Australia’s mutual banks are embracing innovation and fintech start-ups at an elevated pace, according to a new report by KPMG.
The survey titled Mutuals Industry Review 2015: Time to take off found that 62 per cent of Australia’s credit unions, building societies and mutual banks (‘mutuals’) are inclined to invest in new technologies.
KPMG Australia national mutuals leader Peter Russell said the price of new technologies has come down dramatically due to the lower costs of starting new businesses, meaning that good ideas can be turned into business applications at a fraction of the cost compared to five years ago.
“Mutuals have the advantage that they don’t have to deal with as many challenges as their bigger competitors. They can move more quickly to embrace disruptive fintech solutions,” he said.
“Customer-owned institutions are well placed due to their size and nimbleness to seize a competitive advantage by implementing new technologies and ideas, collaborating with fintechs.”
The report found that 34 per cent of mutuals are “agile” and are currently seeking new business models, while only four per cent are sticking to traditional models.
“Mutuals no longer have to build all the infrastructure required to run their business,” Mr Russell said.
“Increasingly, alternative arrangements are available by utilising existing functionality already operating in a cloud based environment which reduces implementation risks and provides substantial cost advantages.”
Moreover, 92 per cent of mutuals now have mobile apps or a mobile-friendly website, and are now focusing on the features and functionality of these applications.
Additionally, 79 per cent plan to increase their investment in mobile technologies in the coming year, with 42 per cent including it in their top five priorities.
The report concluded that the challenge for mutuals in 2016 will be to respond to change, introduce new technologies, increase collaboration and improve their customer value proposition.