Competition is more intense than ever in home loans and savings, as some of the larger credit unions and building societies take the fight right up to their biggest rivals by adding the word "bank" to their name.
Not yet a year old, these new ''mutual banks" are making a good showing in league tables for the financial products offering the best rates, as well as in rankings for customer satisfaction, especially when compared with the Big Four banks.
Louise Petschler, chief executive of Abacus, the industry body for credit unions and building societies, says the emergence of customer-owned mutual banks - versus shareholder-owned ones - is an exciting development.
As deposit-taking institutions, all credit unions, building societies and banks must meet the same regulatory standards and are covered by the same government guarantee, she says, so, yes, a credit union adding the word bank to its name is largely a branding exercise.
"But focusing on brand and rethinking strategy absolutely should, and does, open the door to innovation and really changing the landscape in terms of competition," Petschler says. "Going through a name change is such a big and a symbolic step - it's about carving out a new category in the banking space, so we're excited to see what will happen."
The head of research for financial products researcher Canstar, Steve Mickenbecker, says it's a "historical shift in where we bank and which model - shareholder or customer-owned - we choose to support with our money."
If there's one good thing to have come out of the global financial crisis, "it's that the government allowed eligible credit unions and building societies to adopt the term 'bank' in their name, giving these mutual banks the opportunity to expand their product offerings and grow their businesses," Mickenbecker says.
And that's likely to translate into better pricing.
This may be helped by the fact that officially becoming a bank could have the tangible benefit of opening up access to sources of cheaper funds on the wholesale market, which they can then lend on at better rates.
Teachers Mutual Bank deputy chief executive Brad Hedgman says some government bodies, for instance, have mandates that say they can only put money with banks.
The federal government announced last year that credit unions and building societies that met certain capital requirements would be allowed to become banks. There are now six mutual banks and Petschler thinks that will grow to about a dozen during the next 12 months.
Canstar estimates 20 mutuals will be eligible to add the word bank, having at least $50 million of what's called Tier 1 capital. However, Petschler says some will prefer to stick with their credit-union branding.
Bankmecu became Australia's first mutual bank in September last year.
The Queensland Teachers Credit Union became QT Mutual Bank in October, the Heritage Building Society became Heritage Bank in December.
This year, the Defence Force Credit Union became Defence Bank and Victoria Teachers Mutual Bank and Teachers Mutual Bank emerged out of the teachers' credit unions in Victoria and NSW, respectively.
Petschler says she hopes the visibility of these new mutual banks will prompt people to reconsider the sector.
So how do mutuals stack up against the Big Four banks - the institutions most Australians turn to by default.
Mutuals account for just 8 per cent of new home loans and 11 per cent of household deposits.
Researcher Canstar compared the offers from the two sectors across the popular areas of home loans, term deposits and online savings accounts for Money (see table, left).
It found mutual banks had the lowest average standard variable rate and paid the highest average rate on a $25,000, three-month term deposit. Building societies had the best average rate for online savings accounts.
Canstar then pulled out the best individual products in those three key areas, from among the mutuals and among the Big Four. In each category a credit union or mutual bank trumped the best the Big Four had on offer.
The Hunter United Credit Union's Premium Online Investor Account was the best online saver overall, paying 5.26 per cent as of last week. Westpac's eSaver was the best among the Big Four at 5.10 per cent.
In the three-month term deposit, several credit unions offered the best rate of 5 per cent, along with Heritage Bank, while the top rate among the Big Four was from National Australia Bank, at 4.55 per cent.
In home loans, Bankmecu's refinancing product had the cheapest SVR at 6.34 per cent, compared with 6.82 per cent for NAB's Tailored Variable loan, the best among the Big Four.
Let's apply that to someone with a $300,000, 25-year home loan, $25,000 for a three-month term deposit and $5000 they want to have on call in an online account.
If they cherrypicked the best products in those three categories from among the mutuals, they'd be $2340 better off at the end of the year than if they took the best products on offer from among the Big Four.
The home loan has the biggest impact. Over 25 years the interest savings from taking the cheaper loan would add up to nearly $58,000 (if those rates stayed the same).
That's not to say one particular sector, or institution, has a monopoly on the best products. For a start, this simple exercise, for illustration purposes only, doesn't cover the full range of products.
However, the results do illustrate why it's important to have more than just the major banks on your shopping list when looking for a loan or somewhere to deposit your money.
Asked to put the case for the mainstream banks, Australian Banking Association chief executive Steven Munchenberg says larger institutions offer a full range of products and may have a wider range of options to tailor those products. "We are largely agnostic as to whether a customer is with a major bank or a smaller one, or a credit union or building society,'' he says.
''The most important thing to think about is how you do your banking and what's important for you.
"If you're wanting a straightforward mortgage and you don't have a lot of options in terms of affordability, you'll be very focused on the interest rate."
Munchenberg notes that banks tend to discount deeply on the "headline" standard variable rate we've used as our benchmark, though the mutuals' response is that they discount, too.
He also raises convenience as a consideration, in terms of nearby branches and ATMs, though Petschler points out the credit union-owned network of rediATMs is the second-largest in the country and internet banking clears many hurdles.
It should be noted, though, that not all credit unions are open to the general public, and even those that are may not offer all their products to all comers. NSW-based Teachers Mutual Bank, for instance, accepts deposits from anyone but lends only to teachers.
Finally, Mr Munchenberg suggests that bank customers who feel they're not getting the best deal should speak with their bank, which may be prepared to negotiate. Interest rates aren't always the clincher. "In the short term, mutuals may not always be the cheapest in the market but over the long term we're confident we deliver a better banking experience and value for money," Ms Petschler says.
Brad Hedgman of Teachers Mutual Bank says: "We can't be the best in every rate all the time," but TMB aims to always be below the average SVR of the major banks and in the top 10 for deposit rates as measured by Canstar.
It has also had a rating above 90 per cent in the Roy Morgan Customer Satisfaction Survey every month this year, he says, and has averaged 500 new customers a month this year - the sort of growth the former Teachers Credit Union of NSW hasn't seen in two decades.
The mutuals category stood out yet again in the latest Roy Morgan survey, released just last week.
Some 91 per cent of building society members and 89 per cent of credit union members are satisfied, according to the survey, along with 87 per cent of mutual bank customers.
That compares with 76 per cent satisfaction among those banking with the Big Four.
If you exclude the Big Four, the rest of the banks have an average satisfaction rate of 85 per cent, Roy Morgan's industry communications director, Norman Morris, says.
He says home-loan customers and customers who also happen to be small business operators are most unhappy with the Big Four, probably because of high-profile interest rate moves the big banks made out of step with the Reserve Bank.
Pam Brossman is just as comfortable using her credit union for business as for personal banking.
''Everything is attached to my credit-union accounts - I just go online and it's all there,'' says Brossman, the chief executive of digital communications consultancy SheExperts.com.
She has business and personal accounts and can easily transfer money into term deposits elsewhere and across to her online share-trading account.
If she has a cheque to bank, there's a reply-paid mail service.
The Sydney-based Quay Credit Union is like a ''family bank'', Brossman says. ''They've never charged me fees, except $5 membership per year.
''They treat me like they know me, in that old style of banking. Nothing is ever a problem. When I need something fixed it's fixed within 24 hours, every time.''
OUTSTANDING SERVICE AND GOOD DEALS
Robyn O'Connell liked her local credit union so much she joined the board.
''After a market-research session I was asked to go on the board as I spoke so passionately about the credit union and its benefits to members,'' says O'Connell, who joined the then Maroondah Credit Union (now part of bankmecu) 25 years ago, when a work colleague suggested it would be a good place to get a car loan. She ended up sitting on its board for six years.
''It's just a different philosophy,'' she says. ''They're not there to make money out of you … They're very customer-focused, their service is always outstanding.''
She does have one account with a mainstream bank, because the credit union couldn't provide a particular loan for her DIY super fund.
''Every month we get slugged $12 just for … getting a statement every six months,'' O'Connell says.
''That's where you notice the difference. It's all those little things in all sorts of ways.''