I've written in the past about the interesting (and highly profitable) move by Australian Trade Unions into the "Superannuation" (wealth management/mutual fund/pension account) industry, to great success.
The "Industry Superannuation Fund" phenomenon continues to power on, expanding and gradually picking up market share from the commercial funds. But the basic idea has been "solved" and now they are looking for where to go next.
Since the superannuation funds don't actually do their own investment (they spread the money out to a collection of investment managers) and they have a highly trusting "captured" customer base (workers in unions) it makes a lot of sense for them to move into banking and leverage that trust to claw back profits that would otherwise go to bank shareholders.
Members Equity is a small Australian bank that is owned by a collection of industry super funds.
It is gradually forming into a full service conventional bank, offering regular accounts, mortgages, and all the other random products that a typical bank offers. But it also serves as a trusted manager for a portion of the super fund's investment cash, and because it's owned by them, all the profits from the bank get sucked back into the funds, and thus to the union (and other) workers.
While still small, it seems like an idea whose time has come. Banks have such a bad reputation for screwing over their customers, that having a bank that is (at a fairly high degree of separation) owned by the customers would mean good things for both the customers, staff morale, and the industry in general.
Now that my bank has been swallowed up by one of the "big four" (Australian competition law explicitly forbids the biggest four banks merging with each other, so those four have bought almost all the smaller banks between them) I'm wondering whether it might be worth moving...
My only concern is that about 4 times a year I need to go to a physical branch, and ME doesn't really HAVE any physical branches :/
Sound a tiny bit like BAWAG, a union-owned bank in Austria, that exploded a few years ago after the management (or rather the son of the CEO (or something)) lost a lot of money in some off-shore banking/betting scheme...
Re:BAWAG
Alias on 2009-04-07T01:00:57
Reading that link, I think the difference here is that this bank isn't DIRECTLY owned by the unions. The unions "recommend" that their members join the Superannuation Funds, but don't own them. The members own the fund. And then the bank is owned by the funds.
So there's a largely intact direct control link from the bank back to the actual workers. The unions act as a trust broker in the relationship, but they don't have direct control over the assets of their members, so there's no conflict of interest at that level either.
The mistake it seems that BAWAG had is that the control lines were too direct, and open to too many conflicts of interest.
This not too far removed from how the Co-Operative Bank started in the UK. The bank was largely started as an extension to the ideals started by local co-operative societies in the North West of England. Many of those societies were started by the local workers from mining and milling towns. The bank today now has a very strong ethical policy for anyone joining the bank, which has its origins in the way the societies wanted fair trade. Even businesses must sign an agreement before they can open an account and can have their accounts closed if they break the agreement (see Controversy under this link).
The biggest difference is that the bank isn't owned by the members directly. However, Birmingham Perl Mongers have been quite happy with the Co-Operative looking after our funds for several years now, as they look very favourably on non-profit organisations like ourselves
:-)
Re:Just in case you missed it...
Alias on 2009-04-07T08:51:25
Because our banking system generally is pretty strong (we've got 4 of the only 12 banks left with AA credit ratings) the government here has decided it's affordable to back them to the hilt.
So about 6 months ago they agreed to underwrite all of the loans for all the banks. It was for a fee of course, so they are serving mainly as a loan default insurer of last resort. That move stopped the collapse or forced merger of some of the smaller banks that were looking dangerous.
With that in place, plus the government's deposit insurance guarentees, the banking system is now pretty much insulated from the problems in the credit markets.
Hopefully that warning from last year no longer applies...