

What are the hurdles for credit unions and building societies? Do they need to be allowed to offer more services?

I don’t think the offerings are the problem. We offer a broad array of products that are equal, if not better, than the big four banks. One barrier is that smaller institutions carry more of a regulatory cost burden. The blanket approach on regulations is much easier to deal with if you’re a big institution with lots of resources. The Productivity Commission has said there is a one-size-fits-all approach, and that it’s a blunt regulatory instrument. An investment lending cap at 10 per cent is a good example. Our smaller members will hit that cap a lot quicker than the big four. That doesn’t foster competition.

Do you have hope you’ll see some progress with getting fairer treatment now?

I do have hope; I have hope on a number of fronts (laughs). A lot of regulators around the world have two tiers and treat their mutuals differently to major banks. This isn’t happening in Australia yet. I also hope that through the Royal Commission, which is terrible reading, offers the opportunity to take that two tiered approach to banks who do it right vs those who are doing it wrong.

Do customer-owned banks give financial advice?

We have over 70 members and they all have different structures and arrangements: There are a small few who have financial planning in-house and there are others who use a third-party supplier.

How does our customer-owned banking industry compare to the rest of the world?

There’s a lot we can learn though we’ve got to be careful that we’re comparing apples with apples. Our industry is more similar to Canada’s than the US’s (which has a different structure). Canada’s industry is dominated by five large banks and they have a building society-credit union-mutual structure. American customer-owned banking has a different structure but there’s a lot to learn there too. It’s enormous. They have something like 68,000 credit unions and they service 10 million customers. The Americans are very good at advocacy and we’ve been reaching out to them on that.

How did you get into customer-banking yourself?

I joined National Australia Bank as a graduate and worked across a lot of the banking channels: commercial, retail, third party etc. I love the industry but I wanted to do more to work with the community. My younger son has special needs and I’m actively involved in a lot of community programs with him. COBA gave me the opportunity to combine both of my love of banking and community.

What was your first big investment?

The first big investment was a unit. There were two in the block and we agonised over which one we’d pick as one of them cost $54,000 and $52,000. That $2000 gap inspired quite the debate, but we went with the more expensive one (laughs).