Mutuals don't appeal to young consumers

Mutuals have trouble attracting the business of young people, according to new research.

Finance industry researcher RFi found that that just 15 per cent of people aged 18 to 34 consider a mutual as their main financial institution, compared with 32 per cent of people in the same age group who consider a bank as their main financial institution.

RFi found that Commonwealth Bank has the highest proportion of MFI relationships in the 18 to 34 demographic, at 39 per cent, followed by Bankwest (37 per cent) and St George Bank (34 per cent).

RFi's managing director of advisory, Alan Shields, said the high level of customer satisfaction that mutuals enjoy means they have been able to hold onto their customers long term.

But they have not been able to attract young people.

Shields said one problem for the sector was that it did not offer the same level of digital banking service as banks.

He said many mutuals had increased their scale through mergers in order to be able to invest in their systems but the sector is still seen as a laggard in IT investment.

He said another problem was that only a small number of mutuals distributed their home loans through mortgage brokers.

The broker channel offers an opportunity to acquire younger customers, such as first home buyers, Shields said.

Several mutual chief executives have said that one reason for changing their status from a credit union or building society to a mutual bank was that their research told them that young people did not understand the role of a credit union or a building society.