By Monica Hovsepian, Head of Financial Services Industry at OpenText
While customer conversations around the climate have ebbed and flowed for decades, it
is clear that sustainability is now a key priority, with many believing that organisations bear as much responsibility for positive change as governments do. This has never been so clear in the Financial Services industry as it is now, with the new, upcoming regulations. Take the impending update to the UK Government’s Green Finance Strategy due to be published later this year or the recent report from the Financial Stability Board providing initial recommendations on regulatory approaches to climate related risks.
However, financial institutions are having to contend with more than just new regulations around sustainability. Customers and employees are also the driving motivation behind banks changing priorities. While sustainability has been a key priority for consumers, customers are now actively changing banks if they believe their bank isn’t doing the right thing. A recent survey confirmed that one in four European customers would likely switch banks if their bank was not engaged in ‘ESG’ issues. Unsurprisingly, there is a slight generational divide around the issue. In the same survey, those aged 18-24, were almost twice as likely to switch banks compared to those aged 55. It is clear that the pandemic dramatically accelerated consumers’ engagement with climate change and sustainability. With extreme global weather events increasingly making headlines, as well as various individuals and activist groups raising awareness, customers are becoming increasingly conscious of the topic.
Employees are the third key driver and motivation behind mounting change in the Financial Services industry. Once again, the pandemic has brought the issue front and centre for employees. Increasingly they want to work for a company that focuses on sustainability as part of their business strategy. Why? Put simply, it gives meaning to the work they do. In fact a survey showed 62% of workers said they would be more likely to work for a company with strong environmental policies and nearly half (48%) said that they would take a pay cut to work for a company that is environmentally responsible.
With increasing pressure from regulations, employees and customers, the time is now for organisations within the Financial Services industry to look at what they need to do to become more environmentally friendly and sustainable. This sort of change can seem daunting but what organisations must do is start small. Change won’t happen overnight but the sooner the journey starts, the sooner we can all support the future of our planet and our society.
So, where do financial firms start? There are two key areas they can start looking at.
Review products and services
Organisations should start by analysing their products and services to ensure they align with the company’s wider sustainability goals. This will showcase to customers that you understand the importance of sustainability and all your products and services are in line with this at the heart.
Take offering a credit card that rewards members for their contributions towards sustainability – card holders could donate rewards points to organisations that support sustainability or the card itself could be made from recycled plastic. Or offering ‘green mortgages’ where lenders offer mortgages with better interest rates to those moving into energy efficient homes. Or lastly, providing a current account that monitors the account holder’s carbon footprint based on payments data.
Utilise the relevant technology
Digitisation is one of the most productive ways organisations can embrace sustainability. It can be as simple as removing paper from processes as much as possible, from delivering employee payslips via email rather than in print or switching your method of sending invoices or statements. Organisations can also look at digitising their supply chain platforms. This can reduce the overall carbon footprint for businesses by ensuring information can be securely exchanged and managed any time or place, allowing organisations to retire power hungry internal hardware infrastructures, or even allow IT teams to travel less to different office locations as they can implement projects and cloud-based solutions remotely.
Organisations should also consider adopting a Customer Life Cycle Information Management (CLIM) approach to improve their sustainability performance. By providing the ability to truly have the single pane view of the customer from create, capture, process, deliver, manage, comply and archive – that single pane of the customer, across the entire enterprise of the customer’s activities and engagements, the organization can improve their overall sustainability performance.
Ultimately, there isn’t a ‘one size fits all’ approach to solving this problem. Instead, it can be achieved through a variety of mediums but it is clear that organisations in the Financial Services industry need to act now and showcase to their employees and customers that sustainability is a top priority.