A bank that acts in the interest of society, clearly committed to doing things the right way, and with a management model based on the customer. The Boston Consulting Group (BCG) defines what sustainable banking should be in its report Sense and Sustainability: an industry that generates a positive environmental and social impact, strengthening its ability to innovate and offer security to clients, by quickly adapting to their interests and needs.
In 2020, customers’ priorities shifted due to COVID-19: banks’ dynamics and competitive advantages were transformed, and the development of their digital capabilities was accelerated. Digital migration triggered by the pandemic has increased interest in sustainable banking, which can anticipate customers’ problems, help them with real solutions, offer cybersecurity, and stay one step ahead on issues such as sustainability.
As the report highlights, “concerns over climate change in particular have become decision drivers not only for customers, but also for investors, policymakers, and others. Indeed, regulatory authorities such as the European Central Bank are integrating climate and environmental risks into their supervisory methodologies and banks’ capital requirements.”
What makes a bank sustainable?
According to the report, there is no single, universal combination that makes a bank sustainable, but there are factors that distinguish winning banks of the future from others, such as:
- Commitment to and policy of protecting the environment and promoting social justice
- Efforts to improve positive relationships with customers and foster their financial wellbeing
- Collaboration and partnership with others for scale, expertise, and customer access
- Firm grip on conduct and risk management, including cyber, financial crime, and compliance
- Growth through continuous innovation
- Digitization of customer interactions, AI for personalized engagement, and simplification and automation to drive down unit costs
- Ability to respond to crises quickly and with purpose
Analyzing these factors, Francesc Pérez, Chief Revenue Officer at Latinia, explains that: “Customers are looking for banks that guarantee innovative service and whose digital growth is linked to customer needs and an action plan based on proactivity. Sustainable banking is not about complying with a set of rules, but about turning your purpose into a competitive advantage. This same motivation drives our product development: we are committed to banks that generate positive customer experiences 24 hours a day, both outside and inside their digital channels.”
The bank-client relationship: a true friendship
Client needs change depending on the market and, therefore, there are many opportunities for banks to provide high-impact services. BCG’s report shows how banks are providing solutions to meet customer demands, which call for building deeper relationships with their financial providers.
The customers surveyed are looking for a bank that they feel is a “good friend”, to whom they can turn for advice and honest financial guidance. They also demand greater security and personalization, solutions that anticipate their preferences and streamline their transactions; in short, that base their business model on customer centricity: this is also sustainable banking.
Oriol Ros, Director of Corporate Development at Latinia, affirms that “customers seek a relationship of trust with their banks and expect their behavior to be transparent and socially responsible, in order to continue building a more sustainable and inclusive world, which is a commitment we hold at Latinia, as explained in our collaboration with Chris Skinner in his book Digital for Good, dedicated to analyzing the financial sector’s impact on the planet”.