In their first ever report on co-operatives late last year, global consultants McKinsey surmised that co-ops "may be poised to expand due to a growing dissatisfaction with the short-term orientation of stock-traded companies".
With a presence in nearly every sector, McKinsey continued, "Their unique member-ownership structure and democratic governance model make for organizations that are powerfully aligned on mission and strategy, with a focus on preserving long-term stability."
The "principles before profit" approach of co-operative banking is one that has proved popular and durable elsewhere in the world. Most other countries have co-operative banks and they are particularly strong in Canada, America and Europe.
Steven Fyfe, The Co-operative Bank board chair, believes that doing business co-operatively comes naturally to Kiwis and thus the co-operative banking model is a very good fit for New Zealand.
The McKinsey report found that between 2005 and 2010, co-operatives grew at nearly the same rate as publicly held organisations. The report estimated that co-operatives represent approximately three to five percent of the world's GDP -- and Fyfe considers that would be higher in New Zealand.
"Our farming industries are co-operative in nature," he said. "I've dealt with several co-operative companies in New Zealand, particularly in the agricultural sector, including Fonterra and Alliance Group. I believe that as Kiwis learn more about our banking model they'll relate strongly to a bank owned by its customers."
Chief executive Bruce McLachlan says a great strength of co-operatives, in a financial system context, is that fundamentally they think differently. They focus on long-term sustainability, strategic values, principles, partnerships and member voices.
"Co-operatives have a different kind of connection with customers because they own the organisation," he said. "That's a fundamental thing. Products, service and prices still need to be as good as the competition. You can't thrive without meeting those inherent customer needs."
The Co-operative Bank in the UK -- unrelated to the New Zealand organisation -- has grown significantly in recent years. It is part of the Co-operative Group, the largest co-op in the UK, with a strong presence in food retail, banking, insurance, pharmacy, travel and other services. The organisation launched a groupwide loyalty and branding promotion, converting its membership card to a 'loyalty card' with additional benefits. This grew membership from 800,000 in 2005 to nearly seven million in 2012.
McLachlan said the UK Co-operative Bank's success reflected disillusionment with the traditional financial system by the public as people increasingly move to a co-operative bank with a whole member ownership, member voice and values more aligned with their own.
Fyfe anticipates that The Co-operative Bank in New Zealand can grow its market share; it has 31 branches and 125,000 customers, and expects to grow both significantly in coming years.
"There's absolutely nothing wrong with having foreign-owned banks but there's something not desirable about having more than 90 percent of New Zealanders banking with overseas-owned banks. …