Australia has one of the most consolidated banking sectors in the western world. According to APRA data in July 2025, the big four banks (including subsidiaries) held nearly 74% of total outstanding home loans. When you include Macquarie, ING, Bank of Queensland, Bendigo and Suncorp, that share is nearly 85%.
However, there are more than 60 other banks regulated by APRA that offer mortgage products, not to mention all the non-bank lenders. While many Australians have not even heard of the majority of these smaller outfits, that doesn't necessarily mean the products are any worse. In fact there's a strong case that many Australians could be better off banking with a non-major.
Who are the smaller Australian banks?
Most of the smaller banks in Australia are either mutual societies (Teachers Mutual, Police Bank etc) or regional banks (Geelong Bank, The Capricornian, etc). Mutual societies often restrict membership (you can probably guess who can become a member of Teachers Mutual), while many regional banks provide services to clients who live outside of the specified area.
Read more: Home Loans from Customer-Owned Banks
What both have in common is that they tend to be customer-owned. Whereas the big four and multinationals like ING or HSBC are run for profit, the money that customer-owned banks generate is reinvested into better services for the bank and the community.
"Every product is designed to maximise member value over the long term, not profit margins for shareholders," Ben Luck, Head of Business Banking at customer-owned Regional Australia Bank told Savings.com.au.
If you live in Sydney or Melbourne you might instinctively assume that regional banking services are unsuitable for you, but Mr Luck says more and more Australians from the major cities are switching over.
"In the 2024 financial year alone 5,041 people joined us, many from metro areas," he said.
"City members enjoy the same competitive products, award-winning digital banking, and high-quality customer experience as regional members."
"But they also gain something more: the knowledge that their bank is owned by members, not shareholders, and that its profits are directed back into the communities we serve."
The importance of regional banks
“Regional banks are more than service providers, they are part of the infrastructure of prosperity in regional Australia. When a bank leaves town, local businesses lose cash-handling, families lose trusted advice, and communities lose local jobs. Small businesses in particular rely on those local banking relationships to manage cash flow and investment decisions.”
Regional bank home loans
If you're unfamiliar with the Australian product landscape, you might guess that because of economies of scale, the major banks can have extremely tight margins and offer low rate home loans that smaller outfits simply can't compete with. In reality, this tends to be far from the case. At the time of writing, most of the lowest advertised variable rates in our database were from the likes of Newcastle-based The Mutual Bank and customer-owned Greater Bank.
"Regional banks mightn’t have the swankiest digital apps or online tools that some of their metro-based rivals boast of, but they do often offer some of the most competitive interest rates on home loans. And that’s a big plus - regardless of whether you’re a city slicker or bush basher."
To be fair to the major banks, there are often concessions that mean some customers end up paying rates significantly lower than advertised. Mr Luck said Regional Australia Bank's rates and products are "on par" with the majors, but said there were other benefits to having decisions "guided by member value not shareholder return".
"Our rates and products are on par with the majors, but our decisions are guided by member value, not shareholder return," he said.
"That approach has allowed us to remove account access fees, invest in a strong broker channel, and focus lending expertise where it matters most."
Brokers
Obviously the likes of Regional Australia Bank would find it tough to compete on marketing and brand awareness with the big four, all of whom have a market-cap over $100 billion. Instead, regional banks often focus on building broker networks, often offering specialised services that could suit specific clients. Mortgage broker and founder of Its Simple Finance Joseph Daoud said smaller lenders play a "crucial role in expanding opportunities for homebuyers".
"The reality is, not every client will meet the strict lending criteria of the big four banks," he told Savings.com.au.
"That's where smaller lenders step in. In their efforts to compete, many of them offer unique policy niches that brokers can leverage to help clients achieve their property goals."
Read more: Banks v Credit Unions v Non-Bank lenders
Deposits with regional banks
There are more than 100 ADIs that retail deposit services, but more than 60% of all residential deposits were with the big four in July 2025 according to APRA. That's despite rates on savings accounts and term deposits often being higher at smaller banks.
Here's Infochoice Research Analyst Harrison Astbury on the potential benefits of choosing deposit products from a regional or customer-owned bank:
“Customer-owned banks work by giving ownership to the members who bank with them. By signing up, you're a member, and can attend things like annual general meetings and vote on important issues.
Many were born out of serving a particular region of Australia, or a particular profession. Many still put profits back into the regions with which they call home - keeping jobs in the country, or sponsoring the local footy team. These are areas many of the bigger banks have left behind.
Many have interesting names, and while they seem small, mutual banks collectively pack a punch. Research shows they are the primary bank for more than 1-in-10 Aussie adults, and provide up to 1-in-5 branches/ATMs in the regions.
What this all amounts to is choice for the consumer. You don't have to live regionally or work a certain job to sign up to many of them - and you might find they offer more competitive interest rates on savings accounts and term deposits than the bigger banks. With some, if you are a particular profession, you might get more competitive rates still.
In fact, looking at our savings account and term deposit comparison tables right now, the major banks are rarely seen on the leaderboards - with many of the top 10 rates being from mutual banks.”
What's the downside?
All that said, there are still some good reasons why the big banks remain so dominant
Digital infrastructure
Major banks have more resources than smaller competitors to invest heavily in technology. The apps and online platforms of the big banks and their digital subsidiaries (UBank and Unloan for example) are are often considered the industry benchmark.
Customer service
Customer service is another potential advantage of the scale the major banks operate at. Commonwealth Bank for example likely employs a larger number of home loan specialists than any non-major by an order of magnitude or two. While this is obviously because of the volume, it also can mean the major bank's customer service processes are more efficient. Some customers report the big banks being easier to get in touch with and more responsive to queries or complaints.
Perceived stability and trust
For some customers, the brand recognition of a Westpac or a NAB is worth losing out on a couple extra percentage points of savings returns. It can be understandably daunting to put your life's savings in the care of an institution you've never heard of, and according to Global Finance the biggest banks in Australia are indeed the safest in terms of credit risk. However it's also worth remembering the last time an Australian bank went under was in 1977, and the Financial Claims Scheme means deposits up to $250,000 are guaranteed by the government in any case.
Read more: What happens when your bank or lender goes under
Savings.com.au's two cents
Many Australians don't realise just how many banking options they have. I report on the sector and there was a sizeable proportion of the ADIs registered by APRA that I hadn't heard of. You might decide that the big banks are the big banks for a reason - there are clearly millions of Australians happy with the service from the likes of Commonwealth Bank or Westpac.
On the other hand, the data suggests an increasing number of Aussies are discovering the value smaller banks can provide. Of the 17 home loan lenders that saw their loan books increase by more than 1% from June to July 2025, 13 were customer-owned regional banks or mutual societies. None of the big four banks grew their loan book by more than 0.4%.
The one thing we'd say is to always keep that choice in mind. Even if you do end up going with one of the majors, you can be more assured in your decision if you know you've explored what's on offer at some of the banks with brands you're less familiar with.