The two respective boards mulled over a merger in August 2021, and after seeking member approval officially completed the merger on 1 March.

They will combine with around $26 billion in assets, according to the latest banking data.

It usurps Brisbane-based Great Southern Bank, and also topples the newly-formed Newcastle Greater Mutual Group (NGM), which is a merger of Newcastle Permanent and Greater Bank that also joined forces on Wednesday.

For Toowoomba-based Heritage and Adelaide-based People's Choice, the two will retain their headquarters with a commitment to no staff redundancies.

However it is unclear if it will keep both retail brands, like with NGM. 

The merger will create an entity with more than 720,000 members and 1,900 employees with 95 branches across SA, NSW, NT, Queensland, and Victoria.

New group CEO Peter Lock said the merger creates a bigger challenge for the big banks.

“The reality is Australians only have two choices when it comes to banking – they can go with a listed bank, which has profit maximisation as its top priority, or they can go for a customer-owned bank, which is solely focused on meeting the needs of its members," Mr Lock said.

“This merger establishes a new force in the mutual sector which will reset the way Australians think about banking and help propel the customer-owned model onto the radar of banking consumers around the country."

While the merged entity creates a much bigger footprint in the customer-owned sector, it pales in comparison to Australia's largest banks.

CBA and Westpac have more than $1 trillion apiece in residents' assets; NAB more than $900 billion; and ANZ more than $700 billion.

According to the Customer-Owned Banking Association (COBA), the sector has more than $150 billion in assets, which places it just above Bank of Queensland:

Rank Bank Assets (billion)
1 Commonwealth Bank $1,178.399
2 Westpac $1,019.715
3 NAB $941.160
4 ANZ $710.971
5 Macquarie Bank $252.993
6 BOQ $121.403
7 Bendigo and Adelaide Bank $110.235
8 ING $99.394
9 Suncorp $92.025
10 HSBC $58.169
31 Newcastle Permanent $14.56
33 Heritage Bank $13.96
35 People's Choice $12.66
41 Greater Bank $9.92

Source: APRA ADI Statistics, January 2023

Photo by Finn on Unsplash