Shared services the way forward for mutuals 19 November 2014 4:28PM John Kavanagh The alliance between Bendigo and Adelaide Bank and four credit unions announced on Monday is the first of a number of different shared services arrangements that will reshape the mutual finance sector, according to a leading industry consultant.National head of mutuals at KPMG, Peter Russell, said a number of global IT companies, as well as some local service providers, have been in talks with mutuals about shared services arrangements covering such areas as account opening and maintenance, loan processing and servicing and branch services.Russell said: "Support companies have got the big end of town covered and they are turning their attention to the smaller players. The consolidation in the mutual sector makes it more attractive for big IT companies to do business there."We will start to see some of these things emerge in the next 12 to 18 months."On Monday Bendigo and Adelaide Bank announced it would take over the authorised deposit-taking institution role for AWA Credit Union, Berrima District Credit Union, Circle Credit Cooperative and Service One Credit Union.The credit unions will become franchise businesses of Bendigo and Adelaide Bank.KPMG's latest survey of mutual financial institutions highlighted the pressures on credit unions and other mutuals to rationalise their operations.The average cost-to-income ratio of the mutuals surveyed was 78.7 per cent in 2013/14. Net profit in the sector was down by an average of 1.5 per cent during the 2013/14 financial year.The KPMG report said: "Mutuals have a real choice to make as a sector: continue to operate as individual small businesses or achieve scale benefits by operating collaboratively and by facing the market with a unified value proposition."With the rapid move to digital banking, mutuals are investing in their technology base along with all competitors in the financial services industry. Larger organisations are able to access economies of scale to reduce technology costs."Collaboration will allow the mutual sector to work together to advance their information technology at a more efficient rate."The acting chief executive of the Customer Owned Banking Association, Mark Degotardi, said: "Our industry recognises the need to collaborate, share services and make further investments in technology and innovation."As an industry we have already identified these areas as critical to our future success."