News

United Nations has declared 2025 as the International Year of Cooperatives (ICY2025) under the theme Cooperatives build a better world.

ICY2025 aims to shine a spotlight on the unique contributions of cooperative enterprises, including financial cooperatives.

But what exactly are financial cooperatives, and how do they differ from traditional banks?

What is a financial cooperative?

Financial cooperatives – or customer-owned banks – are financial institutions that are owned and controlled by their customers/members.

Unlike traditional banks, where profits go to external investors, customer-owned banks reinvest profits to benefit their customers and the communities they serve.

As customer-owners, members of financial cooperatives benefit from better services and competitive rates, while also supporting a banking model that invests in their communities.

The history of financial cooperatives in Australia

Financial cooperatives have a long history in Australia, dating back to the 1840s.

When investor-owned banks said no to hard-working people looking to borrow, groups of like-minded workers and communities came together to create credit unions, mutual banks and building societies. From teachers and nurses to police officers, customer-owned banks emerged to serve communities.

As the original peer-to-peer lenders, customer-owned banks continue to be deeply committed to serving their communities.

The cooperative advantage

Customer-owned banks reinvest profits to benefit their customers-owners through market-leading services, competitive rates and community support.

The May 2024 Roy Morgan Customer Satisfaction survey showed COBA members had significantly higher scores than the Big Four – 89.5% for the customer-owned banking sector as a whole, compared to 75.4% for the Big Four banks.

Research also shows that members of customer-owned banks enjoy lower interest rates on home loans and attractive rates on savings accounts.

Deeply rooted in their communities, customer-owned banks actively support local initiatives and charities. In the last financial year, customer-owned banks gave to their communities at a rate nearly nine times higher than the major banks.