The $200 billion sector invisible to banks

The not-for-profit sector has emerged as a huge part of the Australian economy but remains largely invisible as a banking opportunity. However, chief executive of Community Sector Banking (CSB), Andrew Cairns, believes that banks can play a critical role in this growing market. 

“The banking sector is still the most effective way to distribute the flow of capital in the economy. This crucial role that banks play will be important if the not-for profit sector is to continue to evolve and be supported,” he said. 

Citing statistics from JB Were’s recent The Cause Report, Cairns noted that the sector now oversees $200 billion in funds. In comparison, business generates $300 billion in pre-tax profit while households generate $700 billion in income. 

“There are three million people employed in the sector with six million volunteers. One in eight people in Australia are now employed in a not-for-profit organisation," Cairns told AB+F

CSB was formed in 2002 as a joint venture between Bendigo & Adelaide Bank and Community 21 - which is a group of not-for-profit organisations that includes Oxfam and the Australian Conservation Society - to support the sector and its unique needs.

Product nuances 

It was set up because of the sector’s growing frustration with their experience with traditional banks. As such, CSB delivers on projects that traditional banks ignore or deem unimportant. 

“We have the heritage in Bendigo & Adelaide Bank as well as the strength of its balance sheet. This allows us to deliver products that come with the features of a major bank but with competitive rates,” he said.  

Cairns said that the "nuances" of the sector, however, demand a different approach that goes beyond traditional banking services. These are around cultural issues, hardships faced in the community and risk appetite; as such products include shared-equity and microfinancing loans. 

A recent initiative undertaken by CSC was helping the Salvation Army roll out a tap-and-go facility for donations. “We realised that donations need to move into the 21st century given the increasing move by society to a cashless economy.” 

The initiative also saw a new partnership form with Melbourne payment heavyweight Quest Payments. CSB will be eyeing similar partnerships as well as cash-less donation initiatives with other not-for-profit groups. 

“The banking sector can either feed off the sector or prosper with it. We choose to prosper with that community.” 

Upcoming Events
Australian Banking Innovation Summit 2020
The Rocks, NSW, Australia
See all upcoming events
Subscribe to receive insights delivered straight to your inbox
Latest news, unbiased expert analysis and insights across banking and finance