Leading a more sustainable life doesn’t mean that people spend less money. The key is to spend it in the right place and invest in the right projects and products. This is where banks with their payment data have a major role to play in fighting climate change and winning the hearts and wallets of climate-conscious consumers and companies.
When it comes to sustainability action, there’s a long way from the yearly report of a bank’s corporate social responsibility office to truly walking the talk.
Being among the first ones to take impactful action is not easy. There are many reasons why banks are reluctant to stand in the vanguard.
- Covid and the insecurity it brought made many organisations slam on the breaks and wait for better days with their investments and development projects.
- Trying out new ways of doing things or taking leaps in developing something that hasn’t been done before is seen as too big of a risk, at least until others have tried and tested it first.
- Many fall victim to their compliance mindset and see compliance as something that ties their hands and makes innovation difficult.
- Sustainability efforts are seen as something that would cut down consumption, resulting in loss of business.
When done right, sustainability efforts enable banks to make money. I don’t see sustainability and profitability in any contradiction because a sustainable business is also a business that makes more than it spends.
Financial data is a goldmine of sustainability insight waiting to be mined
Niche fintech players are popping up everywhere, and them challenging banks has a surprising effect. As payments are more and more scattered across new players, the vast amount of payments and history data that banks have remains unused. This is where us people, whether consumers or B2B buyers, miss a great chance to learn from our consuming habits and make more sustainable choices.
Financial and payments data that banks have is essentially information about the real lifestyles of real people in private homes and workplaces. Data about what, when, and how people purchase and consume is information about how we emit. By turning that information into easy-to-understand insights, banks can play an active role in helping people to lead a more sustainable life. And there is business there to be taken.
How banks can start embracing the opportunity
Payments are the basic units of any economy, and a lot of valuable information can be derived from them.
For a person or a company to change their behaviour, you must provide relevant information in a form that is easy to use and understand. So, to have an impact on behaviour, the data needs to be turned into personalised insights and tips.
After that, only imagination stands in the way of how you can monetise the insight and encourage more sustainable choices among your customers. This insight can form an integral part of a personal finance tool kit, providing your customers personalised benefits and products, such as loyalty programmes, carbon offset programmes, and green mortgage and investment products.
VIDEO: Paving the way for a sustainable future through payments!
Watch Manish Malhotra (Regional Head, FinTechs at Infosys) and Monika Liikamaa (Co-CEO and Co-founder at Enfuce) talk about:
- The role of banks in sustainability
- Harnessing payments data for sustainability efforts and better business
- The partnership between Infosys and Enfuce
Be the disruption – build a fintech within your bank
The rate at which fintechs are challenging traditional banks is a strong indication that both consumers and business users are craving for tailored, easy-to-use digital services to ease their financial lives. If you want to stay relevant to your customers, sustainability services are a must.
BLOG: Why sustainability services are the new must-have for banks and issuers
Customers do want to join the journey towards net zero carbon. What they need from financial institutions is transparency and open communication about sustainability, so that they can evaluate for themselves who are the partners and service providers that share their values and are making an active effort. And they need concrete advice tailored to their needs and lifestyle.
My hope is that banks would courageously adapt a fintech mindset in sustainability efforts and a more trial and error way of doing things. You don’t have to get it right this instant. Whatever you do, wherever you start, whoever you partner with, just do it. Because in a couple of years’ time, the ones who haven’t started will be the ones in major trouble, not the ones who started and failed, or revisited and adjusted according to customer feedback.
Read more about how you can build a fintech within your bank.
Sustainability services made easy – My Carbon Action helps banks fight climate change.