Will industry funds morph into mutual banks?
It is only a matter of time before some of the largest industry superannuation funds move to gain the licensing necessary to become mutual banks, according to two senior industry fund identities.
The chairman of Media Super, Gerard Noonan and the chief executive of Energy Industries Super, Alex Hutchison, both canvassed the probability of industry funds moving into the banking sphere at a roundtable hosted this week by Money Management's sister publication, Super Review and sponsored by National Australia Bank.
In referencing the possibility, Noonan pointed to the reality of the competitive tensions which currently exist between industry funds and the major banks and said this, in part, had driven Media Super to alter its relationship with the Commonwealth Bank.
"The banks as far as industry funds are concerned are potentially capable of aligning with us but in general terms they're rivals and that rivalry is the difficult part of the relationship," he said.
"We've got a difficult relationship with banks, but simultaneously banks typically hold the cash that superannuation funds have — typically between 5 and 10 per cent — so in our experience we've had the circumstance where Media Super had the Commonwealth Bank as its banker but Colonial First State was proving to be a major competitor," Noonan said.
"…Slowly but surely we've moved our monies away simply because it did not seem sensible to be financing our rival," he said. "You only needed to monitor the monthly and quarterly statistics to determine the largest number of roll-outs went to SMSFs, but each of the major super funds run by the major banks were in the next cohort of roll-outs."
Hutchison told the roundtable that the possibility of industry funds becoming mutual banks had been speculated about for some time, while Deloitte partner, Russell Mason, said he believed it was only a matter of time before the very largest industry funds did become mutual banks.
However Noonan said there were things the industry funds could learn from the major banks, including the ability to effectively data mine to gain better knowledge of their members.
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