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Rising energy bills and living costs have fueled people's discontent with the existing financial system, prompting them to seek meaningful and lasting transformations. The pandemic and growing climate crisis awareness have led consumers to reassess their priorities and choose where to spend their money more carefully.

For a long time, consumers chose banks that offer low costs, accessible services, and excellent customer experiences. Today, however, it's no longer just about the bottom line. Good values are taking the lead in the minds of many consumers. This shift has given rise to a formidable force of 'ethical bankers' who demand more and won't settle for less.

Our survey showed that the majority (73%) of consumers are more likely to use financial institutions that put purpose before profits. Moreover, 58% of respondents are willing to pay extra for financial services that contribute to environmental protection or support local communities. These results indicate a remarkable shift in attitudes towards Environment, Social, and Governance (ESG) criteria, unprecedented in the industry. However, individual action alone isn't enough.

Triodos Bank, a Dutch ethical bank, found that nearly three quarters of the UK consumers believe that people need to collectively invest in long-term solutions to global challenges. This includes initiatives like investing in renewable energy to lower energy costs and reduce our reliance on fossil fuels.

What is the best way forward for FIs to meet this growing demand for this segment?

The banking tribe with a conscience

Consumers who choose ethical banks are individuals who prioritise aligning their financial decisions with their values and principles. These conscious consumers believe that their money can be a powerful tool for positive change and prefer to support FIs that uphold ethical practices and social responsibility.

This socially-conscious tribe is young (aged between 18 and 34), well-educated, and driven to make a positive impact. It prioritises experiences over ownership and is willing to pay extra for access to goods and services that align with their values.

The state of sustainable finance

Green banking seems to have taken a slight dip but that is only temporarily. As household bills soar, a growing number of individuals confess to feeling a loss of control over their finances. According to Triodos Bank, approximately two-thirds of consumers express concern that the escalating cost of living has hindered their capacity to use money for positive change. Moreover, 54% admit that making sustainable choices with their money has become a secondary priority.

EIU’s 2023 report on climate change highlights that while the ultra-low pandemic rates triggered demand for sustainable financing, the ESG landscape shifted in 2022 due to the war in Ukraine as well as macroeconomic hurdles. The research house insists, however, that the transformation of ESG will persist amid ongoing conflicts. While a new ESG boom is not expected in 2023, the groundwork is being laid for a gradual rise in appeal as the global economy recovers in 2024.

In anticipation of seizing future opportunities, financial institutions can strategically prepare and enhance their offerings by focusing on three key topics:

  • Customer-centric products & services

Banks must heed customer demographics and understand their priorities. Ethical bankers prioritise digital accessibility, with 69% emphasising the importance of online banking for opening new accounts. Ethical bankers are impulsive, with 42% having spontaneous spending habits. They demand seamless digital services and are quick to switch banks, especially since the pandemic. FIs must focus on delivering value and unmatched flexibility to prevent ethical bankers from seeking a better customer experience and products elsewhere.

  • Walk the talk

For ethical bankers preaching without action won't cut it. Customers who prioritise purpose won't settle for empty words. Banks must be bold, matching their promises with action. FIs must diligently incorporate principles of transparency and ethics, establish robust corporate governance, and implement effective metrics and measuring tools. Moreover, FIs should embrace regulatory requirements as these can serve as a critical pillar in ensuring banks adhere to ethical standards and practices.

  • Find the right partners

According to Gartner, by 2025, the carbon emissions of hyperscale cloud services will be a top three criterion in cloud purchase decisions. FIs must focus on partnering with cloud-native providers who pay attention to minimising IT-related carbon emissions, this includes leading providers of cloud infrastructure, core banking platforms and third-party vendors.

Mambu is committed to reducing negative impacts, and allocates at least 1% of revenue and time to projects that create positive changes in areas of influence. Additionally, we actively measure our carbon footprint, and in 2022 provided sustainability training to 96% of new joiners, and had one in three Mambuvians involved in sustainability work.

To survive, banks must take social purpose seriously. It's not just about products and services; they must align with customers' values. To effectively do that, FIs must seek out partners who share their commitment to sustainability. Collaborating with like-minded organisations not only strengthens the impact of sustainable initiatives but also reinforces the collective effort to drive positive change.

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Mambu Communications
Our PR & Communications team includes marketers, content creators and online experts, and provides insights and expertise from the entire Mambu team. For media queries, please contact us at press@mambu.com.
Mambu Communications