Spotlight: bankmecu, a different kind of banking
bankmecu’s decision to become Australia’s first ever customer-owned bank is a direct response to the Australian Federal Government’s desire to see higher levels of competition across our country’s banking sector. bankmecu has decided to take up the Government’s challenge by adopting the business name bankmecu and seeking to appeal to people and community sector organisations who would not have otherwise considered banking with a Credit Union. It demonstrates recognition by Australian banking regulators of bankmecu’s work, over more than half a century, to create one of Australia's strongest mutually owned financial institutions.
Like the first ‘people’s banks’ created in Europe back in the 19th Century, bankmecu is about to embark on a journey offering Australians a responsible approach to banking where the customers own the bank.
bankmecu is a new kind of Australian bank. It will be accountable first and foremost to its customers. bankmecu will not exist to maximise profits for a group of external shareholders. Instead it will take a responsible approach to banking and maximise benefits and value for its customers and their communities. Profits will be owned by customers.
Spotlight: Customer value
This past year saw bankmecu achieve a record level of profit of $27.5m. This profit is owned by bankmecu’s customers and provides bankmecu's financial strength to continue to serve and benefit them.
bankmecu reserves now stand at $287.8m making bankmecu one of the strongest capitalised mutually owned financial institutions in Australia. This capital strength offers its customers security and the basis to deliver ongoing competitive benefits.
International rating agency Standard & Poor’s reaffirmed the Company’s investment grade credit rating. bankmecu was the first credit union in Australia and is amongst only a handful of credit unions from around the world to have been issued with a rating.
The benefits of being a bankmecu customer in competitive interest rates and fees has once more been independently assessed. This work is completed by Cannex Canstar who advised that if bankmecu customers had been banking with the 4 major banks over the last year then they would have been collectively worse off by an amount of $31m. To put that another way, bankmecu customers received some $31m in pricing benefits in 2010-11.
That worked out to be an average benefit of $231.60 per customer.
An area of bankmecu’s business being given attention is concentration of customer value. As new business is developed amongst organisations in the community sector, a greater proportion of total business value is being held by a smaller number of customers. bankmecu aims to achieve a greater spread of business value across a larger number of customers.
A number of bankmecu customers also have relationships with other banks. The opportunity is available to encourage these customers to conduct more of their personal banking business with bankmecu.
bank
mecu’s customer base is ageing and concerted effort must be given to finding new ways to encourage the next generation of customers to experience the more responsible approach to banking offered at bank
mecu. The decision to call ourselves bank
mecu, a customer-owned bank is part of this strategy to appeal to a group of people who otherwise would not consider banking with a credit union.
Spotlight: Responsible Banking
bankmecu has developed a reputation both nationally and internationally as being one of Australia's most successful mutual financial institutions combining leading economic performance with a strong commitment to sustainable development, high levels of customer satisfaction and a highly engaged corporate culture.
bankmecu has an ambition that its brand will represent leadership in responsible banking performance. For bankmecu the value in a responsible approach to banking is evident in two key ways. Firstly, by bankmecu investing its customers' money in ways which provide both an economic return as well as positive social and environmental outcomes. Secondly, by adopting a more responsible approach to banking shareholder value increases and the organisation’s long-term viability is enhanced. As the increased regulatory pressure on financial institutions around the world demonstrates, the global financial crisis resulted from a failure of responsibility amongst many of them.
bankmecu’s approach to banking reflects the attitudes and values of customers. As a customer-owned financial institution bankmecu is accountable to its customers. Listening to customers is essential. bankmecu’s stakeholder engagement and reporting processes are being constantly refined. A move towards more integrated reporting processes will further enhance stakeholder transparency and demonstrate the business case for acting more sustainably.
During last year's reporting period, bankmecu became a signatory to the UN Global Compact and the UN Principles for Responsible Investment. Aligning bankmecu’s business with these two international programs will assist it to work towards achieving best practice levels of performance.
Efforts this year were recognised in two important ways. Ethical Investor selected bankmecu as the Most Sustainable Small Company of the Year in 2010 and the Australian Reporting Awards recognised its 2010 Sustainability Report as the best report in Australia.
Spotlight: CUFA International Leadership Challenges
In 2010/11, four bankmecu representatives participated in CUFA International Leadership Challenges.
In July 2010, Simone Douglas and Jess Costello participated in the CUFA Cambodian Leadership Challenge, a 14-day cycling challenge providing participants a unique insight into Cambodian culture and providing the opportunity to develop connections with Cambodian communities and actively assist the Cambodian financial cooperative movement.
In April 2011, Derek de Vrieze and Jess Jetson participated in the CUFA Fijian Leadership Challenge a 14-day kayaking challenge, which provides participants with a valuable insight into Fijian culture, developing connections with Fijian communities and offering training and assistance to the Fijian financial cooperative movement.
Photo: Simone Douglas, Community Banking Manager with young students in Cambodia.
Spotlight: Responsible product development
Motor vehicle crashes are the single largest cause of death amongst males aged between 18 and 25 years of age. For this reason bankmecu has reviewed its approach to financing motor vehicles with its customers' funds and taken the decision that it would seek to encourage people to purchase the safest motor vehicles. This position complements mecu’s existing commitment to encourage people to also purchase more environmentally efficient motor vehicles via price signalling.
As a result, bankmecu will introduce lower interest rates on car loans which finance the purchase of the safest motor vehicles. Cars rated by The Australasian New Car Assessment Program (ANCAP) at 5 stars will qualify for the lowest rate of interest. ANCAP provides consistent information via a website about how well new car models protect their occupants in serious crashes. Cars are rated up to 5 stars (being the safest). http://www.howsafeisyourcar.com.au/
All bankmecu customers up to the age of 25 who finance the purchase of a car with bankmecu and insure it with Allianz will also be offered a $200 rebate off the cost of attending appropriately accredited Advanced Driver Training.
This product feature reinforces bankmecu’s responsible approach to banking and investing customer’s funds into financing motor vehicles for the least experienced drivers.
Spotlight: SMS/Email alerts
As part of its commitment to providing customers with convenient services, bankmecu introduced SMS/Email alerts to provide customers with the convenience of receiving automated alerts by SMS or Email. Customers can set up alerts to notify them of direct credits, direct debits, balances or balance thresholds.
This new service is expected to reduce the number of calls and balance enquiries thereby raising service levels in addition to providing an efficient service to customers.
Spotlight: Sustainability Superstar Awards
bankmecu’s inaugural Sustainability Superstar Awards took place in April 2010, with the reward trip in September 2010. These awards were a new staff recognition program developed by Footprints (the staff representative reference group for sustainability).
The eight 2010 bankmecu Sustainability Superstars and their award categories were:
- Damien Richmond - Social Improvement
- Allison Jerome - Building Partnerships with Individuals/Organisations
- Anthony Heinemann - Environmental Improvement
- Suzanne Bezencon - Economic Improvement
- Zoe Gaylard - Environmental Improvement
- Jodie Geyer - Outstanding Leadership
- Rebekah Watson - Environmental Improvement
- Jason Trionfi - Building Partnerships with Individuals/Organisations
All winners were given the opportunity to visit the bankmecu Conservation Landbank, enjoy an Awards Dinner and also attend the Wimmera Region Biodiversity Seminar.
bankmecu’s Sustainability Superstar Awards is supported by Allianz, who generously meet the costs of the program.
Photo (left to right:) Damien Richmond, Mrs Brady (Kowree Farm Tree Group), Adam Blake (Trust For Nature), Andrew Brady (Kowree Farm Tree Group), Steven Lynch (bankmecu), Jason Trionfi, Anthony Heinemann, Allison Jerome, Suzanne Bezencon, Justin Glass (Trust for Nature), Robert Allen (bankmecu), Martine Raskall(Allianz).
Find out more about the awards and an update on the 2011 winners.
Spotlight: Carbon neutrality
bankmecu met its strategic objective to achieve carbon neutral operations for 2010/11 by making energy efficiency improvements and purchasing residual emission offsets through Climate Positive.
Climate Positive is a reputable not-for-profit organisation providing National Carbon Offset Standard (NCOS) approved credits. Climate Positive offsets are additional to Australia’s commitment under the Kyoto protocol and have a renewable energy component (i.e., wind farm-derived Voluntary Carbon Standard (VCS) or Gold Standard credits).
Climate Positive wind farm projects achieve greenhouse gas emission reduction by replacing fossil fuel fired power plants in the grid, thus reducing fossil fuel consumption and avoiding pollutant emissions. In addition, investment in wind farm projects in developing countries provides job opportunities for local people, improves their standard of living, reduces reliance on fossil fuel and stimulates economic growth.
As an inbuilt offset feature, Climate Positive also partners with Trust for Nature to plant trees on covenanted properties for the purpose of restoring biodiverse resilient ecosystems within Australia. For every tonne offset with Climate Positive, 4m2 of biodiverse vegetation is restored in Victoria.
Climate Positive was the only not-for-profit organisation ranked ‘outstanding’ in The Total Environment Centre and Choice Magazine’s Carbon Offset Watch.
bankmecu’s carbon neutral operations commitment is in addition to bankmecu’s goGreen Car and Home loans which provide energy efficiency incentives and vehicle emission carbon offsetting through bankmecu’s Conservation Landbank.
Spotlight: bankmecu Landbank activity
In 2011, bankmecu increased its Conservation Landbank on behalf of members to 657 hectares (about 90 Melbourne Cricket Grounds), with the acquisition of 220 hectares adjoining the existing Minimay property purchased in August 2008.
bankmecu now has three properties in its Conservation Landbank; 201 hectare Minimay, 236 hectare Ozenkadnook (Judith Eardley Wildlife Reserve) acquired in May 2010 and newly acquired 220 hectare Minimay North.
Similar to the 201 hectare Minimay property, this parcel of land is significant for its conservation assets such as Buloke woodlands which support the rare Red-tail Black Cockatoo. In addition, the Landbank also hosts the Golden Sun Moth, Growling Grass-frog and Striped Legless Lizard.
The 2010-11 planting season:
Throughout 2010/11, the Kowree Farm Tree Group worked with local community groups to plant trees on bankmecu's Minimay property. Community groups use the planting as a fundraising activity for their organisation. For each stem they plant, they receive 30 - 40 cents. During the 2010/11 planting season, 16,000 trees were planted at Minimay.
Community groups involved in clean-up activity, ripping and plantings included Edenhope Girl Guides, Goroke Apex Club, St Malachy’s Parents Group, Edenhope Apex Club and Goroke College.
Feedback from the local community has been positive, with money raised going back into the community. For example, funding has gone into the bowling club, golf club, caravan park and swimming pool.
Dale from Goroke Apex says ‘Goroke Apex get involved because it is local, financially rewarding, easy and seems to work’.
Spotlight: ACF New Economics Program
bankmecu has partnered with the Australian Conservation Foundation to assist it with its ‘New Economics Program’. This work involves research in the areas of building a clean economy, ecological evaluation and measuring genuine progress, to better promote human wellbeing in an ecologically sustainable way.
The partnership aims to advance practical, achievable improvements in economic theory and practice to better promote human wellbeing in an ecologically sustainable way. It will focus on specific projects in the following three areas:
Valuing our environment.
Our environment has intrinsic value and produces specific, measurable benefits to our economy and communities. If we ignore these values, we will risk undermining the very basis of our economic prosperity.
Measuring genuine progress.
In wealthy countries, increases in material wealth are no longer generating improvements in actual human wellbeing, and the overemphasis on economic growth has obscured the decline in environmental, social and cultural integrity.
Building a clean economy.
Environmental goals have often been seen as opposed to economic efficiency and competitiveness. But a growing body of evidence suggests the opposite is true and that we can build a cleaner and more prosperous economy for Australia.
Spotlight: Stakeholder engagement
bankmecu believes that many social, environmental and economic issues will be better addressed when the corporate, community and government sectors combine their respective skills and resources in a cooperative way.
Consequently bankmecu sees that it has an important role to play bringing each of these parties together through a process of stakeholder engagement to consider and discuss a number of issues that are impacting our communities and environment. This process of stakeholder engagement allows bankmecu to better understand issues of material importance to our own business and enables bankmecu to make better and informed choices about how and where to invests either customers' money or Community Investment funds.
In July 2010, bankmecu held a stakeholder engagement session focused on how the community housing sector can move beyond a welfare approach in order that housing be regarded as part of the nation’s critical infrastructure. This event was attended by key representatives from government, the community sector, business and academia.
It was highlighted at this event that while the benefits community housing provide are well understood, including increased education, health and employment outcomes, this understanding had not been quantified by research in the form of a measurable social return on investment. Following the engagement session, bankmecu worked with the Community Housing Federation of Australia, PowerHousing Australia and the NetBalance Foundation to undertake a project to measure Social Return On Investment (SROI) in the community housing sector across Australia.
This research will be launched in September 2011 and will be made available to all interested parties in an effort to help build the case for greater investment into community housing. bankmecu is encouraged to see individual community housing organisations are also looking at conducting their own SROI studies. Of particular note, bankmecu customer Victorian Women’s Housing Association was recently awarded for an SROI study it conducted on their business.
Spotlight: Kyabra Community Association LivingIn Program
The LivingIn Independent Living Project works with families who have an adult son or daughter with a disability to design and construct housing that enables a move to more independent living.
The Stewart family have been involved with the LivingIn Independent Living Project since its inception in 2009. The family has had links with Kyabra Community Association for more than 15 years. Terri Anne Stewart is in her early thirties and has intellectual and physical disabilities. Her parents, Terry and Carol, have a vision for the future that involves Terri Anne moving into a place of her own in the community with support from them and other family members. They believe this support will enable her to form links and friendships with her neighbours and with other people in the local community, and will help her to gain some level of independence.
The LivingIn Independent Living Project represents a unique and innovative model of design and construction that enshrines concepts of participation, sustainability and positive social outcomes
bankmecu will continue to support housing for the disabled through a project developed in partnership with Foresters Community Finance and Kyabra Community Association. This project will seek to provide a financial model to assist families, like the Stewarts, provide housing that will enable people with a disability to live independently.
Spotlight: Regional development
Following the merger with RegionalOne Credit Union, bankmecu became Victoria’s largest financial cooperative. With its head office based in Kew it would be easy to assume the majority of bankmecu’s Victorian business would be in Melbourne. However, around 51.10% of bankmecu’s Victorian banking business is conducted by customers who live in regional Victoria.
As a result, bankmecu believes it is necessary to support partnerships between community groups and key regional stakeholders which provide strategic and targeted responses to economic, environmental and social issues affecting regional communities and economies.
Through the Community Investment Program bankmecu has invested in a number of regionally focused initiatives and organisations in 2010/11 including:
- Committee for Gippsland
- Committee for Ballarat
- Bendigo Business Council
- Community Foundation for Bendigo and Central Victoria
- Bendigo Sustainability Group
- Commerce Ballarat Business Awards
- Loddon Murray Community Leadership Program
bankmecu’s support in this area not only demonstrates bankmecu's commitment to these communities, it also allows bankmecu to play an active role in helping determine the future direction of these regions.
bankmecu provided support to establish the Committee for Gippsland as an initial investor and subsequently played a role in establishing and participating on the interim Committee. bankmecu is representing its business interests on the Committee for Gippsland as well as the interests of its customers in Gippsland and the broader community and environment.
Spotlight: VCOSS Clearinghouse
A strong community sector is vital to the sustainable development of Australian society. In order to help support the professional development of people employed within the community sector in Victoria, bankmecu has committed funds to assist in developing the Victorian Council of Social Service (VCOSS) Clearinghouse. The VCOSS Clearinghouse aims to encourage train and develop practitioners employed in the community sector.
Specifically, bankmecu is working with VCOSS to develop a finance network. The aim of this network is to increase skills through collaboration and information exchange between community based organisations at the operational level. The first Finance Network meeting held in June 2011 attracted around 50 people, with guest speaker Saul Eslake of the Grattan Institute discussing the impacts of Federal and State Budgets on the community sector.
Spotlight: Integrated reporting
For some time bankmecu has demonstrated its strong commitment to developing its Sustainability Reporting. Accuracy, transparency and accountability are fundamental to communicating performance on material issues of importance to stakeholders.
bankmecu believes the true value of reporting is yet to be realised and that reporting requires a much clearer correlation between sustainable development and the creation of long-term shareholder value.
bankmecu now intends to take its reporting one step further. It aims to move towards a more integrated form of reporting to bring together both bankmecu’s financial and non-financial results and performance. It is bankmecu’s aim to ensure reporting provides even clearer context for performance data, clarifies how sustainability fits into the business and makes the case clear as to why all businesses - and in particular all mutually owned financial institutions - should embed sustainability into their decision making.
This work has commenced in partnership with Net Balance. In 2011 bankmecu aims to produce its first fully integrated annual report.