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Everything you need to know about mutual banks



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Between the major banks, credit unions and mutual banks, choosing who to use as a lender can be difficult.

But don’t worry, we’ll be breaking down mutual banks. So, you’ll have the knowledge to choose the right option for you.

We’ll be covering the following in this article: 

  • What is a mutual bank
  • How they work 
  • Mutual Bank vs Credit union: how to pick between them
  • How Benevolence Financial Group can help

Have any questions we missed or require more detail? Contact us via email or call today! 

What is a mutual bank?

Effectively, they are credit unions who have undergone approval to call itself a bank.

The process starts on a vote from the board members. If the majority vote ‘yes’, then, the organisation applies to the Australian Prudential Regulation Authority for permission to change its name to ‘mutual bank.’

Many were founded by Australian communities or workers and continue supporting them, like those focused on specific careers or community programs.

Overall mutual banks offer similar, if not almost the same services as from a bank, notably general deposit accounts, loans and insurance. The biggest difference is that mutual banks are owned by their customers, meaning there are no shareholders. 

How do they work? 

When you open an account with a mutual bank, you become a member. As there are no shareholders, profits are given back in member benefits, like making rates and fees as low as possible.    

Mutual banks vary in size and can operate in smaller areas than banks, with some in multiple states and others choosing to focus on a single area or region.

The only thing traditional banks, credit unions and mutual banks have in common is they must have an authorised deposit-taking institution (ADI) licence to legally operate under any of these titles. 

All ADI licences are approved and administered by the Australian Prudential Regulation Authority, and all authorised deposit-taking institutions comply to the same standards.

This means all Australian banks, credit unions and mutual banks follow the same banking code of practice, and all are equally safe options. 

Mutual Bank vs Credit union: how to pick between them

As the difference between mutual banks and credit unions is very small, you may be wondering which option to go with. 

Well, it depends on what you’re looking for.

If you’re after a low home loan rate or more customer-focus, you won’t mind who your lender is as long as you get that rate or quality service.   

But to narrow it down even further, we made the following questionnaire when picking your mutual bank from the 30+ options available nationwide, and the 4 headquartered in Sydney.  

Does its mission align with your values? Is the bank you’re looking at sustainably minded? 

One of the unique things about mutual banks is they’re ethical. They support communities and give back by voluntarily following ethical responsibility principles. For example, some mutual banks have been actively avoiding lending money to the Australian fossil fuel industry. 

So why not pick a bank that shares your value and makes a difference.

3. Is reporting transparent?

As a part-owner, you must know what the bank is doing with your money. So, before deciding who to go with, ask yourself if it was easy to find it out? And if you want it to manage your finances.   

Why go with BFG?          

We compare loans from over 30 lenders including mutual banks to find the best deal for you. As so, you don’t miss out on any benefits.

But we’re also an ethical finance broker and like mutual banks, with us you give back. 

Whenever we make a home loan, we invest up to half of all the profits into our partner charities addressing housing and social issues within Australia and internationally. Each investment is made in the name of our customers and they can make a tax-deductible tangible difference. 

Want to use BFG for your home loan needs? Click here to book an appointment with one of our specialists today. 

Disclaimer: The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstances and requirements.

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