Since 1948, International Credit Union Day has been celebrated on the third Thursday of October, commemorating the spirit of the global credit union movement. This year’s theme is “Cooperation for a prosperous world”, and according to Greg Patmore, Emeritus Professor of Business and Labour History at The University of Sydney, it’s pretty fitting.
“Prosperity isn’t just about wealth; it’s about making sure all community groups have an opportunity to participate in it. This principle is at the heart of customer-owned banks, from supporting vulnerable communities to providing services in rural and regional Australia,” he says.
In this week’s feature article, Patmore, who has co-authored A History of Australian Co-operatives 1827-2023, shares his insights into the challenges and opportunities for customer-owned banks, and how they can innovate and lead while staying true to their member-owned foundation.
The changing shape of the sector in Australia
Australia’s customer-owned banks were founded to provide financial services to communities underserved by traditional shareholder-owned institutions. Building societies offered housing finance, and credit unions provided personal loans, protecting members from exploitative practices.
“Loan sharks used to turn up to workplaces on payday to collect payment, and they usually had exorbitant loan rates. So, setting up a credit union was one way for hard-working Australians to protect themselves rather than relying on non-banks, loan shark institutions,” he explains.
In the last few decades, Patmore acknowledges the Australian mutual banking sector has been experiencing a wave of consolidation, primarily driven by the need for scale to handle escalating regulatory burdens and the demands of a highly competitive, oligopolistic market.
“Since the 1990s, the pattern of mergers has accelerated, shifting away from the localised credit unions that existed in factories and specific workplaces in the 1970s. While consolidation is often necessary for financial viability and to meet regulatory standards, customer-owned banks must protect the member voice in the organisation,” he says.
Balancing scale with mutuality
Yet, as customer-owned banks expand in size rather than numbers, they face a key challenge: balancing vast scale with the principles of mutuality.
In the UK, building society Nationwide is today one of the country’s biggest banks, and recently, there has been public debate over the mutual bank’s executive pay package.
“For customer-owned banks, the central question should be: ‘How do you link member ownership with member participation and member voice?’ For mutual organisations that grow significantly, preserving active member engagement is crucial. If this engagement is lost, the organisation risks becoming ‘member passive’, a condition that historically leaves the mutual movement vulnerable to de-mutualisation challenges,” Patmore explains.
He adds: “Some mutual banks, as they have grown, have introduced membership panels so they can actively listen to what their members think. So, it’s important to incorporate member perspectives to maintain the mutual identity.”
Increased awareness but lack of education
Awareness of the cooperative model is rising globally, with the UN declaring 2025 as the International Year of Cooperatives for the cooperative movement’s contributions to socio-economic development. At the same time, the UK Labour Party has committed to doubling the size of the mutual sector.
“I believe these developments have been important in raising wider awareness of cooperatives, and hopefully other governments think about actually positively supporting the movement,” Patmore explains.
However, a persistent challenge facing mutuals is the knowledge gap in education.
“Business schools often fail to teach alternative forms of business organisation beyond the traditional investor-owned model. Unless awareness of cooperatives and mutuals is raised through the education system from an early age, it will remain difficult to compete against the pervasive narrative of the traditional corporate model. This is the number one challenge for customer-owned banking sector and the wider cooperative movement,” he says.
Cooperatives in a digital world
In an increasingly digital world, Patmore says that trust is the key differentiator, especially concerning privacy and data protection.
“This is where customer-owned banks, with their fundamental commitment to their members, can truly stand out by guaranteeing safe and secure transactions,” he explains.
While technological advancements like AI continue to reshape the industry, Patmore believes most people still value personal touch and human interaction.
“Leaders must clearly articulate the benefits of adopting new technologies while simultaneously ‘keeping it real’ through human interaction and outreach services,” he says.
The future of customer-owned banks
In the highly oligopolistic Australian banking sector, Patmore contends that credit unions and mutual banks play an essential role by providing an alternative choice for consumers.
“Customer-owned banks fill gaps left by traditional banks, whether that’s looking after isolated, regional, or disadvantaged communities,” he says.
“The caring aspect is a long tradition of the cooperative movement broadly.”
His key advice for leaders of Australian customer-owned banks, particularly on ICU Day? Continuing to protect and prioritise member involvement.
“While ownership is the foundation, member participation is what adds unique value, giving members a right to a say or direct involvement in governance. This sustained engagement is the key for customer-owned banks to maintaining their identity and distinguishing themselves from shareholder-owned rivals. It’s about demonstrating that money is plowed back into the organisation for the member’s benefit, rather than flowing to anonymous shareholders,” he says.
Greg Patmore’s co-authored book A History of Australian Co-operatives 1827-2023 is available online to the cooperative and mutual sector for the purpose of teaching and research. A digital copy of the book can be assessed here.