Merged mutual aims for big four

The head of Australia’s largest mutual lender is throwing down the gauntlet to the big four banks, promising a more aggressive customer acquisition strategy in order to build the scale needed to keep up with critical investments in artificial intelligence and digital technologies.

A year since the merger of People’s Choice Credit Union and Heritage Bank, the merged group’s chief executive Peter Lock is overseeing the rollout of a new brand – People First Bank – before handing over to Steve Laidlaw, who previously ran the People’s Choice business out of Adelaide.

Mr Lock, who headed the Heritage Bank for seven years before the merger last March, said the ambition was to create a “new iconic national mutual” that would compete head-on with the big four banks.

People First is Australia’s largest customer-owned lender, with 740,000 members and $24.6bn in assets.

Mr Lock said the goal was to reach 1 million members by 2030, as the organisation looked to scale up and provided a “counterbalance” to the big four.

“To go from 740,000 to a million, it can’t all be done organically – some of that has got to be done by merger and acquisition,” he said.

“There is going to be consolidation within the sector – there has to be due to the increased cost of digitisation, and the investment required in technology to have contemporary, modern and secure products. An enormous amount of capital investment is required.

“Scale is an obvious answer to that, and you saw that argument being proffered by Suncorp with their sale to ANZ. It’s the same argument in the customer sector.”

With Heritage Bank’s roots in Queensland and People’s Choice’s footprint extending from South Australia into the Northern Territory, Mr Lock said there were opportunities for the merged company to expand more aggressively into NSW, Victoria and WA.

Heritage and People’s Choice on Monday reported a net profit after tax of $31m in the six months to December.