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Building the banks we need: Ethical banking in the age of radical change

By Ilia Uvarov, Executive Creative Director, Joe Hearty experience design director R/GA London

“Ethical banking” might sound like an oxymoron. And that’s for good reason.

Traditionally, people put their trust in banks to keep their money safe. While some banks did that better than others, this was the one thing customers demanded. But our relationship with money has changed. These days, where we bank and how we spend represents who we are. We expect our banks to think, act and talk in a way that not only helps us manage our money, but also in a way that helps us shape our futures.

At a time when customers are more critical than ever, what makes a truly ethical bank?

Active purpose

People buy into brands that align with their beliefs and values. In fact, 90% of Gen Z consumers expect brands to actively help improve social and environmental issues. Setting an ‘active purpose’ helps a brand define the behaviours and beliefs it wants to encompass and how it can act on them.

One example of a company that takes a firm stance in this respect is Doconomy. Founded in Sweden in 2018, Doconomy offers the world’s first credit card with a carbon limit. It tracks the products and services you spend on and blocks your card once you’ve exceeded your environmental impact allowance. The purpose is built into the core of the product. It is a bold move that gives Docomony a sense of authenticity that’s as seductive as it is meaningful.

For many banks, arriving at an active purpose might not come naturally. It requires an organisational shift spearheaded by a transformational team. When done well, this process results in a new mindset that uplifts the whole company.

Access and inclusion

1.7 billion adults worldwide do not have access to a bank account. The chaotic state of global economics has only increased the number of people suffering from systemic financial alienation. For many, strict requirements mean that opening a bank account or getting a loan is virtually impossible. Of course, exclusion comes in many forms and can also surface in the products and services banks create – font sizes, device requirements, branch locations, ATM interfaces. How can banks rethink these experiences and honour a wider set of demographics and circumstances customers inhabit?

In Turkey, a country with the unbanked population of roughly 25 million people, Akbank, one of the country’s top banking brands, launched a P2P payment platform called Tosla. Originally aimed at unbanked millennials, the service has found a wider audience due to its minimal sign up requirements, distinctive brand, intuitive interface and the support network provided by Akbank. Built on a behaviour new to the region – the casual exchange of funds for shared expenses – Akbank offered Tosla users the unique opportunity to apply for a full current account, increasing Akbank’s customer acquisition and further democratising access to their financial services. This is just one example of how focusing on inclusion can be beneficial for both society and banks.

Transparency and education  

When it comes to spending wiser and saving faster, most people need help. Analysing your finances and being able to budget and plan requires knowledge, discipline and time. This creates an opportunity for banks to show empathy and offer a helping hand – from teaching healthy habits to helping reach financial goals beyond paying bills on time.

GoHenry is an online app and debit card that helps parents teach their kids about money management. By creating a safe environment for kids to save and spend responsibly without having to worry about being in debt, GoHenry helps establish healthy financial habits they can practice in the real world.

An ethical bank does the same. By proactively thinking about their customers, by acknowledging and understanding their realities, banks can develop a new set of relationships with their customers and evolve their role.

Data and privacy

Privacy and trust have always been a priority when building a relationship with a bank – but how do you strike a balance between your bank knowing enough to serve you in a compelling way, versus your bank knowing too much?

In a recent Accenture Survey, 75% of consumers surveyed stated that they are very cautious about sharing their personal data, but six out of ten would be willing to share significant personal information with their bank, including location data and lifestyle information, in exchange for a better deal. The takeaway is obvious, when the value exchange is clear, people are happy to share their data. But where do you draw the line?

In China, WeChat has just launched WeChat Pay Score, a new credit scoring system based on users’ spending habits – in return, users gain access to perks like small loans. Unfortunately, this scoring system also takes into account each user’s private and social connections, conversations and political views – making the concept of privacy a distant memory.

On a more positive note, we can also see how the gradual adoption of Open Banking has allowed banks to offer more personalised products and services that cater to our ever-changing needs by leveraging customer data and AI.

Whatever the experience, ethical banks must be transparent with regards to how they use this approach to gather, analyse and utilise personal data while explaining the value exchange and benefit they give back to people’s lives.

A new way forward

A truly progressive financial institution should be motivated towards understanding and serving the needs of their customers. Banks have an opportunity to lead this change by standing for something more than just money, by demonstrating a passion for and genuine commitment to a cause. They can also lower the barrier to entry by creating more inclusive financial products, experiences and services. Finally, through communicating in a transparent and accessible manner and by helping people build healthy financial habits, they can earn trust through a responsible use of data and by valuing customer privacy. When financial institutions start to understand and implement these considerations, only then can the sector truly meet the needs of its users and society at large.