Polaris Management Consulting

From community banking to community building – the next horizon of purpose for mutual banks in Australia? In his 2021 letter to JP Morgan & Chase shareholders, Jamie Dimon outlined a vision to shift banking beyond the 'vanilla' to cater more to the unique needs of minority communities 🌍. Australia's mutual banks, traditionally the heartbeat of community banking, are at a crossroads 🚦. Digitisation, rising costs of banking, consumer preferences, and regulatory pressures challenge their sustainability 📉. But mutual banks have an opportunity to evolve from being just banks in the community to being community builders 🏗️. By orchestrating member value through partnerships with third parties, mutual banks can tailor services directly to their communities' needs 🤝. Three strategic actions are essential: 1️⃣ Deep Dive into the Community: Identify and intimately understand the community's needs and financial well-being milestones 🎯. 2️⃣ Strategic Partnerships: Collaborate with third parties that offer something valuable and aligns with the bank's mission and community focus 🤝. 3️⃣ Evolve and Innovate: Continuously enhance services to boost member experience and equity 🌱. As an illustration, consider Teachers Mutual Bank (TMB)'s 'one-stop-shop' travel services🌐. Currently, this offers travel money services, but imagine integrating more comprehensive travel services, amplifying value to members with travel needs - the bank not only manages your finances but also enriches your travel experiences ✈️🏖️. (I'm not suggesting this is a good idea for TMB - just a 'what-if' illustration.) Technology that enables greater collaboration at the product level is more accessible 💻, business process interoperation is becoming more standardised 🔄, and the ecosystem business model is more understood 🌐 (more on this in another post!). So the barriers are lower. 🚧➡️🔓 Mutual banks already hold a position of trust within their communities. By transitioning to the role of community builders, they could secure their place as central pillars of their communities 🏦 ➡ 💡. #customerownedbanking Polaris Management Consulting #ecosystems #partnerships #communitybuilding

2023 was the year AI mesmerised the world (and scared a few of us) - what could it mean for mutual banks? 🌍🤖 [ 👇 post your thoughts - what are you seeing?] As industries and societies grapple with AI's implications, Accenture notes that banking is at the forefront of potential impact, with processes ripe for transformation. McKinsey goes further, suggesting a transformation of the banking business model. And cnvrg.io’s ML Insider 2023 survey indicated that financial services and banking are among the industries leading AI adoption (number of machine learning models in operation). 🏦💡 Banks have used AI for some time, from fraud detection to guiding bank tellers on customer conversations. But the transformation journey has only just begun and banks are likely to experience AI impact across: customer experience and services; risk management and compliance; product development and innovation; operational efficiency; marketing and personalisation; content synthesis and generation; and strategic integration. 🔄📈 For mutual banks, we think four really matter. 🌟 Customer Service Enhancements: Mutual banks excel in community-focused services. AI can take this up a notch by providing more personalised and efficient service, making banking even more member-centric. 🏦💡 🚀 Boosting Operational Efficiency: With cost-to-income challenges, mutual banks can leverage AI for automating routine decisions & tasks. This shift would allow staff to concentrate more higher-value activities like enhancing service quality. 🤖⚙️ 🛡️ Advancements in Risk Management & Compliance: Small banks face big risks. AI can help mitigate these risks and ease compliance burdens, ensuring trust and security while focusing more on member value. 📊🔍 🧭 Strategic Integration: Mutual banks need to integrate AI deeply into their strategic planning, aligning it with their core purpose and goals. AI shouldn't be a side project, but a key driver of future success. 🎯🌐 But with limited resources to invest, here are some ways for mutual banks to think about this: 📈 Tangible Value Creation: Balance is key! Investing in AI should bring real benefits to members. Think controlled risk and smart investment to drive value. 🧪🏦 🎯 On Purpose: AI should align with your bank's core mission and strategic goals, harnessing its power to fulfill your purpose. 🌟🔗 🧭 Ethical Foundation: Regulation of AI is uncertain, so stick to your values. Focusing on ethics and transparency gives mutual banks a strategic edge as they navigate AI. 👁️🗨️🛡️ 💡 Core to Innovation Culture: Embed AI in your bank's culture and long-term plans. This fosters a culture of innovation, potentially setting your bank apart strategically. 🚀🏦 Practical applications of AI are becoming more accessible as are the foundational enablers. Change is coming. Will mutual banks seize the initiative by incorporating AI as a strategic tool? #customerownedbanking Polaris Management Consulting