Teachers Mutual Bank Limited is one of Australia’s largest mutual banks, comprising four brands: the original Teachers Mutual Bank, UniBank, Firefighters Mutual Bank and Health Professionals Bank. They have over 200,000 members and have more than $8 billion in assets. We spoke with Corin Millais, Manager – Ethical Business Strategy, about TMBL’s approach to and initiatives around responsible investment.
In your view, what does a responsible and ethical bank look like?
Our philosophy is that banks should be run along triple bottom line principles – that is people, planet and profit. If being responsible is not front and centre of a bank’s business strategy, then it is just a side show and not fit for the future. The mutual and co-op models are structured under profit-for-purpose governance and offer a different business model.
At one level it’s for the community to decide what a responsible bank is, not the banks themselves, and it is our responsibility to match those high standards. People expect their bank to do what’s right, even if they don’t always know what that is.
What does responsible investment mean to TMBL and what drives your commitment to ethical banking?
It’s about operating socially responsible strategies, standards and practices across the entire enterprise and balance sheet. We have stringent criteria applied to investing and lending our members’ money. This means every member, and every dollar, and every dollar from wholesale investors.
We’re driven by our history, our governance and member owned structure, as well as future opportunity. Being socially responsible is at the heart of everything we do.
For a small Australian bank, we’ve set a fairly ambitious target to be a ‘world leading ethical business,’ so that definitely keeps us on our toes. Earlier this year, we announced that we are targeting $3.5 billion in responsible investment for our bank, and we are determined to meet this goal.
What benefits have come from having products certified by RIAA, both on the retail and wholesale sides?
The external, independent credentials are vital for transparency and trust, and the trade mark provides added authority. For us, RIAA certification has given us the opportunity to innovate and pioneer responsible investment, create a consumer focus and apply responsible investment standards to approximately 98% of our products, not just a few niche products.
It has allowed us to create some market momentum too. We’ve just surpassed $1 billion of RIAA-certified products on our balance sheet and looking to the next billion. We also added 7% of the total Australian green bonds market in 2018 – not bad for an $8 billion balance sheet.
What kind of consumer interest and demand are you seeing for your responsible investment products?
It’s certainly a huge conversation opener; there is rising consumer interest in responsible finance, and this can be at an organisational level, not product specific.
To be honest there could be more demand for wholesale. We are the only bank offering Certified Ethical Wholesale products to the Australian market –NCDs (negotiable certificates of deposit), TDs (term deposits), and MTNs (medium term notes). Investors looking for fossil fuel free and ESG offerings in their cash portfolios could take a look at what we can offer, as we can assist them to meet their own ESG goals.
What are the key metrics and measurements that count?
We undertake many external ESG metrics and benchmarks, from RIAA to the World’s Most Ethical Companies ranking. What counts most though, is running a successful ethical business model where people come first.
Our mortgage book grew three times as fast as the market -10% versus 3% – and our membership passed 200,000 for the first time last year. People join us in part for our ethical position, but also for great products and services. It’s all three that work together. We don’t think it’s any coincidence that in the latest Roy Morgan customer satisfaction ratings we had the highest net promoter score (NPS) of any financial institution in Australia.
What’s next for responsible banking in a post Royal Commission world? What’s next for TMBL?
Responsible banking has the opportunity to grow as customers increasingly demand socially responsible practices from their financial institutions.
At our Bank, we are just about to launch a multi-brand consumer campaign with the message: ‘Feel Good Wealth– build your wealth with a bank that does good.’
We’ve set a clear aim to be the most socially responsible bank in Australia – so we must continually improve our performance, and have a glass half-empty view of where we sit today. We want to continue our growth trajectory, and social responsibility is increasingly an issue of competitive advantage and positioning.