Great Southern Bank looks at the numbers
Taking out a home loan through Australia’s largest customer-owned bank could save customers a significant amount of money than if they were to borrow through one of the majors, Great Southern Bank says.
Off the back of a strong 2022 financial year, with $5.28 billion of new lending, up 58% on FY21, the customer-owned bank commissioned Canstar to conduct research on the average savings of its home loan customers over the year to June 2022.
Compared to the average cost of borrowing with one of the big four banks, data showed the average annual saving of Great Southern Bank home loan customers was estimated at $1,182, the bank said. This was a collective annual saving of $56.8 million.
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Great Southern Bank chief customer officer Megan Keleher (pictured above) told MPA that the Canstar research showed most of the $1,182 in estimated annual savings was achieved through comparatively lower interest costs.
The main saving was in variable home loan rates but also more competitive fixed home loan rates, she said.
“We were also able to offer cost savings in our ongoing fees, which mortgage holders know can add up across the lifetime of a loan,” Keleher said.
Beyond a purely financial standpoint, customers are attracted to customer-owned banks for a range of reasons, Keleher said.
She pointed to a Royal Morgan Consumer Banking June 2022 Australia report, which showed compared to major banks, the mutual sector collectively held the highest customer satisfaction as of June 2022, at 91.6%. The four major banks scored a collective 77.4%.
The report, which measured satisfaction among customers who used a financial institution as their primary institution over the previous six months, showed customer satisfaction for credit unions was 90.9%.
“They tend to support responsible banks that share their social and environmental values, and views on promoting improving financial inclusion,” Keleher said.
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Referring to Great Southern Bank FY22 results showing lending to first home buyers increased by 50%, Keleher said 11% of its home loan customers had accessed government-backed home buyer schemes, enabling them to reduce the costs of homeownership.
The average age of a new Great Southern Bank customer has dropped to 27 years. Millennials represent a strong target audience for the bank, which it reaches and engages with through sports sponsorships, and through actively championing government homebuyer schemes, Keleher said.
“In FY22, we extended our partnerships with both Brisbane Heat and Carlton FC. These days, you'll see Great Southern Bank branding and activations at the AFL and AFLW, as well as the Big Bash League,” Keleher said.
With over two-thirds (68%) of residential home loans generated through mortgage brokers, Keleher said the bank is focused on bolstering its broker channel.
“We signed up three new broker aggregators this year which doubles our broker network, expands our customer base and is helping to attract younger borrowers,” Keleher said.
In response to how customer-owned bank clients could potentially save more money than major bank customers, Customer Owned Banking Association CEO Michael Lawrence said it was due to a focus on customer value rather than investor returns.
“This translates into highly competitive product offerings, including lending rates,” Lawrence said.
As they work in their members’ communities, customer-owned banks strive to provide fit-for-purpose products, he said.
“Customer-owned banks are funded overwhelmingly by household deposits rather than from wholesale funding markets, so our sector always aims to give a fair deal for borrowers and depositors. Our members don’t need to squeeze their customers to pay dividends to shareholders,” Lawrence said.
Younger consumers tended to be attracted to customer-owned banks because they want to see products and services that deliver for them and the broader community, he said.
