"Virtual Banks" - Community Sector Banking

Bendigo Bank and leading community sector bodies have formed a joint venture company offering banking and other financial services for Australia’s Not for Profit sector.

The Bank’s Managing Director, Rob Hunt, says the Community Sector Banking initiative is based on Bendigo’s successful Community Bank model, with sector participants generating a revenue stream from their own banking activities.

Community Sector Banking, which will operate under Bendigo’s banking authority, will be a branchless operation initially covering 19 sector participants including ACOSS, Brotherhood of St Laurence, NSW Federation of Housing and others.

The 19 partners have formed a company, Community 21, which will contract for Bendigo to provide banking services for member companies and other non-government organisations and will share in the margin and fee revenue generated.

Rob Hunt says Community Sector Banking is based on the same aims, and the same principles, as Community Bank with the concept that the definition of community was a lot broader than simple geography. The Not for Profit sector is a clear community of interest to which the Community Bank model can apply.

He says the participants will share in the responsibility of banking in the sector – in their case, mustering the customer base – and they will share in the rewards. Bendigo’s responsibility is to show the sector how it can drive a better return from its capital and so enhance the services it provides to our community.

Community 21 chairman Alan Cox says the Not for Profit sector Australia-wide generated cash-flows of around $20 billion per year.

He says it’s one of the biggest sectors in our economy and yet it is probably not well-understood. Bendigo is keen to explore ways in which it can leverage its current finances to improve its ability to invest in new facilities for our clients.

Cox says discussions with Bendigo show that through combining the demand for banking services, rather than acting as individual bodies, it can derive a better return on capital. The ultimate winners are the clients, who will benefit from improved services.

Bendigo Bank’s head of strategic development, Greg Peel describes Community Sector Bank was “a virtual bank” with a range of specialised services being delivered electronically.

It has already begun to roll out some product to the sector and will work with participants to develop other products specifically suited to the sector’s needs.

Community 21 members are:
Australian Council of Social Service,
Brotherhood of St Laurence,
Jobs Australia, Scope (Vic),
The Deaf-Blind Association (Vic),
NSW Council of Social Service Access Community Group (Corrimal); Anglicare Tasmania;
Business Enterprise Centre – Mersey (Devonport);
Enterprise and Training Company (Coffs Harbour);
Foresters and Friendly Society (Nundah);
Gympie Skills Centre;
Charities Aid Foundation (Chatswood);
Newtrain (Tamworth);
NSW Federation of Housing Associations;
OEC Employment Agency (Dubbo);
OzChild;
St Lukes (Bendigo)
Youth Accommodation Assoc. (NSW).

Community 21 banking is the result of more than twelve months of consultation and negotiation with the Third Sector, including a national survey of its banking needs.

ACOSS Deputy President and Board member of the new bank, Eleri Morgan-Thomas says charities and community service organisations are often treated by the traditional banks as peculiar fish and the sector’s particular needs are often poorly served as a result.

Morgan-Thomas says welfare based Not for Profits are different to private companies because the primary goal is to meet the needs of low income and disadvantaged Australians and not to generate profits.

He says they are very different to the public sector because they are controlled by local communities and because many have a mix of voluntary and paid staff.

He says the new consortium of major charities and welfare agencies has been formed to meet these needs and potentially provide other services to the sector such as insurance, governance advice, capacity-building, and travel.

Duncan Power of the Charities Aid Foundation (NSW) says the initiative will assist Not for Profits to operate with greater efficiency and CAF will also be operating an agency of Community Sector Banking known as ‘Investors in Community”.

Chris Jones of Anglicare Tasmania says the initiative will help improve the resources available to charities and community service agencies so they can provide better services to disadvantaged Australians.

Brotherhood of St Laurence’s Executive Director Father Nicolas Frances says it’s an opportunity for the community sector to not only participate in banking services, but to also show leadership on how the concepts of social responsibility can be complementary to efficient banking.

The Community 21 website it still under construction and will soon be operating at www.csbanking.com.au. However for more information you can call 1300 550 603