The industry-wide crunch on fee income in the last 12 months has eroded the bottom line returns of one of Australia's largest customer-owned deposit takers, People's Choice Credit Union.The Adelaide-based mutual suffered a 2.8 per cent decline in net profit to A$32.1 million in the 12 months to the end of June after the bank wrote down the carrying value of its national fleet of automatic tellers.People's Choice removed all fees on its 70 ATMs, which wiped out around $6 million from its fee income line.The slide in ATM revenue marred an otherwise solid operating result, which was highlighted by tight cost control and market share gains in retail lending and deposits.People's Choice expanded its national loan book by more than $400 million or 6 per cent to $7.27 billion.While the credit union remains heavily exposed to the South Australian banking market, managing director Steve Laidlaw said the push into the Victorian home loan and deposits markets was yielding material growth for the organisation.About 62 per cent of the mutual's loan base is exposed to South Australian borrowers but Laidlaw has embarked on an aggressive pitch to put the lending business on a national footing."Almost half of our loan growth came from Victoria last year and we believe that will continue," he said."We now have eight branches, including two home loan centres in Victoria and we are seeing a significant increase in exposure for our brand through targeted marketing and our major sponsorship of the Western Bulldogs in the AFL.""We would like to see a more even distribution of our loans across Australia."Laidlaw said the credit union was aiming to originate the bulk of its new business through proprietary channels, rather than third parties.While some customer-owned providers are now mostly dependent on mortgage brokers to source new borrowers, Laidlaw said People's Choice was philosophically committed to expansion through direct relationships with customers.Digital banking is driving customer acquisitions, with more than 21,000 new members opening deposit accounts last year.People's Choice is trying to position itself as a "millennial brand" and is investing heavily in new mobile banking platforms to strengthen its appeal to the customer segment."The real focus of our organisation is on digital transformation," said Laidlaw."Our digital transformation is aimed at millennials who are the most valuable customer segment and expect to be able to do everything through a smartphone."Laidlaw, who also sits on the CUSCAL board, revealed that CUSCAL planned to white-label parts of the 86 400 mobile banking platform to customer-owned banks and credit unions.Some credit unions have raised concerns that as a stand-alone start-up bank     86 400 has the potential to cannibalize customers using mobile platforms offered by CUSCAL affiliates."If we worry about 86 400 cannibalizing then we're really losing sight of the bigger picture," Laidlaw said."We're supportive of 86 400 as an investor in CUSCAL - it's CUSCAL's intention to white label some of the APIs and make those available to members of the mutual sector."Laidlaw also revealed that his credit union's procurement joint venture with