BANKING: by Ken AldredNews Weekly
Bendigo Bank preferred over 'Four Pillars'
, December 20, 2008
Bendigo Bank has been voted the bank with which people are most satisfied, reports Ken Aldred.Bendigo Bank's small town philosophy and community involvement have again made the bank a winner with the Australian public. In this year's Australian Financial Review Smart Investor survey, Bendigo Bank was voted the bank with which people are most satisfied. This parallels the high ranking accorded Bendigo Bank in other recent and similar surveys of bank customer satisfaction.
The Smart Investor survey showed significant dissatisfaction with the bigger banks, those in the survey saying they were particularly unhappy with the many fees and charges the big banks now impose on customers. Survey respondents added that they found it hard to connect to the big banks and also difficult to obtain information from them. Overall the five big banks slumped badly in the survey. The ANZ, for example, fell from first place to fifth.
In marked contrast, the Bendigo Bank has never lost or forgotten its grassroots base. It was started by the Bendigo community in 1858 as a building society to help miners buy their own homes and as a result build a stronger town.Community involvement
Today, even though Bendigo Bank has outgrown its building society origins and is now a fully-fledged bank, it has retained its tradition of community involvement. It now services 500 communities across Australia, helping them all to grow and prosper, and operating on the principle that a prosperous community is a great place in which to run a successful bank.
Like building societies, the community banks operated by Bendigo Bank do so under the ownership of local people who also control the bank through their local board of directors. A wide cross-section of the community, including residents, traders and business people, constitute the local ownership of the bank.
Investors in the community bank can own between $500 and $10,000 of equity. The upper limit of $10,000 is deliberately set to prevent monopoly control of the community bank and keep the ownership base well spread across the suburb or township involved.
Another unique feature of the community banks is the way in which they plough a proportion of local net profit back into their community. Bendigo Bank now has 224 community banks and these community banks have created more than 1,000 jobs and put $30,000,000 back into local projects.
These local projects cover everything from assisting sporting clubs, building community halls, acquiring fire trucks for the CFA or other fire services, and buying badly needed equipment for local schools. These are but a few of the diverse range of projects funded by the community banks.
The process for setting up a community bank under the auspices of Bendigo Bank is fairly straightforward. A steering committee of interested local citizens is established to ascertain community support and manage the process of bringing about a local community bank. This committee then sets out through a promotional program to obtain pledges of support for the proposed bank. These pledges are not binding, but are indicative of the likely support for the community bank. The pledged capital needed to start one is approximately $750,000.
Once the $750,000 in pledges is obtained, a feasibility study is conducted by an independent firm of accountants to determine whether the local community would provide sufficient banking business to make the community bank viable. The feasibility study undertakes surveys of those who made pledges and also many others.
If the feasibility study demonstrates that the community bank is a workable proposition, then a prospectus is drawn up and a campaign launched to promote the prospectus. Once the capital required is raised through the prospectus, arrangements are made to open the doors of the new bank.
Normally the interested local citizens, who as the steering committee have taken the setting up of the community bank through all of these stages, become the board of directors of the new bank. This board then becomes responsible for the overall running of the new bank, including hiring the community bank manager and staff.
It is easy to see that, though much hard work must be done to establish a community bank, the process itself is not that complicated. Moreover, members of a community have control of their own banking services and are able to put part of the profits back into their own community projects.
As the New Year approaches, maybe setting up a community bank for your own community is something you, your family, friends and colleagues should think about as your project for 2009.- Ken Aldred is a former federal Liberal MP and is also a member of the Beaconsfield District Community Bank Steering Committee.