The Banking Revolution That Has Gone Relatively Under the Radar

Published : 3 years ago, on 28/06/2021

During 2020, the year of the pandemic, only four banks have failed and closed down in the
United States. The figure for 2019 is exactly the same, and for the preceding year it is a
surprising zero. Just for proportions, in 2011, there were 92 cases of banks failing in the
country.

This data correlates with numbers in many other countries around the world. The banking sector
is doing things differently in recent years – and it seems to be working. This is especially
prominent when comparing the banking system today to its situation right after the housing
crisis of 2008. “The last time banks were under a lot of pressure, the financial system kind of fell apart,” remarked Eric Compton from Morningstar. “They were the dogs of the last crisis and now they’ve shined through this one.”

Let’s get digital
The most obvious of these recent transformations is the shift from brick-and-mortar banking to
the digital sphere. Take the U.K. for example. Over the past year, 368 bank branches alone
have been shut down, and over 4,000 branches closed their doors for good in the last six years.
More than 90% of American banks, on the other hand, now offer basic actions such as fund
transfer services via mobile banking.

Nevertheless, one shouldn’t ignore the negative implications of this shift. Millions around the
world cannot enjoy the fruits of this revolution, mainly because they are not digitally oriented, but
also due to lack of access to the technology necessary. In fact, a survey conducted in May
across the U.S. showed that while almost 50% of adults under 24 prefer to open a deposit
account through the internet, about two thirds of people over the age of 57 opt for a face-to-face
meeting with a bank representative.

Having said all of that, there are ways to find a middle ground. Many banks around the world,
such as the Bank of Ayudhya in Thailand, have come up with creative solutions for the elderly
population. ‘Age-friendly banking’ is what they call it, and it includes designated branches for
people who prefer not to use apps or any other web platform for their daily financial activities.
These branches are also designed to be more accessible to an older population, physically and
mentally.

Time to socialize
This digital revolution has become possible thus mainly thanks to another, no less important
revolution – the social one. Just like in the case of the elderly, banks and other financial
institutions have realized that they have a significant responsibility toward the community they
serve and flourish in. This social responsibility, which used to be waived off with a monthly
donation to some charity or non-profit organization, is now a must in every bank’s development
strategy.

Barclays Bank is an international brand with several branches in India. It has recently decided to
purchase drinking water for its employees and customers from plants run entirely by
transgenders across the country. Instead of donating money to this community’s struggle for
equality and rights, the bank enables the community’s members to become financially
independent. This way, they are also ensuring that the money gets to the right places.

It’s not only about who banks choose to do business with. It’s also about who they choose not to
do business with. The Alliance of Climate Business Leaders is an organization which includes
several global banks, such as HSBC, UBS, Bank of America and BBVA – among other major
global financial bodies. These banks have recently signed an agreement to take into account
scientifically based guidelines in lending portfolios, making capital less accessible to polluting
companies and industries. While this might seem easier said than done, it is certainly a way to
set an example for other, smaller institutions.

Don’t just say, do
On the local scale, more and more banks are going for a ‘boots on the ground’ approach and
actively helping their communities live better lives, once again instead of just donating money. In
Podgorica, for example, Adriatic Bank sent its employees out on Earth Day to plant trees in one
of the city’s main streets – including the Head of Human Resources herself, Ivana Kecojevic.
“We want to give our small contribution,” she said. “It wasn’t enough for us to just donate these
trees. We wanted to be out in the field, so our fellow Podgoricans can take an example from us
as to how they can simply make this planet a better place to live in.”

The bottom line is that it seems to be working. No one can argue that these actions are all %100
altruistic. These banks have an image they need to preserve and improve, and the fact that they
are noticed doing good for the benefit of others is apparently more effective to that image than a donation here and there. That, together with the ability to progress technologically while not leaving the non-digitally oriented population behind, is what has made banking better – for the
clients and for the banks themselves.

This is a sponsored feature.