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Why the future of successful banking lies in sustainability

by wrich
Editorial & Advertiser disclosure

Phillip O’Neill, Financial Services Director at Kin + Carta Europe

Phillip O’Neill

The transition to a more sustainable future is hugely important for everyone, and has become an increasingly hot topic as the early impacts of environmental change are becoming more noticeable. As organisations that millions of people interact with every day, financial services and markets have the potential to significantly influence society by educating customers and investors about carbon footprint. The provision of slick digital experiences is a key tool at their disposal in doing so.

But with the status quo involving masses of unused data, bloated and complex mobile banking apps, and billions of pounds that have been wasted on inefficient cloud migrations, there’s plenty of work to do in order for the banking sector to hit the mark when it comes to digital sustainability.

Before they begin educating customers, it’s important for banks to define their own ‘sustainability mecca’. This will be unique to each bank and building society: a clear manifesto for what they stand for and where they want to have an impact. This should be paired with recognition of the level of reach they have and how they can utilise it more effectively to educate their customers.

Using data to correlate core purpose with customers

Establishing a mecca provides the starting point. The next stage is identifying commonalities between these values and those of specific customer groups. Figuring out exactly what customers care about and providing concrete examples of how the organisation is working to achieve these goals helps to establish a solid foundation for broader thought leadership.

Once banks have collected the right data and know what their customers care about, they need to develop something that serves them all – even though individual values will be unique. A customer experience powered by data means an organisation isn’t flying in the dark. Data insights give banks capacity to know what to focus on and where, which allows them to truly walk the sustainability walk.

A great example of this type of initiative is the free carbon footprint tracker that Natwest launched for app users last year. The feature allows customers to see the CO2 emissions associated with their daily spending, as well as providing hints and tips on how to go greener and resources for doing so. 

The purpose of this feature dovetails with Natwest’s internal goal of halving its direct operations emissions by 2025 from a 2019 baseline (it has already achieved a reduction of 46%) – uniting the bank and its customers behind a common cause. 

Data-led capital deployment

Data isn’t just important for customer sentiment analysis and insights, it’s also a valuable insight for measuring business goals. For example, measuring carbon impact can allow banks to make better decisions on mobilising capital going forward, because moving forward is just as important as working in the now. Cost saving is a big mandate across banks going into 2023, so banks will need to work out how to do more with less.

One way to achieve this with data-led initiatives is to treat them as long life products. There should be clear ownership and accountability for the governance and quality of the data and how it is used – it should not be left to languish in a stagnant data lake.

Instead, banks should entrust its stewardship to high performing product teams working on a clear mandate that is tracked and delivered. There’s no need to build an app with 10 million features in the hope it works for everyone, when a team with individual expertise can come together to create intelligent interfaces, offering intuitive design that’s also feature rich. 

Investing in cross functional teams to collect the right data will result in a leaner business model, creating less wasted data and developing functional, intelligent products – all while hitting sustainability goals and boosting profits as a result. 

Identifying where to start is also crucial. Impact is measured and built over time, so it’s important for financial companies to take a phased approach rather than attempting to “boil the ocean”. Effective data use puts financial companies in a much better position to generate meaningful insight and action their sustainability KPIs.

Looking beyond legal obligations

While government regulation means banks are required to implement changes to manage and reduce their carbon footprint, this necessity also presents banks with an opportunity.

Leading on sustainability should be viewed as a voluntary KPI across the financial industry, above and beyond any government mandates. Impacting the planet and its people is an ethical obligation over and above a legal one. Financial organisations have the capability to utilise intelligent experiences to better meet sustainability goals, with the added bonus of helping to boost customer retention.

Big corporations have to have a voice now. Silence speaks volumes, and over time customers will notice. The future of banking lies in sustainability not solely because it’s better for business, but because there is no room to backpedal. Businesses that fall behind won’t be able to jump back on the moving horse.

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