In recent years, Australia’s banking landscape has undergone significant transformation through a wave of mergers and acquisitions. These consolidations have reshaped the competitive environment, potentially limiting consumer choice and reinforcing the dominance of major players. As the banking sector becomes increasingly concentrated. The role of finance and mortgage brokers has never been more crucial. In maintaining genuine competition and ensuring Australians can access the right financial products for their needs.

The Shrinking Banking Landscape: Recent Mergers Reshaping Australia’s Financial Sector

The past five years have witnessed substantial consolidation within Australia’s banking and financial services sector. According to comprehensive research covering September 2019 to May 2025. Numerous significant mergers have occurred among banks, mutual banks, and credit unions:

Major Bank Acquisitions

• ANZ’s acquisition of Suncorp Bank (July 2024): This landmark $4.9 billion deal represented the largest banking acquisition in over a decade, with one of Australia’s “Big Four” absorbing a significant regional competitor.
• NAB’s acquisition of Citigroup’s Australian consumer business (November 2021): This strategic move further consolidated NAB’s market position by absorbing Citigroup’s retail banking operations.
• NAB’s acquisition of neobank 86 400 (Early 2021): NAB purchased digital challenger bank 86 400 for $221 million and subsequently merged it into its digital banking arm UBank. This acquisition eliminated an innovative competitor from the market and consolidated NAB’s digital banking presence. According to Canstar, 86 400 customers were transitioned to the rebranded UBank platform in May 2022, further reducing the number of independent digital banking options for consumers.
• Bank of Queensland (BOQ) acquiring ME Bank (July 2021): This merger combined two challenger banks that had previously offered alternatives to the major institutions.

Mutual Bank and Credit Union Consolidation

The mutual sector has experienced even more pronounced consolidation:

• MyState Limited and Auswide Bank merger (February 19, 2025): This completed merger created a stronger, larger financial services institution serving approximately 272,000 regional customers. Auswide Bank became an indirect wholly owned subsidiary of MyState Limited, with the merged entity operating under four brands: MyState Bank, Auswide Bank, SelfCo, and TPT Wealth.
• Newcastle Greater Mutual Group formation (March 2023): Greater Bank merged with Newcastle Permanent Building Society to form Newcastle Greater Mutual Group, following overwhelming member approval in November 2022. This created the 10th largest Australian-owned bank and the largest mutual by net assets and capital base, serving more than 620,000 customers while maintaining both original brands.
• Beyond Bank’s aggressive expansion (2020-2024): Beyond Bank has absorbed multiple smaller institutions:
  • Nexus Mutual (formerly Esso employees credit union) in March 2020
  • South West Mutual Credit Union in April 2022, adding 13,000 customers
  • First Choice Credit Union in February 2024, adding 4,000 customers
  • AWA Alliance Bank in March 2024, adding 40,000 customers and ending AWA’s previous association with Bendigo and Adelaide Bank
• Bank Australia and Qudos Bank merger (approved April 2025)
• Unity Bank and G&C Mutual Bank merger (March 2025)
• Heritage Bank and People’s Choice Credit Union forming People First Bank (March 2023)
• Sydney Credit Union and Endeavour Mutual Bank forming Australian Mutual Bank (October 2019)

Pending and Potential Mergers

The trend of consolidation shows no signs of slowing, with several additional mergers in various stages of discussion:

• Teachers Mutual Bank Limited and Australian Mutual Bank: These institutions have announced merger discussions that would further reduce the number of independent mutual banks.
• Regional Australia Bank and Summerland Bank: Intent to merge has been announced, with completion planned for 2026.
• Beyond Bank’s expansion plans: In June 2024, Beyond Bank signed a Memorandum of Understanding to investigate potential mergers with both P&N Bank in Perth and BCU Bank in Coffs Harbour. While P&N Bank withdrew from discussions in September 2024, the potential merger with BCU Bank could still proceed, creating what would be Australia’s largest mutual bank.

This wave of consolidation represents a significant reduction in the number of independent financial institutions available to Australian consumers, with implications for competition, service quality, and consumer choice.

The Competition Concern: How Mergers Impact Consumer Choice

The ongoing consolidation raises significant concerns about reduced competition in Australia’s banking sector. When ANZ’s acquisition of Suncorp was under regulatory review, Bank of Queensland explicitly warned that the deal would “further entrench the major bank oligopoly in Australia.”

The Australian Competition and Consumer Commission (ACCC) initially opposed the ANZ-Suncorp merger due to competition concerns, though the Australian Competition Tribunal later approved it. This decision sparked debate about whether Australia’s competition framework adequately protects consumers’ interests in the financial services sector.

The acquisition of digital challengers like 86 400 by major banks is particularly concerning for competition. These neobanks emerged specifically to disrupt traditional banking with innovative technology and customer-focused approaches, only to be absorbed into the very institutions they sought to challenge.

Similarly, the consolidation in the mutual sector is eliminating distinct customer-owned alternatives that have historically offered different value propositions from the major banks. With each merger, the diversity of the financial landscape diminishes.

Financial experts have highlighted several concerning impacts of this consolidation trend:

1. Reduced product diversity: Fewer institutions typically means fewer innovative and tailored financial products.
2. Potential for higher margins: Less competition can lead to higher interest rates on loans and lower rates on deposits.
3. Diminished regional focus: As regional banks are absorbed by national players, the specific needs of regional communities may receive less attention.
4. Concentration risk: The financial system becomes more vulnerable when banking assets are concentrated among fewer institutions.
5. Decreased customer service quality: With fewer alternatives, banks may have less incentive to maintain high service standards.

The Critical Role of Mortgage and Finance Brokers in Maintaining Competition

As banking options consolidate, mortgage and finance brokers have emerged as essential counterbalances to diminishing competition. Their importance is highlighted by several key factors:

1. Providing Access to a Diverse Lender Panel

While the number of institutions is shrinking, brokers maintain relationships with numerous lenders – from major banks to smaller credit unions, building societies, and non-bank lenders. This gives consumers access to a broader range of options than they could easily find themselves.

According to the Mortgage & Finance Association of Australia (MFAA), the average broker has access to over 30 different lenders, ensuring consumers can still choose from diverse options despite market consolidation.

2. Driving Competitive Pricing

Research consistently shows that broker involvement leads to more competitive loan pricing. The MFAA’s “Value of Mortgage and Finance Broking 2025 Report” found that “growth [in broker market share] is correlated with improved competition in the banking sector and reduced mortgage interest rates.”

By enabling easy comparison between multiple lenders, brokers create pressure for all institutions to offer competitive rates and terms – effectively counteracting the reduced competition from mergers.

3. Championing Smaller Lenders

Brokers provide vital distribution channels for smaller lenders who lack the branch networks of major banks. This helps these institutions remain viable competitors despite their size disadvantage.

As noted by industry research, “Mortgage brokers increase choice and competition between lenders, leading to better service levels and competitive mortgage pricing.”

4. Shifting Market Power to Consumers

The dramatic rise in broker-originated loans – from less than 50% in 2012 to approximately 75% of new mortgages in 2025 – has fundamentally altered the power dynamics in Australia’s lending market. This shift enables consumers to “regularly shop around and switch lenders more easily,” according to financial analysts.

5. Providing Specialised Expertise

As banking products become more complex and numerous, brokers offer specialised knowledge that helps consumers navigate options and identify the most suitable products for their specific circumstances – a service increasingly valuable as direct bank staff numbers decline.

The Numbers Tell the Story: Broker Impact on Competition

The impact of brokers on maintaining competition is reflected in compelling statistics:

• 75% of new home loans are now originated through mortgage brokers (up from less than 50% in 2012)
• The mortgage broking industry is growing at an annualised rate of 10.6% (2020-2025)
• Broker-originated loans are estimated to total $6.2 billion in 2024-25
• Brokers have access to an average of 30+ lenders
• Research shows broker involvement has contributed to a reduction in average mortgage interest rates

Why Every Australian Borrower Should Consider Using a Broker

In this environment of reduced banking competition, working with a mortgage or finance broker offers several significant advantages:

1. Broader market access: Brokers can present options from numerous lenders in a single consultation.
2. Negotiating power: Brokers understand lender policies and can negotiate more effectively than individual consumers.
3. Time efficiency: Rather than approaching multiple banks individually, borrowers can access numerous options through one point of contact.
4. Specialised knowledge: Brokers stay current with rapidly changing lending policies and products across the market.
5. Ongoing relationship: A good broker provides service beyond the initial loan, helping clients review and refinance as market conditions change.

Conclusion: Brokers as the Essential Counterbalance

As Australia’s banking landscape continues to consolidate through mergers and acquisitions. The role of mortgage and finance brokers becomes increasingly vital. They serve as the essential counterbalance to diminishing institutional competition! Ensuring consumers maintain access to diverse lending options and competitive rates.

For consumers navigating this changing financial environment, working with a broker represents not just a convenience but a strategic advantage. By leveraging a broker’s market knowledge, lender relationships, and negotiating expertise. Borrowers can effectively overcome the limitations of a more concentrated banking sector. Some brokers we recommend are Ryan and Lisa from Moreton Bay Finance Broker and Will from Green Finance Group.

In the face of continued consolidation, mortgage and finance brokers stand as champions of consumer choice and market competition. Ensuring that even as the number of financial institutions decreases, Australians’ access to competitive financial products remains robust and secure. Need help Buying your next property? Contact us today.