A “Mutual Bank” also known as a “Mutual Savings Bank” is a bank which is operated on a Mutual Bank model, with the specific goal of encouraging savings and providing benefits to its depositors. When someone deposits funds in a “Mutual Bank”, she or he essentially buys an ownership stake in the bank and are entitled to vote at shareholder and member meetings. 

A Mutual Savings Bank is set up specifically to be operated for the benefit of the depositors. The purpose of the Mutual Bank is to stimulate savings by creating a safe place to deposit money and to offer benefits such as interest on deposits and dividends on Mutual Bank shares, and to invest conservatively for the purpose of generating profits. 

The institution most frequently identified as the first modern Mutual Savings Bank was the “Savings and Friendly Society” organized by the Reverend Henry Duncan (1774-1846), the local minister in 1810, in Ruthwell, Scotland. Rev. Duncan established the Mutual Bank in order to encourage his working class congregation to develop thrift. These first Mutual Savings Banks were designed to uplift the poor and working classes to teach low income individuals the virtues of thrift, and self-reliance by encouraging them to save and allowing them the security to save their money.

Mutual Banks have historically been characteristically conservative in their approach. This conservatism is what allowed Mutual Savings Banks to remain stable throughout the turbulent period of the Great Depression, despite the failing of some commercial banks. Because Mutual Savings Banks are run very conservatively, they tend to be insulated from some of the volatility of the market. Unlike other banks, they weather financial crises much better, and may continue to return a profit when other institutions are failing.

Some of the first Mutual Savings Banks still operate today, and numerous others have been established since.