Defence Bank has embraced online video and social media in a move to stay competitive against Australia’s top national banks, according to the bank’s CEO, Jon Linehan.
Linehan urged other mutual banks to do the same in a statement released today.
“What mutual banks can do is move quickly to offer the availability of options for the consumer, varying from the branch, online video—a major Defence Bank initiative—and social media, and by doing so be cost competitive with the major banks,” the CEO said
Defence Bank has $1.4 billion dollars in assets and 91,000 members. About 86 per cent of Defence Bank transactions are online, said Linehan. The high number reflects the fact that many of the bank’s Defence customers are based in remote locations and that 62 per cent are aged between 18 and 45, he said.
Linehan said he believes that Defence Bank and other mutual banks are in a position to move faster than the commercial giants in embracing technology.
“There’s no doubt in my mind that Australian banking is a long way behind other sectors of the economy in its use of social media,” he said.
“This means there are opportunities that will allow the mutuals to enter this space more quickly as, in many instances, they are less tied to the traditional branch system.”
Linehan said online video is cheaper than flying financial planners to remote locations. The technology also establishes greater trust with the customer compared to a traditional phone call.
“When people are talking about large sums of money, whether it’s a loan for a house or their superannuation, then they want to put a face to the person they are talking to,” he said.“The difference between that-to-face interaction and a first-name person in a call centre is, in our experience, very significant.”
“What the video is doing is not only providing access to advice, but also access to trust and personal interaction.”
However, Linehan said the bank’s online efforts will not replace traditional branches. Those “will remain integral to the banking system, with the significant transactions such as lending and large investments still the domain of the branches.”
“It reflects the fact that customers still want to see the branches,” he said. “The bricks and mortar give them a sense of security.”
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