Purpose-Driven Banking

Sustainability is THE megatrend of our time. However, calling it a “trend” may not really do justice to the existential urgency of climate change. The latest interim report by the Intergovernmental Panel on Climate Change (IPCC) underscores the profound seriousness of the situation: global greenhouse gas emissions must fall by 50 percent by the 2030s in order for the 1.5 degree target to remain attainable. Put simply, this won’t happen without behavioural changes.

The good news, however, is that this message is now clearly resonating with consumers, and not just with Millennials either. More and more people want to make a positive contribution by making more sustainable choices. Yet given the complexity of the issue, it can quickly become overwhelming for individuals on a day-by-day basis.

Read here how banks and financial institutions are helping their customers to adopt more sustainable behaviours and position themselves as competent, relevant partners with purpose-driven banking. The key to all this is data-driven solutions that determine a customer’s carbon footprint.

Consumers’ keen interest in sustainability also applies to Swiss retail banking. The latest consumer study conducted by the FinTech Contovista (in German) revealed that a whopping 52 percent of customers would like their bank to show greater commitment to the environment. 57% are interested in the carbon footprint of their consumption decisions – while a healthy 81% are prepared to accept personal responsibility for this. For Swiss banks, this represents a major opportunity to address the current challenges facing the industry.

In the dynamic environment of digitalisation, the financial sector is currently under significant pressure from mobile neobanks and innovative tech companies such as Google and others. In general, there has been a loss of trust in traditional banks for some time now, and their relevance is in danger of declining as a result. As the experts at Accenture analysed in their study “Purpose-Driven Banking,” institutions should increasingly focus on ethics and values as a countermeasure. If they address meaningful, real but as yet unmet needs such as sustainability in a proactive and authentic manner, they’ll get closer to their customers and generate trust.

However, this requires banks to offer more than just traditional banking services, e.g. by cooperating with third-party providers. On the other hand, it probably isn’t sufficient to be limited to marketing ESG investment products, which, although undoubtedly sensible, isn’t very useful for differentiation purposes. This is especially true since Swiss banks aren’t always convincing when it comes to providing advice, as Greenpeace showed in a practical “mystery shopper” test.

It’s crucial that you have offerings that provide tangible, concrete added value in consumers’ everyday lives. Open Banking enables precisely this through data-driven, action-oriented services such as carbon footprint analysis of individual consumption behaviour. The idea is that third-party providers enhance the existing interface (e-banking) with intelligent sustainability features based on the analysis of account information.

By drawing on account information and external data sources, the carbon footprint of each individual transaction can be determined – although perhaps not with absolute precision. The basis for this is the categorisation of this information using advanced analytics, as well as the corresponding enrichment of data with additional information. For users, this approach offers the highest level of transparency, since it is precisely their personal, known account information that forms the basis of the analysis.