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- The content provides a high level perspective of the mutuals and community banks sector, touching on key issues such as the preferential tax status of US credit unions
- The many case studies within this report will reveal much about the sector that is innovative and exemplifies global best practice
- Sectors discussed are subject to a number of ongoing pressures which may threaten the survival of individual organisations and the business models concerned
- An aggregation of best practice, drawn only from the case studies within this report, would provide an industry-leading model through which to offer retail financial services in the 21st century


There is increasing scrutiny by listed institutions of any perceived or real unwarranted advantages enjoyed by the organisations discussed in this report. And their concerns about the lack of a level playing field continue. In the US, it is hard not to sympathise with a banking system that is both subject to the rigours of meeting stock-market expectations, while competing with the credit union movement. Many of the credit unions have the size, strength and product range of the banks with which they are competing – but also continue to enjoy tax-exempt status. Moreover, as the case study reviewing the position of the Delta Community Credit Union reveals, this type of institution is able to widen the qualifying criteria for membership should the need arise. Overall, this debate in the US seems unlikely to subside without some movement. The European Union did rule in favour of the withdrawal of valuable German state guarantees, which were an advantage enjoyed by the savings bank movement and other organisations. The movement has come to terms with the increased cost of funding that this created. Developments in the German banking sector in 2010-11 have had the effect of placing much of the system under renewed and severe scrutiny. The activities of the Landesbanken have been an issue for many years, and their underperformance has placed a strain on the whole of the community, mutual and state banking sector.


- The report assesses the state of distinctive sectors that are not subject to the disciplines of global stock markets
- It concerns itself with the provision of ‘retail banking services’ through institutions owned by members, communities or municipalities
- The institutions examined include building societies, co-operative banks, credit unions and various types of community banks
- A common approach of many mutuals is the extent to which they have benefited from economies of scale offered by dedicated service providers, which are discussed in the report

Reasons To Buy

- Consider the areas in which these types of institution have found particular success
- Content in this report illustrates the extent to which these types of organisation enrich the retail financial services sector by offering a real alternative to clients across all major segments
- While animosity towards the sector may continue in some markets, a key insight from this report is that there is much to learn from the innovatory work of mutuals and community banks
- An aggregation of best practice from this report would provide an industry-leading model through which to offer retail financial services in the first half of the 21st century

Key Highlights
- The shareholder driven banking sector has had a painful multi-year existence. The near term prognosis is little better. This report examines a different approach to banking, which has historic origins that continue to influence some aspect of the way in which they do business
- The distinctive positioning of these types of institutions are increasingly appreciated and valued by their members and constituents
- Community financial institutions are linked much more closely to their constituencies
- Building societies in the UK, Sparkassen in Germany and mutuals in the US are all discussed, and case studies featured

Table Of Contents

Mutuals and Community Banks - The Strategic Lessons

Executive Summary

Table of Figures
Table of Tables
1 Overview
1.1 The scope of this report
1.2 The business models
1.3 Co-operative banks
1.4 National Agricultural Co-operative Federation, South Korea
1.5 Credit unions
1.6 Community banks
1.7 Heightening competition
1.8 The arguments
1.9 The Golden 1 Credit Union
1.1 Global best practice
1.2 A history…and a future
1.3 Conclusion
2 The UK building society sector
2.1 Introduction
2.2 A new era
2.3 The Building Societies Association
2.4 Conclusion
3 Nationwide Building Society, UK
3.1 Preamble: before ‘Nationwide'
3.2 The world's largest building society
3.3 Dunfermline Building Society: transfer of assets to Nationwide Building Society
3.4 Members and customers
3.5 Defending its mutual status
3.6 Mutually-orientated channel strategy
3.7 Supporting communities
3.8 Investing in colleagues
3.9 The evolving business model
3.10 Building for the future
4 Abacus - Australian Mutuals
4.1 The Australian mutual sector: an overview of associations and service companies
4.3 Indue
4.4 Future prospects
5 Heritage Bank, Australia
5.1 Background
5.2 Business highlights at June 2011
5.3 Product delivery
5.4 Member and customer relationships
5.5 The Heritage Community Branch model
5.6 Compliance and the Heritage
5.7 Conclusion
6 Newcastle Permanent Building Society, Australia
6.1 Background
6.2 The Newcastle today
6.3 Financial Year Highlights 2011
6.4 Delivery channel development
6.5 Products
6.6 Returning value to members and communities
6.7 Conclusion
7 Community banking in the US
7.1 Background
7.2 Mutual Holding Companies
7.3 American Bankers Association (ABA)
7.4 Demutualisation
7.5 The issue of taxation
7.6 Conclusion
8 Bendigo and Adelaide Bank, Australia
8.2 The merger with Adelaide Bank
8.3 The community banking model
8.4 Community bank start-ups
9 Community banking in Germany
9.1 Introduction
9.2 The Savings Bank Finance Group Management structure
9.3 Group businesses
9.4 Maintaining a strong financial base
9.5 Landesbank Berlin
9.6 A customer for life
9.7 The Mittlestand - at home and abroad
9.8 Future expectations - DSGV research
9.9 In the community
10 The German Sparkassen
10.1 A major force
10.2 Branch innovation
10.3 Accommodating the young consumer
10.4 Sophisticated self service facilities
10.5 Conclusion
11 The European co-operative banking sector
11.1 Size, strength and diversity
11.2 The European Association of Co-operative Banks
11.3 Membership and objectives
11.4 The role of co-operative banks
11.6 Credit Agricole
11.7 Raiffeisen Zentralbank Oesterreich
11.8 Raiffeisen Bank International
11.9 Unico Banking Group
11.10 Conclusion
12 Rabobank Group, The Netherlands
12.1 Background
12.2 The origins of Rabobank
12.3 Today's Rabobank
12.4 Group Strategy 2013-2016
12.5 Recent developments
12.6 Membership development
12.7 Delivery channel strategy
12.8 Conclusion
13 The Co-operative Bank, UK
13.1 A democratic ownership
13.2 The growth of the Bank
13.3 Laying the foundations
13.4 Co-operative banking principles
13.5 Profit generation to create a sustainable model
13.6 Market-leading colleague satisfaction
13.7 Market leading customer satisfaction
13.8 Membership growth
13.9 Co-operative banking in practice
13.10 Ethical finance
13.11 Financial inclusion
13.12 Environment
13.13 Conclusion
14 Members and Education Credit Union, Australia
14.1 Background
14.2 Employee focus
14.3 A differentiated credit union
14.4 The Bankmecu sustainability strategy
14.5 Looking to the future
15 The US credit union movement
15.1 Origins and growth
15.2 Credit union key statistics - 2011
15.3 The Credit Union National Association
15.4 The CUNA Mutual Group
15.5 Tax exempt status
15.6 Conclusion
16 The US credit union movement service corporations
16.1 The developing credit union service organisations
16.2 Credit Union Service Corporation
16.3 CO-OP Financial Services
16.4 PSCU Financial Services
17 Delta Airlines: the employer
17.1 The credit union
17.2 History and the broadening franchise
17.3 Delivery channels
17.4 Looking to the future

List of Tables

Table 1.1: UK building societies, ranked by group assets (May 2012)

List of Figures

Figure 1.1: History of the National Agricultural Co-operative Federation
Figure 4.1: Abacus coverage across Australia
Figure 4.2: Total Australian domestic resident assets ($'billion) as at December 2011
Figure 4.3: Market share - Australian household deposits March 2012
Figure 8.1: Bendigo and Adelaide Bank, a multi-brand strategy
Figure 12.1: Rabobank loan portfolio in billions of Euros
Figure 12.2: Rabobank net profit in millions of Euros
Figure 12.3: Rabobank key figures (2007-2011)
Figure 16.1: Growth of PSCU credit, debit and bill pay accounts
Figure 16.2: PSCU credit and debit transactions
Figure 17.1: Delta Community Credit Union (DCCU) Key Figures (2005-2011)

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