Tuesday's announcement came as the Australian Prudential Regulation Authority approved the application from Illawarra's second oldest business to become a mutual bank.

Chairman Michael Cole and chief executive Robert Ryan said the decision followed a comprehensive review of how best to position IMB in a competitive market place.

The research found that many young people did not relate to a building society. Mr Cole said non-IMB members, particularly younger people, were unclear of what a building society was and did.

Mr Ryan said that meant they were not always thinking about IMB as an alternative banking option.

"The research also showed that many current members already consider IMB as their bank," he said.

IMB's ownership model will not change as a mutual bank.

It will continue to be member-owned as has been the case since it started life as Illawarra Mutual Building Society in 1880 to help members finance the construction of their homes.

Mr Ryan said there would be little noticeable change to the present member-focused approach.

But there would be a new trading name and logo for IMB Bank.

Mr Cole said of all the home-grown financial institutions in the region, the IMB was probably the only one large enough to become a bank.

It now serves 180,000 members, has $5 billion in assets and 44 branches.

The newest branch has opened at Oran Park and Mr Ryan said the plan was to continue to grow the branch network in Sydney, the ACT, Melbourne and Victoria.

The new brand and logo will be launched closer to August 1.