It’s no longer business as usual for AWA’s Board. Under the Alliance Bank model the focus has shifted from the need to meet APRA compliance and regulatory requirements to new responsibilities around community engagement, growing partnerships and growing the business.
Can you tell us why you on longer have to focus on APRA compliance and regulatory requirements?
Upon undertaking a partial Transfer of Business (which involved a transfer of our loans and deposits to Bendigo and Adelaide Bank) when we moved into the Alliance Bank Model Bendigo and Adelaide Bank assumed all of the ADI obligations including APRA oversight from this point on.
What does this mean for the role of Directors?
Our experience is that our Board was revitalised with many new opportunities that were not available to us as an ADI. Previously Directors felt very constrained by the restrictive regulatory requirements imposed upon them under the ADI model. Now Directors remain heavily focused on delivering benefits to our Members, but feel empowered to deliver significant benefits to the communities in which we operate. This has involved developing new skills within the existing Board as well as from outside.
Under the Alliance Bank model member capital can be used to benefit members and their communities. How do you preserve member capital and still deliver against your community purpose?
As the capital that we accumulated as an ADI well exceeds our current balance sheet requirements we have considerable flexibility under our new model to use it for the benefit of our members and communities whilst still honouring our fiduciary obligation to manage this capital in the best interests of members.
We use the capital to support community groups in the delivery of community infrastructure and facilities whereby the repayment of this capital is achieved via the extra business delivered to us by members and supporters of those community groups.
What community building projects is AWA involved in?
AWA is currently assisting two Geelong based community organisations, namely the East Belmont Cricket Club and Basketball Geelong to deliver significant infrastructure improvements for their members. The East Belmont Cricket Club initiative involves a complete rebuild of their change room facilities and a major upgrade of their practice facilities. The Basketball Geelong initiative involves the development of a new stadium including six new basketball courts, change room facilities, canteen and administration facilities. This new centre is a real game changer for Basketball Geelong as they have battled for many years with a shortage of facilities and struggled to accommodate their ever growing participation numbers.
Are there ongoing cost savings as a result of the alliance with Bendigo and Adelaide Bank?
As well as delivering revenue to AWA from both sides of the balance sheet (ie loans and deposits) the Alliance Bank Model significantly reduces the costs incurred by AWA in a range of areas – most significantly in IT, Audit, Insurance and transaction delivery, with these savings exceeding $500k pa.
You mentioned that IT costs have reduced. Explain how this impacts the business when new technology becomes available.
As new products and technology becomes available (eg the national payments platform), Alliance partners are able to leverage this new technology as a group with Bendigo and Adelaide Bank responsible for its delivery.
Why didn’t the AWA Board decide to merge with a larger CU?
Although AWA Credit Union was in a very sound position at the time that it moved into the Alliance Bank model we had grave concerns about the continual decline in numbers within the credit union Industry and therefore about its health and long term future. Unfortunately this decline has continued unabated since we moved into our new operating model.
The AWA Board were concerned with the fundamental problems that were causing this rapid decline in the number of small and medium sized credit unions and wanted to deliver a long term future for AWA whereby the Board retained total control over the member relationship, our capital and our staffing.
This could not be achieved by merging with a larger credit union, in fact such a merger would have necessitated significant redundancies and a total loss of local control.
Which is more cost effective, merging or becoming an Alliance Bank?
Our analysis of the costs associated with a move into the Alliance Bank model versus a merger with another credit union confirm to us that merger costs (including staff redundancy payments and data base merge costs) significantly exceed the costs of moving into the Alliance Bank model.
What does life look like as an Alliance Bank?
In some ways life has not changed a lot now that we are in the Alliance Bank model. We are still a mutual member owned organisation providing banking products to our members.
Members have however seen a change in our name including the inclusion of the term Bank (which they took in their stride), a significant expansion in our product range along with the abolition of transaction and account keeping fees and mortgage loan establishment fees.
Members have also seen us become more engaged via an increased range of philanthropic and infrastructure initiatives.