A new model for mutual banking

This article was originally published on AB+F, an RFi Group company website.Teachers Mutual Bank Limited CEO Steve James knows the importance of reinvention as he signals a planned initiative that will underpin a kind of hybrid bank.If there is one lesson the industry veteran would like to share with budding CEOs it is this: “Embrace the challenge and the new technologies that come with that”.And in keeping with the ethics of customer-owned banks, James adds: “For your customers’ sake, always be ethical and hold strong values for your organisation.James was interviewed as part of special report on reinvention with Backbase and AB+F.It's a theme he know doubt is familiar with, having been with Australia’s largest mutual bank for 40 years – the last 15 as CEO.Since then the mutual bank has led on a number of innovative initiatives.It was among the first to introduce mobile banking and provide new payment technologies to its members.The bank’s members already had the choice of Samsung Pay, Apple Pay and Google Pay while the big four were still debating the merits of mobile wallets.James sees the need to introduce emerging technologies to its members as a strategy that is simply part of driving the future of the 54-year-old bank by meeting the evolving member needs.“It’s no secret that digital banking is transforming the landscape. The majority of our everyday transactions are Tap & Go.  Most members receive digital statements.”The bank is already in the first stage of transforming its back office using robotics,  AI and digital.

James’ long-term vision for the bank is to have the relationship banks and the neobank become closer together to form a new hybrid bank that offers not only excellent products and services, but is very user friendly - this will be a new model for the mutual banking sector.”

And in exciting news, the bank is also set to introduce a neobank – among only a handful of incumbents embracing the strategy.“We are currently developing a neobank offering that will be mainly mobile.  I won’t say too much more about it at this stage, but we believe there is an opportunity in this space for a mutual bank to deliver this option.”Currently, Teachers Mutual Bank Limited (the corporate entity) has four relationship banks – Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank, and UniBank.With the introduction of the neobank, James’ long-term vision for the bank is to “have the relationship banks and the neobank become closer together to form a new hybrid bank that offers not only excellent products and services, but is very user friendly”.“This will be a new model for the mutual banking sector.”Leading on innovation is also key to the way Teachers Mutual reinvents its business to remain relevant to its members’ changing needs and expectations.Indeed, the bank has grown from a small credit union formed in 1966 for teachers in Sydney’s Hornsby to a nationwide suite of brands - Teachers, Firefighters, University and Health Professionals bank.Over the last five decades significant changes to technology have emerged and as James alluded to earlier, today it is all about digital banking.For James, reinvention or transformation is a normal process of Teachers and importantly it supports the need to provide better services and products to its members in the “most user-friendly way”.“It means keeping updated with technology, even at times being the leading edge.  It is about being able to compete in a very aggressive financial market place.”Specifically, the mutual bank’s ability to remain relevant in today’s world is about transforming both the back end and front end of its business.The bank has eleven robots in the back office performing functions to improve customer experience and staff engagement.“It creates a faster member experience, and reduces high volume repetitive tasks for staff, which means they can focus more on member service.”The bank uses robots to provide a more streamlined experience for members on things like:  onboarding; requesting account changes; travel advisories; account change preferences, switching to electronic statements.“We have near real-time communications on these functions now. The overall benefits are reduction in time, cost and operational risk – it’s very consistent and standardised.”The bank has also embraced AI, by using automation, which moves data from different sources to collate documents as well as data analytics for government compliance.“We want to ensure a sustainable future, empowering our staff in their jobs and improving customer experience.

I think failures are just part of business and you probably learn more from your failures than you do your successes

“But it’s important to remember, technology solutions are human solutions, we don’t separate them.  They complement each other.”James acknowledges that with reinvention comes risks and failures.“There have been a few failures in the past!  One of the most memorable involved a telecommunication device that converted an analog telephone to an early digital phone.“The devices failed when the batteries ran out of power and couldn’t be recharged!But equally, taking the risks does also pay off.“We took a professional risk as an early adopter of internet banking.  It was not in wide use at the time, and for a credit union, which we were then, it was a huge leap.  It enabled us to get a head start with our online banking services.”James is eager to share his lessons with his team about taking on calculated risks.But the crucial point here is that, any risks must be balanced with protecting and putting member needs front and centre – a core belief of a mutual bank.“It is OK to take business risks but we have a strong culture of good ethics and values that should not put our members at risk.“I think failures are just part of business and you probably learn more from your failures than you do your successes.“We have a very dynamic, committed Board and executive team who love the challenge of making TMBL a better organisation for its members.”Going forward, James remains focused on growing the business.This will include the launch of its neobank, building its relationship banks and being ‘open banking’ ready.And again, embrace those new technologies.The bank is currently eyeing the cloud and James adds, new innovation will continue to enhance user experience, and grow the bank’s membership.“We are always open to new technology and always ready to adopt it, because your customers will always look to you to provide it.”And it is a challenge he continues to embrace.“I personally enjoy the challenge of making our organisation the best it can be for our 220,000 members and customers.”