Non-Listed Banking Models
VRL Financial News Publishing, March 2009, Pages: 219
The 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 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
Summary of contents
Why read this report?
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.
Building Societies
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 including: 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.
Community Banks:
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 account-able to community stakeholders, 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.
Co-operative Banks
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, featuring; Rabobank, The Netherlands and the Co-operative Bank, UK.
Credit Unions:
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 Education 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.
Chapter 1: Executive summary
SCOPE
PART 1: Introduction
PART 2: Building societies
PART 3: Community banks
PART 4: Co-operative banks
PART 5: Credit unions
PART 6: Social networking and banking – an innovation?
Conclusion
Part 1: Introduction
Chapter 2: Overview
The scope of this report
The business models
Building societies
Co-operative banks
National Agricultural Co-operative Federation, South Korea
Credit unions
Community banks
Heightening competition
The arguments
The Golden I Credit Union – quantifying member benefits
Global best practice
A history…and a future!
Lafayette Federal Credit Union, Maryland, US
Conclusion
Part 2: The building society sector
Chapter 3: The UK building society sector
Introduction
A new era
The building societies association
Society-member relationships
Demutualisation – the debate
Conclusion
Chapter 4: Nationwide Building Society, UK
Preamble: before ‘Nationwide’
Nationwide: Proud to be different
The world’s largest building society
Merger activity
Members and customers
Defending its mutual status
Mutually-orientated channel strategy
Helping colleagues…to help members
Investing in colleagues
The evolving business model
Building for the future
Chapter 5: The Australian mutual sector: An overview of associations and service companies
Abacus – Australian Mutuals
Cuscal
Indue
Chapter 6: Heritage Building Society, Australia
Background
Financial and operational strength
Product delivery
Member and customer relationships
The Heritage community branch model
Crow’s Nest community branch
Compliance and the Heritage
Conclusion
Chapter 7: Newcastle Permanent Building Society, Australia
Background
The Newcastle today
Delivery channel development
Products
Returning value to members and communities
Conclusion
Part 3: Community banks
Chapter 8: Community banking in the US
Background
Mutual holding companies
America’s Community Bankers
Demutualisation
The issue of taxation
Conclusion
Chapter 9: Community banking in Germany
Introduction
The savings bank finance group management structure
Group businesses
Maintaining a strong financial base
A customer for life
The Mittelstand – at home and abroad
In the community
Conclusion
Chapter 10: The German Sparkassen
A major force
Branch innovation
Accommodating the young consumer
Sophisticated self-service facilities
Community first!
Part 4: Co-operative banks
Chapter 11: The European co-operative banking sector
Size, strength and diversity
The European Association of Co-Operative Banks
Membership and objectives
The EACB at work
The Crédit Agricole group
Raiffeisen Zentralbank Österreich Ag and Raiffeisen International
Unico banking group
Conclusion
Chapter 12: The Rabobank Group, The Netherlands
Background
The origins of Rabobank
Today’s Rabobank
Group strategy 2005-2010
Membership development
Delivery channel strategy
Conclusion
Chapter 13: The Co-operative Bank, UK
A democratic ownership
The recent growth of the bank
Co-operative Insurance
Laying the foundations
Co-operative banking principles
Profit generation to create a sustainable model
Market-leading colleague satisfaction
Market-leading customer satisfaction
Market-leading social responsibility approach
Membership growth
Co-operative banking in practice
Ethical finance
Financial inclusion
Environment
Conclusion
Part 5: Credit unions
Chapter 14: Members and Education Credit Union, Australia
Background
Employee focus
A differentiated credit union
The mecu sustainability strategy
Looking to the future
Chapter 15: The US credit union movement
Origins and growth
The credit union national association
The CUNA Mutual Group
Tax-exempt status
Conclusion
Chapter 16: The US credit union movement service corporations
The developing credit union service organisations
Credit Union Service Corporation
CO-OP Financial Services
PSCU Financial Services
Continued evolution
Chapter 17: Delta Community Credit Union, US
Delta Airlines: the employer
The credit union
History and the broadening franchise
Delivery channels
Looking to the future
Part 6: P2P Lending: A Disruptive
Innovation in Consumer Lending?
Chapter 18: Peer to Peer Lending
A brief introduction:
Chapter 19: Players in Operation
Zopa UK
Web site: www.uk.zopa.com
Operating model
Business model
Partnership opportunities for banks
Zopa USA
Web site: http://us.zopa.com
Background
Operating model
Business model
Partnership opportunities for banks
Zopa Italy
Web site: www.zopa.it
Operating model
Business model
Partnership opportunities for banks
Prosper – USA
Operating model
Defaults
Business model
Partnership opportunities for banks
Lending Club – USA
Web site: www lendingclub.com
Operating model
Business model
Partnership opportunities for banks
Virgin money USA
Web site: www.virginmoneyus.com
Operating model
Business model
Partnership opportunities for banks
Kiva – USA
Web site: www.kiva.org
Background
Operating model
Business model
Partnership opportunities for banks
MicroPlace – USA
Web site: www.microplace.com
Background
Operating model
Business model
Partnership opportunities for banks
Duck9 – USA
Web site: www.duck9.com
Operating model
Business model
Partnership opportunities for banks
Boober Netherlands
Web site: www.boober.nl
Background
Operating model
Business model
Partnership opportunities for banks
Boober – Italy
Web site: www.boober.it
Background
Operating model
Business model
Partnership opportunities for banks
smava - germany
Web site: www.smava.de
Background
Operating model
Business model
Partnership opportunities for banks
MyC4 – Denmark
Web site: www.myc4.com
Operating model
Business model
Partnership opportunities for banks
Loanland – Sweden
Web site: www.loanland.se
Operating model
Business model
Partnership opportunities for banks
Kokos ˜– poland
Web site: www.kokos.pl
Operating model
Business model
Finansowo – poland
Web site: www.finansowo.pl
IGrin – Australia
Web site: www.igrin.com.au
Operating model
Business model
Partnership opportunities for banks
PPDai – China
Web site: www.ppdai.com
Background
Operating model
Business model
Partnership opportunities for banks
Korean players
MoneyAuction
Web site: www.moneyauction.co.kr
Operating model
Business model
Partnership opportunities for banks
FirstHand
Web site: www.firsthand.co.kr
Popfunding
Web site: www.popfunding.co.kr
Olive Auction
Web site: www.oliveauction.co.kr
Germany’s ‘classified ad’ services
Auxmoney
Web site: www.auxmoney.com
Money4Friends
Web site: www.money4friends.de
Elolly
Web site: www.elolly.de
Ongema
Web site: www.ongema.de
Chapter 20: P2P Lending as a Disruptive Innovation
Chapter 21: Delivering Better Rates Through Greater Efficiency
The marketing challenge for P2P lending
How competitive are P2P lending rates?
UK
USA
Chapter 22: Offering a More Satisfying Customer Experience
Disillusionment with banks as a driver of P2P lending
Social interaction and the ‘fun factor’ as drivers of P2P lending
Philanthropy and ethical investing as drivers of )P2P lending
Chapter 23: The ‘Long Tail’ of the Consumer Loan Market
Customising products
Flexible loan amount
Flexible interest rates
Floating rates
Revolving credit
Variable loan terms
Flexible repayment schedule
Multiple payment options
Secured loans
Co-signers/ guarantors
Early repayment penalties
Interest only loans
Customising credit approval criteria
Chapter 24: Leveraging Social Networking Tools to Scale Relationship Lending
Creation of a borrower-lender community
Prosper case study: the challenges of managing an online community
Personalised loan listings
Lending Club’s LendingMatch™ technology
Prosper’s endorsements system
The potential of online reputation scoring
Chapter 25: The Trend Towards Transactional Lending
Growth requirements and current growth trends
Does P2P lending have the same growth upside as eBay?
Consumer finance as driver of growth
Credit card consolidation as a driver of growth
The credit crunch as a driver of growth
Chapter 26: Hybrid Models – Blending P2P and Traditional Lending
The field partner approach
Prosper Group leaders as field partners
P2P lending in credit counselling programmes
The friends and family approach
Partnering with financial institutions
Referral partnerships
White label partnerships
Distribution partnerships
Chapter 27: The Business Case for Banks
Chapter 28: Competing With P2P Lending
- Zopa UK
- Zopa USA
- Zopa Italy
- Lending Club - USA
- Virgin money USA
- Kiva - USA
- MicroPlace - USA
- Duck9 - USA
- Boober Netherlands
- Boober - Italy
- smava - germany
- MyC4 - Denmark
- Loanland - Sweden
- Kokos ˜- poland
- Finansowo - poland
- IGrin - Australia
- PPDai - China
- MoneyAuction
- FirstHand
- Popfunding
- Olive Auction
- Auxmoney
- Money4Friends
- Elolly
- Ongema
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