Cuscal backs 'fifth pillar'

Staff Reporter Monday, 20 Dec 2010 1 minute read

Making headlines today, one company has come to the defence of Australia’s credit unions and said the sector is up to the challenge of becoming the nation’s fifth force in banking.

Cuscal, which processes the credit unions’ payments and transactions, believes the sector can handle any increase in work.

Speaking to The Australian Financial Review, the group’s managing director Craig Kennedy said credit unions could “easily” compete with the majors by banding together.

Mr Kennedy’s comments follow Treasurer Wayne Swan’s plans to introduce a banking reform package that will aid home loan competition by building credit unions and other smaller institutions into a fifth pillar of the banking system.

By while Mr Kennedy is “adamant” that credit unions are up to the challenge, other industry professionals are not so sure.

Last week Aussie’s executive chairman John Symond labelled the banking reforms a “joke”.

He said the biggest barrier to competition was a lack of whole-sale funding costs for non-banks, and credit unions would do little to increase competition in the home loan arena.