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Non-Listed Banking Models

Published: 2009

Non-Listed Banking ModelsThe banking community is currently the subject of a level of public vitriol, that was unimaginable only a few years ago.

 Against this background and with several financial players status' changed to that of semi-nationalised entities, the public at large is questioning the role of the banking industry and many of its operating practices- not least the executive rewards.

This report concerns itself with the provision of ‘retail banking services’ through institutions owned by members, communities (on and off-line) or municipalities.

To purchase this report, or to request a report summary or list of case studies, call Jeannie on +44 (0) 207 563 5640 or email


This new research report will effectively demonstrate the provision of retail banking services through member-owned institutions, including:

  • Building societies, co-operative banks, credit unions, community banks and social networking sites 
  •  Business models and basis of ownership
  • The link between the business and their constituencies
  • Brand values

As the banking sector seeks to recover from the fall out from subprime and restore the trust and credibility of key stakeholders- real lessons in vision and a broad range of best practice can be gained from studying the new and established players in non-listed banking models.


To purchase this report, or to request a report summary or list of case studies, call Jeannie on +44 (0) 207 563 5640 or email


This report concerns itself with the provision of ‘retail banking services’ through institutions owned by members, communities (on and off-line) or municipalities. The institutions examined include building societies, co-operative banks, credit unions, various types of community banks and social networking sites. The business models and basis of ownership vary, but a strong common ethos exists linking the differing institutions directly to their constituencies. And there is increasing evidence that the members and constituents of these types of institutions are placing an increasing value on their distinctive brand values.


This report considers the areas in which these types of institutions have found particular success, often to the standard of international best practice. It also looks at issues and areas of contention related to their respective business models and situations. Many of the organisations considered by this report have historic origins that still influence some aspect of the way in which they do business, and this factor is also taken into account. The Overview introduces the respective business models and issues that surround them, for example, the issue of demutualisation that has concerned the sector for much of the last three decades.


This section reflects a UK building society movement that has been hit hard by demutualisation over the last 20 years, but has now entered a period of renewed growth and greater appreciation for the mutual ethic. This positive trading climate is further enhanced by a supportive legislature, and strong support from the Building Societies Association. The case studies of the Nationwide building societies offer insights into many areas of best practice. These include the primacy of membership, member rewards, co-operation between mutuals and leading-edge approaches to staff engagement and culture. At the time of writing the UK building society movement seems to have coped more successfully with the credit crunch and recession than the ‘mainstream’ banking community.


The business model that delivers this type of banking can vary significantly by market, and origins. In the US, the majority of such banks are member-driven mutuals, and operate as members of the organisation, America’s Community Bankers. The German Sparkassen model is accountable to community stake- holders, and is organised at national level through the Deutscher Sparkassenund Giroverband (the German Savings Bank Association, or DSGV). These local ‘savings banks’ have long since matured as full retail banking operations, but have retained their local catchments and orientation. The model supported and promoted by Bendigo Bank in Australia is based on a joint venture with the community through a specially-constructed corporate vehicle. Across all models, the underlying principle of community stakeholding and influence is the common factor.


The co-operative banking sector shares strong common principles rooted in the mid-19th century. The European Association of Co-operative Banks (EACB) represents nearly 4.600 member institutions to the European Union from its Brussels-based  offices. The case studies included in this section of the report are distinctive and contrasting. Rabobank in The Netherlands is the central banking  organisation for 188 local co-operative banks located across the country. The strong agricultural history and associations are reflected in the commercial activities through which it leverages this experience and its resources in other countries. The Co-operative Bank in the UK enjoys direct lineage from the origins of the movement and was formed in 1872 to support the retailing arm and associated production activities. It operates as a domestic bank but also offers a showcase of best practice in the application of ethics and concern for the environment within financial services.


While the players in this sector are diverse in both size and nature, they are linked by strong principles. Credit Union Australia is the largest union in Australia, with assets of over A$2 billion and approaching 400,000 members. Members and Ed- ucation Credit Union (mecu), also from Australia, was formed from a merger of

23 smaller organisations in 2003, and exemplifies growth through merger. It has also entered into a covenant with the State of Victoria’s environmental authorities as part of its major commitment to environmental sustainability under a United Nations programme.


‘Peer-to-peer’,  ‘person-to-person’,  lending is a means by which borrowers and lenders can transact directly without traditional financial intermediaries such as banks. P2P lending has two basic models – the ‘online marketplace’ model and the ‘friends and family’ model. The model was the subject of much media com- mentary through 2007 and renewed discussion since the incredibly successful use of online fund raising by President Obama during his Presidential campaign.


This report has taken a snapshot of the state of the mutuals,  community banks and peer to peer sites in major markets across the world.

It has found much to applaud in the management and principles of the business models. An aggregation of best practice, drawn only from the case studies within this report, would provide an industry-leading model through which to offer re- tail financial services in the 21st century. While animosity towards the sector may well continue in some markets, a key insight from this report is that there is also much to learn from the innovatory work of mutuals and community banks. The distinctive positioning of these types of institutions is increasingly appreciated and valued by their members and constituents.

The findings of this report illustrate the extent to which these types of organisa- tions enrich the retail financial services sector by offering a real alternative to clients across all the major segments.


Part 1

Executive summary


Part 2: The building society sector

Chapter 3: The UK building society sector

Chapter 4: Nationwide Building Society, UK

Chapter 5: The Australian mutual sector: An overview of associations and service companies

Chapter 6: Heritage Building Society, Australia

Chapter 7: Newcastle Permanent Building Society, Australia


Part 3: Community banks

Chapter 8: Community banking in the US

Chapter 9: Community banking in Germany

Chapter 10: The German Sparkassen


Part 4: Co-operative banks

Chapter 11: The European co-operative banking sector

Chapter 12: The Rabobank Group, The Netherlands

Chapter 13: The Co-operative Bank, UK


Part 5: Credit unions

Chapter 14: Members and Education Credit Union, Australia

Chapter 15: The US credit union movement

Chapter 16: The US credit union movement service corporations

Chapter 17: Delta Community Credit Union, US


Part 6: P2P Lending - A Disruptive Innovation in Consumer Lending?

Chapter 18: Peer to Peer Lending

Chapter 19: Players in Operation

Chapter 20: P2P Lending as a Disruptive Innovation

Chapter 21: Delivering Better Rates Through Greater Efficiency

Chapter 22: Offering a More Satisfying Customer Experience

Chapter 23: The ‘Long Tail’ of the Consumer Loan Market

Chapter 24: Leveraging Social Networking Tools to Scale Relationship Lending

Chapter 25: The Trend Towards Transactional Lending

Chapter 26: Hybrid Models – Blending P2P and Traditional Lending

Chapter 27: The Business Case for Banks

Chapter 28: Competing With P2P Lending


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