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QT Mutual Bank and RACQ this week announced plans to create a new customer-owned banking service, leveraging the considerable assets and capabilities of RACQ’s large membership base.
The proposed merger will establish a banking subsidiary within the RACQ Group, alongside its assistance, insurance and lifestyle operations which service more than 1.5 million members in Queensland.
RACQ Group CEO Ian Gillespie and QT Mutual Bank CEO Steve Targett said the goal was to use the strong RACQ brand and resources along with the banking expertise and products of QT Mutual Bank to establish a highly scale-able, customer-owned banking platform.
Mr Targett told Mortgage Business the mortgage distribution benefits were massive. The mutual lender currently has 60,000 members, while RACQ has more than 1.5 million members.
“It’s huge. What we want to do is reach into their customer base and sell them a better mortgage product. If we can get a small penetration there we can get a huge amount of growth,” he said.
“If we get the basics fixed in terms of our banking platform, combined with a great brand like theirs, and if we can come up with better pricing than we have at the moment – which is even better than the big banks – then we think we will have a proposition that stands out.”
Mr Gillespie said the group was aiming to be a trusted alternative to the “shareholder-owned, profit-driven banks”.
“The merger will offer greater benefits to members of both organisations, with a highly compatible suite of premium products and services and a common focus on delivering exceptional service and value,” he said.
If successful, the formal merger of the two organisations is expected to be completed by the third quarter of 2016.
“RACQ wants to diversify into banking while QT Mutual Bank wants scale and investment in technology to achieve growth, that’s why this deal makes sense. Together we can achieve things for our members that we can’t do on our own,” Mr Gillespie said.
He said the time was right to invest in building a larger scale alternative to the traditional banks, utilising the mutual banking business model with its focus on returning value to members rather than maximising profits for shareholders.
“We’ll be committed to offering members honest, easy and great value banking products and services without any hidden fees or excessive charges,” Mr Gillespie said.
“By adding banking to our already strong insurance and assistance offers, our combined membership will benefit from great service, better value and a deeper relationship overall.”
Mr Targett said the proposed merger supported the bank’s long-term growth strategy to bring products and services to a wider customer base.
“We believe the trusted RACQ brand, resources and existing member base, combined with QT Mutual Bank’s banking knowledge, experience and personalised service will provide Queenslanders with a real choice in the competitive financial services market,” he said.
“Importantly, we’re culturally aligned with shared values and a focus on education and the community. That community focus and advocacy fits very well with what our members expect from a merger partner.”
The merger is expected to deliver an enhanced banking experience through an expanded product offering, investment in technology and new digital capabilities, and a wider service network with a 24-hour contact centre.
“This really is a case of one plus one equals three, and a far better option than an in-sector merger with another bank or credit union,” Mr Targett said.
The proposal is expected to be put to QT Mutual Bank members for a vote in mid-2016. RACQ members will not be required to vote.
[Related: Non-major lenders announce merger]