In an era when everyone hates banks more than ever, ME Bank is looking to capitalise on its heritage and ownership to build its position over the next couple of years. It may even be “keeping the bastards honest”, as the inimitable Don Chipp said in the lead-up to the 1980 Federal election.
Let’s face it: ME [Members Equity] is still a bank. But one of the good things about this bank is that it has a new chief executive who is committed to delivering the sort of services wanted by the members of the 35 industry funds which own it. ME Bank began, in 1994, as Super Members Home Loans, then half-owned by the then National Mutual (now AXA). It’s now being run, since last month, by a 21-yearveteran of another successful boutique bank, Bendigo and Adelaide Bank – Jamie McPhee.
McPhee is looking for three main things from his shareholders:
- capital for growth, and
- distribution capabilities.
He says that ME should not try to become the “fifth bank”. Rather, it needs to leverage its fundamental differences from other banking organisations. Similar to Bendigo and Adelaide, ME will remain a “community” bank. It’s just that the community in question is spread across Australia and numbers more than five million (the approximate membership of the owner funds).
“We’re still fishing in a very big pond,” he says. “We have to make sure we’re engaged with our stakeholders and put banking solutions on the table – both personal and business banking. “The funds have said that having a suite of business banking products is also important. They want us to be demand-pull and not productpush.”
Margins for banks and brokers, believe it or not, are today way below what they were back in 1994. “Aussie John (Symonds) and the others competed away the super-normal profits of the big banks. The market actually got to profitless prosperity.” McPhee admires the way Symonds built a brand for Aussie Home Loans very cheaply and quickly with the simple message: “At Aussie We’ll Save Yer”.
While ME will always be a low-cost provider, fitting with the culture of its shareholders, it’s not as easy today to be able to always offer the cheapest alternatives across a full range. Similar to Symonds, McPhee is a PR person’s delight, appearing to be both affable and honest. Unlike Symonds he has the added advantage of being very athletic.